EXHIBIT 4.30
--------------------------------------------------------------------------------
ELECTRIC CITY CORP.
SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 23, 2003
--------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (as it may be amended from time to time,
this "AGREEMENT"), is entered into as of April 23, 2003 by Electric City Corp.,
a Delaware corporation (the "COMPANY"), and the purchaser whose name appears on
the signature page of this Agreement (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Purchaser shares of
its common stock, par value $0.0001 ("COMMON STOCK"), and warrants to purchase
shares of its Common Stock, all as more fully described herein; and
WHEREAS, Purchaser desires to purchase such securities from the Company in
the amounts and for the purchase price and otherwise on the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 The following terms when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise requires, have
the following meanings, such meanings to be equally applicable to the singular
and plural forms thereof:
"AFFILIATE" means, as applied to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as applied to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble of this
Agreement.
"ANCILLARY AGREEMENTS" means the Common Stock Warrants and the Stock
Trading Agreement.
"ASSETS" shall have the meaning set forth in SECTION 5.5 hereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of Chicago are authorized or
required by law or executive order to close.
"CERTIFICATE OF DESIGNATION" means collectively, the Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof of Series A Convertible Preferred Stock of Electric
City Corp. and the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
1
Qualifications, Limitations and Restrictions Thereof of Series C
Convertible Preferred Stock of Electric City Corp.
"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation
of the Company, as amended or restated from time to time.
"CLOSING" shall have the meaning set forth in SECTION 2.2 hereof.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.2 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange
Commission or any other governmental authority at the time administering
the Securities Act or the Exchange Act.
"COMMISSION DOCUMENTS" shall have the meaning set forth in SECTION
5.16 hereof.
"COMMON SHARES" means the shares of Common Stock to be issued by the
Company to the Purchaser hereunder (excluding any shares of Common Stock
which may be issued pursuant to exercise of the Common Stock Warrants).
"COMMON STOCK" shall have the meaning set forth in the Recitals
hereof.
"COMMON STOCK WARRANTS" means the warrants to be issued by the Company
to Purchaser to purchase 125,974 shares of Common Stock, as evidenced by a
Warrant Certificate, as the same may be amended from time to time in
accordance with the terms thereof.
"COMMON STOCK WARRANTS ISSUED TO PREFERRED HOLDERS" means the warrants
to purchase common stock of the Company issued to each of the Series A
Preferred Stock Holders and the Series C Preferred Stock Holder. delete?
"COMPANY" shall have the meaning set forth in the preamble of this
Agreement.
"COMPANY IP" shall have the meaning set forth in SECTION 5.13 hereof.
"ELIGIBLE SECURITIES" means the Common Shares and the shares of Common
Stock evidenced by the Common Stock Warrants.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar or successor federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time
to time.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
2
"INVESTOR RIGHTS AGREEMENT" means the Investor Rights Agreement dated
as of July 31, 2001, by and among the Company and the Series A Preferred
Stock Holders, as amended by the Joinder and First Amendment to Investor
Rights Agreement dated as of June 4, 2002, by and among the Company, Series
A Preferred Stock Holders and the Series C Preferred Stock Holder.
"LITIGATION" shall have the meaning set forth in SECTION 3.1(e)
hereof.
"LOSSES" shall have the meaning set forth in SECTION 7.1 hereof.
"OFFICER'S CERTIFICATE" means a certificate of the Company signed by
its Chief Executive Officer or Chief Financial Officer.
"PERSON" means an individual, a corporation, a limited liability
company, an association, a partnership, a trust or estate, a government or
any department or agency thereof.
"PLACEMENT AGENT" shall mean Delano Group Securities.
"PURCHASER" shall have the meaning set forth in the preamble of this
Agreement.
"PURCHASE PRICE" shall have the meaning set forth in SECTION 2.2
hereof.
"REGISTRATION STATEMENT" shall have the meaning set forth in SECTION
4.4 hereof.
"REGULATORY APPROVALS" means (a) any and all certificates, permits,
licenses, franchises, concessions, grants, consents, approvals, orders,
registrations, authorizations, waivers, variances, exemptions,
declarations, or clearances from, or filings or registrations with, or
reports or notices to, any Governmental Authority, and (b) any and all
waiting periods imposed by applicable laws.
"SECURITIES" shall have the meaning set forth in SECTION 2.1 hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same may be in effect from time to time.
"SERIES A PREFERRED STOCK HOLDERS" means, collectively, Newcourt
Capital USA Inc., a Delaware corporation, Newcourt Capital Securities,
Inc., a Delaware corporation, EP Power Finance L.L.C., a Delaware limited
liability company, Xxxxxx Xxxxxxx Xxxx Xxxxxx Equity Funding, Inc., a
Delaware corporation, Originators Investment Plan, L.P., a Delaware limited
partnership, Duke Capital Partners, LLC, a Delaware limited liability
company and Leaf Mountain Company, LLC, an Illinois limited liability
company.
"SERIES C PREFERRED STOCK HOLDER" means Xxxxxxx X. Xxxxxxx, an
individual, in his capacity as holder of the outstanding shares of Series C
Convertible Preferred Stock of the Company and certain Warrants to Purchase
Shares of Common Stock of the Company which were issued to Xxxxxxx X.
Xxxxxxx on or about June 4, 2002 in connection with issuance of 200,000
shares of the Series C Convertible Preferred Stock to Xx. Xxxxxxx.
3
"STOCK TRADING AGREEMENT" means the Stock Trading Agreement dated
April 23, 2003 between the Company and the Purchaser, as the same may be
amended from time to time in accordance with the terms thereof.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
July 31, 2001, by and among the Company and the Series A Preferred Stock
Holders (other than Newcourt Capital Securities, Inc.), as amended by the
Joinder and First Amendment to Stockholders Agreement dated as of June 4,
2002, by and among the Company, Series A Preferred Stock Holders (other
than Newcourt Capital Securities, Inc.) and the Series C Preferred Stock
Holder.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled, directly or indirectly, by the
Person, or one or more of the Subsidiaries of the Person, or a combination
thereof.
"TAXES" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including, without limitation,
all net income, gross income, sales and use, ad valorem, transfer, gains,
profits, excise, franchise, real and personal property, gross receipt,
capital stock, business and occupation, disability, employment, payroll,
license, estimated, or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties on or
additions to any such taxes (and, in the case of the Company and its
Subsidiaries, Taxes for which the Company or any of its Subsidiaries may be
liable in its own right, or as the transferee of the assets of, or as
successor to, any other corporation, association, partnership, joint
venture, or other entity, or under Treasury Regulation Section 1.1502-6 or
any similar provision of state or local law).
"TAX RETURN" means a report, return or other information required to
be supplied to a Governmental Authority with respect to Taxes including,
where permitted or required, combined, unitary, group or consolidated
returns for any group of entities that includes the Company or any of its
Subsidiaries.
"TRANSACTIONS" shall have the meaning set forth in SECTION 3.1(d).
"TRANSACTION DOCUMENTS" shall have the meaning set forth in SECTION
5.1(b) hereof.
"WARRANT CERTIFICATE" means a warrant certificate evidencing the
Common Stock Warrants, duly executed by the Company and delivered to the
Purchaser pursuant to this Agreement, and any replacement certificate
issued by the Company in respect thereof pursuant to partial exercise,
transfer, loss or mutilation of such warrant certificate, as such original
or replacement certificate may be amended and in effect from time to time.
4
ARTICLE II
ISSUE, PURCHASE AND SALE OF THE SECURITIES
2.1 AUTHORIZATION OF ISSUANCE OF SECURITIES. The Company has authorized
the initial issuance of (collectively referred to herein as the "SECURITIES")
the following: (a) 456,429 Common Shares to be issued hereunder and (b) the
Common Stock Warrants.
2.2 PURCHASE AND SALE OF SECURITIES; CLOSING. Subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to Purchaser, and
Purchaser agrees to purchase from the Company, at the Closing (as defined
herein), for an aggregate purchase price of Four Hundred Nineteen Thousand, Nine
Hundred and Fourteen Dollars ($419,914.00) (the "Purchase Price"), the
Securities. Subject to the satisfaction or waiver of the parties' respective
conditions to closing set forth in Sections 3.1 and 3.2, the closing of the
purchase and sale of the Securities (the "Closing") shall take place on April
23, 2003, or at such other time and on such other date as the Purchaser and the
Company may agree (the "CLOSING DATE"), at the offices of Purchaser or at such
other location as the Purchaser and the Company may agree. At the Closing, the
Company will deliver to Purchaser one or more stock certificates, as Purchaser
may request, registered in Purchaser's name (or in its nominee name if
designated by Purchaser) evidencing the shares of Common Stock to be purchased
by Purchaser, together with the Common Stock Warrants, against payment of the
Purchase Price therefore by wire transfer of immediately available funds to or
upon the order by the Company.
ARTICLE III
CONDITIONS OF CLOSING
3.1 PURCHASER CONDITIONS TO CLOSING. Purchaser's obligation to purchase
and pay for the Securities to be purchased by Purchaser at the Closing is
subject to the satisfaction, as determined by, or waived by, Purchaser on or
before the Closing Date, of the following conditions:
(a) RECEIPT OF SECURITIES. Purchaser shall have received delivery of
the stock certificates and Warrant Certificates evidencing the Securities,
duly issued by the Company;
(b) OPINION OF THE COMPANY'S COUNSEL. Purchaser shall have received
from Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx, Chartered, special counsel to
the Company in connection with this transaction, an opinion dated on the
Closing Date in the form attached hereto as "EXHIBIT A - FORM OF OPINION";
(c) STOCK TRADING AGREEMENT. The Stock Trading Agreement shall have
been entered into and delivered by Purchaser and the Company;
(d) NO LITIGATION; NO ORDER. No action, suit or proceeding relating
to the transactions contemplated by this Agreement or any Ancillary
Agreement (the "TRANSACTIONS") shall be pending that in the reasonable good
faith judgment of Purchaser (i) seeks to restrain or prevent any of the
Transactions and has a reasonable probability of success or (ii) is
reasonably likely to have a material adverse effect on the assets,
business, prospects, properties, operations or conditions (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, and no
order (including, without
5
limitation, a temporary restraining order), decree, writ, judgment or
injunction shall be in effect that restrains, enjoins or prevents the
consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement (collectively, "LITIGATION");
(e) PROCEEDINGS. On or prior to the Closing Date, all corporate and
other proceedings required to be taken under applicable laws, rules and all
regulations and all rules of The American Stock Exchange in connection with
the transactions contemplated by this Agreement or any Ancillary Agreement
shall have been taken and all filings and documents incident thereto shall
be reasonably satisfactory in form and substance to Purchaser and his
special counsel, and the Purchaser and his special counsel shall have
received all such counterpart originals or certified or other copies of
such documents as they may reasonably request;
(f) COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed
and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by
the Company on or before the Closing Date;
(g) OFFICER'S CERTIFICATE. The Purchaser shall have received a
certificate, dated the Closing Date and signed by the Chief Executive
Officer of the Company, certifying that the conditions set forth in
SECTIONS 3.1(d), 3.1(e), 3.1(f), 3.1(j) and 3.1(k) hereof have been
satisfied on and as of such date;
(h) SECRETARY'S CERTIFICATE. Purchaser shall have received a
certificate, dated the Closing Date and signed by the Secretary of the
Company, attaching good standing certificates from the Delaware Secretary
of State and the Illinois Secretary of State with respect to the Company,
Switchboard Apparatus, Inc. and Great Lakes Controlled Energy Corporation
and certifying the authenticity of attached copies of (i) the Certificate
of Incorporation and by-laws of the Company and the certificate of
incorporation and by-laws of each of its Subsidiaries, in each case as
amended; (ii) resolutions of the Board of Directors of the Company
approving this Agreement and the Ancillary Agreements and the transactions
contemplated by this Agreement and the Ancillary Agreements;
(i) PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. The
acquisition of and payment for the Securities and the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements
(i) shall not be prohibited by any applicable law or governmental
regulation, (ii) shall not subject Purchaser to any penalty or, in its
reasonable judgment, other onerous conditions under or pursuant to any
applicable law or governmental regulation and (iii) shall be permitted by
the laws and regulations of the jurisdictions to which Purchaser is
subject;
(j) CONSENTS AND APPROVALS. All consents, waivers, approvals,
exemptions, authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons necessary or required in
connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement (including, without
limitation, the issuance of the Securities contemplated hereunder), any
Ancillary Agreement or any other document executed in connection with the
consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement shall have been obtained and be in full force and
effect, and Purchaser and its special counsel shall have been furnished
with appropriate evidence thereof; and
6
(k) INSOLVENCY. The Company shall not have made an assignment for the
benefit of creditors, nor shall it have filed with a court of competent
jurisdiction an application for appointment of a receiver or similar
official with respect to it or any substantial part of its assets, nor
shall there have been filed by the Company or any of its Subsidiaries a
petition seeking relief under any provision of the Federal Bankruptcy Code
or any other federal or state statute now or hereafter in effect affording
relief to debtors, nor shall there have been filed against the Company or
any of its Subsidiaries any such application or petition.
3.2 COMPANY CONDITIONS TO CLOSING. The Company's obligation to issue and
sell the Securities at the Closing is subject to the satisfaction, on or before
the Closing Date, of the following conditions:
(a) RECEIPT OF PURCHASE PRICE. The Company shall have received
payment of the Purchase Price by wire transfer of immediately available
funds;
(b) STOCK TRADING AGREEMENT. The Stock Trading Agreement shall have
been entered into and delivered by Purchaser and the Company;;
(c) NO LITIGATION; NO ORDER. No action, suit or proceeding relating
to the Transactions shall be pending that in the reasonable good faith
judgment of the Company seeks to restrain or prevent any of the
Transactions and has a reasonable probability of success;
(d) PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. The
acquisition of and payment for the Securities and the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements
(i) shall not be prohibited by any applicable law or governmental
regulation, and (ii) shall not subject the Company to any penalty or, in
its reasonable judgment, other onerous conditions under or pursuant to any
applicable law or governmental regulation; and
(e) CONSENTS AND APPROVALS. All consents, waivers, approvals,
exemptions, authorizations, or other actions by, or notices to, or filings
with, Governmental Authorities and other Persons necessary or required in
connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement (including, without
limitation, the issuance of the Securities contemplated hereunder), any
Ancillary Agreement or any other document executed in connection with the
consummation of the transactions contemplated by this Agreement or any
Ancillary Agreement shall have been obtained and be in full force and
effect.
ARTICLE IV
CERTAIN COVENANTS
4.1 CORPORATE EXISTENCE; LICENSES AND PERMITS; MAINTENANCE OF PROPERTIES.
The Company shall at all times use commercially reasonable efforts to do or
cause to be done all things necessary to maintain, preserve and renew its
existence as a corporation organized under the laws of a state of the United
States of America, and to preserve and keep in force and effect, and cause each
of its consolidated Subsidiaries to apply for on a timely basis, all licenses
and permits necessary and material to the conduct of the business of the Company
and its Subsidiaries, taken as a whole.
7
4.2 LISTING. The Company shall have, within ninety (90) days of the
Closing Date, obtained approval from the American Stock Exchange to list for
trading on the American Stock Exchange the Common Shares issued pursuant hereto
and the Common Shares issuable upon the exercise of the Common Stock Warrants.
4.3 SECURITIES EXCHANGE. The Company shall use its reasonable best efforts
to maintain its Common Stock listing and to continue to have its Common Stock be
quoted on The American Stock Exchange or on another national securities
exchange, so long as it is subject to Section 13 or 15(d) of the Exchange Act.
4.4 REGISTRATION. The Company agrees that it shall, subject to the receipt
of necessary information from the Purchaser, prepare and file with the SEC as
soon as practicable and in no event later than ninety (90) days following the
Closing Date, a Registration Statement on Form S-3, to enable the resale of the
Common Shares and the Common Stock evidenced by the Common Stock Warrants by the
Purchaser from time to time and use all reasonable efforts to cause such
Registration Statement to be declared effective as promptly as possible after
filing and to remain continuously effective for a period of not less than one
(1) year following the Closing Date. In the event that Form S-3 is not available
for such registration, the Company shall use such other form as is available for
such registration.
4.5 BEST EFFORTS. The Company agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws, rules
and regulations to consummate and make effective the transactions contemplated
by this Agreement as promptly as practicable. In case at any time after the
Closing any further action is reasonably necessary to carry out the purposes of
this Agreement, the proper agents, officers and directors of the Company shall
take such action.
4.6 INSURANCE. The Company shall at all times maintain customary directors
and officers insurance in amounts as are customary for other publicly traded
companies of similar size.
4.7 PUBLIC DISCLOSURE. The Company shall: (i) on the Closing Date: (x)
issue a press release disclosing the material terms of the transactions
contemplated hereby (including at least the number of shares sold and proceeds
therefrom) and (ii) make such other filings and notices in the manner and time
required by the Commission, (including filing of this Agreement with the
Commission pursuant to the Exchange Act and other action's required to comply
with Section 4.4 hereof).
ARTICLE V
REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company represents, covenants and warrants to the Purchaser as follows:
5.1 ORGANIZATION; STANDING AND QUALIFICATION OF COMPANY AND ITS
SUBSIDIARIES; CORPORATE AUTHORITY.
(a) Each of the Company and each of its Subsidiaries is a corporation duly
organized and existing in good standing under the laws of the jurisdiction of
its organization, and has the
8
corporate power to own its property and to carry on its business as now being
conducted, is duly qualified and in good standing as a foreign corporation to do
business in every jurisdiction where the character of the properties owned or
leased by it or the nature of any business transacted by it makes such
qualification necessary, except where such nonqualification or lack of good
standing would not have a material adverse effect on the business of the Company
and its Subsidiaries, taken as a whole. Each of the Company and its Subsidiaries
have delivered to Purchaser true, complete and correct copies of their
respective certificates of incorporation and their respective by-laws, as
amended through the date hereof, which are in full force and effect on the date
hereof.
(b) The execution and delivery by the Company of this Agreement and the
Ancillary Agreements (collectively, the "TRANSACTION DOCUMENTS"), and the
performance by the Company of all transactions and obligations contemplated
hereby and thereby are within its corporate authority. The execution, delivery
and performance of the Transaction Documents and each other agreement
contemplated by the terms hereof and thereof and the issuance of the Securities
have been duly authorized by all necessary corporate proceedings on the part of
the Company. Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to equitable principles relating to enforceability. The Common Shares are
duly authorized and, when issued hereunder, will be validly issued, fully paid
and nonassessable and subject to no preemptive rights in favor of other Persons
which have not been waived. Assuming the accuracy of the representations of
Purchaser in this Agreement, the Common Shares issuable hereunder will be issued
in compliance with all applicable federal and state securities laws. The shares
of Common Stock issuable upon the exercise of the Common Stock Warrants are duly
authorized and reserved for issuance, and, when issued upon such exercise, will
be validly issued, fully paid and nonassessable, and subject to no preemptive
rights in favor of other Persons which have not been waived. Assuming the
accuracy of the representations of Purchaser in this Agreement, when such shares
of Common Stock are issued, such shares will be issued in compliance with all
applicable federal and state securities laws. The Company has reserved for
issuance 125,974 shares of Common Stock issuable upon exercise of the Common
Stock Warrants.
(c) Great Lakes Controlled Energy Corporation and Switchboard Apparatus,
Inc. are the only Subsidiaries of the Company. Each such Subsidiary is wholly
owned by the Company.
5.2 CAPITAL STOCK.
(a) As of the date hereof, the Company has authorized 120,000,000 shares
of Common Stock and 5,000,000 shares of preferred stock. As of the date hereof,
the Company has 33,669,031 issued and outstanding shares of Common Stock,
2,225,472 issued and outstanding shares of Series A Convertible Preferred Stock
and 216,934 issued and outstanding shares of Series C Convertible Preferred
Stock. All outstanding shares of the Company Common Stock have been duly
authorized, validly issued and are fully paid and nonassessable and free of
preemptive rights. All outstanding shares of Common Stock were issued in
compliance with all applicable federal and state securities laws.
(b) Except as otherwise stated in this SECTION 5.2 or in SCHEDULE 5.2 and
except for shares of capital stock reserved for issuance in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements, the
Company has not granted or issued, or agreed
9
to grant or issue, any options, warrants or similar rights to acquire or receive
any of the authorized but unissued shares of its capital stock of any class or
any securities convertible into shares of its capital stock of any class or any
stock appreciation rights. Except as stated in SCHEDULE 5.2, no adjustment to
the exercise price of any outstanding options or warrants of the Company will be
required as a result of the issuance of any of the Securities.
(c) Except as set forth in SCHEDULE 5.2(c), no holder of shares of Common
Stock (or securities convertible into or exchangeable or exercisable for Common
Stock) has any rights to purchase or receive additional or other securities upon
the occurrence of an event that might dilute such holder's percentage interest
in the Company.
5.3 NO DEFAULTS. Except as set forth in SCHEDULE 5.3, neither the Company
nor any of its Subsidiaries, to its knowledge, is in violation of, or in default
under, nor has there been any waiver given with respect to, any term or
provision of any charter, by-law, mortgage, indenture, agreement, instrument,
statute, rule, law, regulation, judgment, decree, order, writ, or injunction
applicable to it, such that such violations and defaults in the aggregate could
reasonably be expected to result in any material adverse change in the business,
assets, properties, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries, taken as a whole, or materially adversely
affect the ability of the Company to perform in any material respect its
obligations under this Agreement. All Regulatory Approvals required by the
Company and its Subsidiaries to conduct their respective business as now
conducted by them have been obtained and are in full force and effect, and the
Company and its Subsidiaries are in compliance with the terms and requirements
of such Regulatory Approvals. Except as set forth on SCHEDULE 5.3 hereto, since
December 31, 2002, none of the Company or any of its Subsidiaries has received
any written notice or other written communication from any Governmental Entity
regarding (i) any revocation, withdrawal, suspension, termination or
modification of, or the imposition of any material conditions with respect to,
any Regulatory Approval, (ii) any violation of any law by the Company or any of
its Subsidiaries, or (iii) any other limitations on the conduct of business by
the Company or any of its Subsidiaries.
5.4 BURDENSOME AND CONFLICTING AGREEMENTS AND CHARTER PROVISIONS. Neither
the execution or delivery of the Transaction Documents by the Company, nor the
offering, issuance and sale of the Securities by the Company, nor fulfillment
of, or compliance with, the terms and provisions of the Transaction Documents,
nor the issuance by the Company of shares of Common Stock upon exercise of the
Common Stock Warrants, will, except as set forth in SCHEDULE 5.4, conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
lien upon any of the properties or assets of the Company or any of its
Subsidiaries, or require any consent, approval or other action by, or notice to,
or filing with, any court or administrative or governmental body or any other
Person or pursuant to the Certificate of Incorporation or by-laws of the Company
or the certificate of incorporation or by-laws of any of the Company's
Subsidiaries, any award of any arbitrator or any material agreement (including
any agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject, except for such approvals or waivers as may be required in connection
with fulfillment of, or compliance with, the Certificate of Designation,
Investor Rights Agreement, Common Stock Warrants Issued to Preferred Holders and
Stockholders Agreement, which shall have been obtained by the Closing Date.
5.5 TITLE TO ASSETS, ETC. The Company has good and marketable fee simple
title to the assets reflected on the balance sheet set forth on SCHEDULE 5.5
(the "ASSETS"). Except as set forth
10
in SCHEDULE 5.5, none of the Assets is subject to any encumbrances, except for
minor liens that in the aggregate are not substantial in amount, do not
materially detract from the value of the property or assets subject thereto or
interfere with the present use thereof and have not arisen other than in the
ordinary course of business. There are no pending or threatened condemnation
proceedings relating to any of the facilities of the Company. The real property
improvements (including leasehold improvements) and fixtures and equipment of
the Company are adequately insured and are structurally sound with no known
material defects. The facilities, fixtures and equipment of the Company are in
good operating condition and repair (except for ordinary wear and tear and any
defect for which the cost of repairing would not be material), are sufficient
for the operation of the Company's business as presently conducted and are in
conformity in all material respects with all applicable laws, ordinances,
orders, regulations and other requirements (including applicable zoning,
environmental, motor vehicle safety or standards, occupational safety and health
laws and regulations) relating thereto currently in effect, except where the
failure to conform would not have a material adverse effect on the business or
financial condition of the Company. The Assets are valued on the Company's books
at or below actual cost less an adequate and proper depreciation charge. The
Company has not depreciated any of the Assets on an accelerated basis or in any
other manner inconsistent with applicable Internal Revenue Service tax and
fiscal guidelines, if any.
5.6 LEASES. Each of the Company and its Subsidiaries enjoy peaceful and
undisturbed possession of all leases material to them. All such leases are valid
and subsisting and are in full force and effect.
5.7 CONTRACTS. Except as set forth in SCHEDULE 5.7, there is no contract,
agreement or understanding required to be described in or filed as an exhibit to
any Commission Documents that is not described in or filed as required by the
Securities Act or the Exchange Act, as the case may be. Except as set forth in
SCHEDULE 5.7, each such contract, agreement and understanding is valid and
binding and is in full force and effect and enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally or as may be limited by equitable principles relating to
enforceability), except in the case of such contracts, agreements or
understandings that are by their terms no longer in force or effect. Except as
set forth on SCHEDULE 5.7, (a) no approval or consent of, or notice to, any
Person is needed in order that such contract, agreement or understanding shall
continue in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination following the consummation of the
transactions contemplated by the Transaction Documents, other than such notices,
consents and approvals as have been obtained and (b) the Company and/or its
Subsidiaries are not in violation of, breach of, or default under any such
contract, agreement or understanding nor, to the Company's knowledge, is any
other party to any such contract, agreement or understanding.
5.8 FINANCIAL STATEMENTS. The Company has furnished the Purchaser with (a)
the balance sheet of the Company and its consolidated Subsidiaries as at
December 31, 2002 and the related statements of income, stockholders' equity and
cash flows of the Company and its consolidated Subsidiaries for the fiscal year
ended December 31, 2002, all certified by BDO Xxxxxxx LLP, including in each
case the related schedules and notes.
All such financial statements (including any related schedules and notes)
have been prepared in accordance with generally accepted accounting principles
consistently applied, except to the extent set forth in the notes to such
financial statements. The balance sheets and the related schedules and notes
fairly present the financial condition of the Company and its
11
consolidated Subsidiaries as at the dates thereof and the net income and
stockholders' equity statements and the related schedules and notes fairly
present the results of the operations of the Company and its consolidated
Subsidiaries for the periods indicated. Except as set forth in SCHEDULE 5.8, the
Company has incurred no material liabilities since December 31, 2002, other than
those incurred in the ordinary course.
Except as set forth in SCHEDULE 5.8, there has been no material adverse
change in the assets, business, prospects, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole,
since December 31, 2002.
5.9 ACTIONS PENDING. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries before any court, arbitrator or administrative or
governmental body that (a) seeks to enjoin or otherwise prevent the consummation
of the sale or issuance of the Securities or (b) materially and adversely
affects, or as to which there is a reasonable possibility of an adverse decision
that would materially and adversely affect, either individually or collectively,
the assets, business, properties, prospects, operations or condition, financial
or otherwise, of the Company and its Subsidiaries, taken as a whole. Neither the
Company nor any of its Subsidiaries is in violation of any judgment, order,
writ, injunction, decree, rule or regulation of any court or governmental
department, commission, board, bureau, agency or instrumentality, the violation
of which reasonably could be expected to, either individually or collectively,
materially and adversely affect the business, property, assets, prospects,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
5.10 OFFERING OF SECURITIES. Assuming the accuracy of the representations
of Purchaser in this Agreement, the offer, sale and issuance of the Securities
are exempt from the registration requirements of the Securities Act. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the
Securities to any Person so as to bring the offering and sale of such Securities
by the Company within the registration provisions of the Securities Act. The
Company has filed all notices and satisfied all registration or qualification
requirements of any state securities or Blue Sky law of any applicable
jurisdiction with respect to the offer, issuance and sale of the Securities or
required by the Ancillary Agreements.
5.11 BROKER'S OR FINDER'S COMMISSIONS. Other than the fee payable to the
Placement Agent, no broker's or finder's or placement fee or commission will be
payable with respect to the sale or the issuance of the Securities contemplated
hereby or by the Ancillary Agreements as a result of any act or omission by the
Company, and the Company will hold Purchaser harmless from any claim, demand or
liability for broker's or finder's or placement fees or commissions alleged to
have been incurred in connection with the sale or the issuance of the Securities
due to any actions or omissions by the Company or its Subsidiaries or any of
their respective directors, officers or agents.
5.12 APPLICATION OF PROCEEDS. The net proceeds of the sale of the Common
Stock will be used by the Company for working capital and for general corporate
purposes.
5.13 INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries exclusively own or possess the
requisite licenses or rights (on reasonable commercial terms) to use all
patents, trade secrets, trademarks,
12
service marks, service names, trade names, copyrights and other intellectual
property rights necessary to enable each of them to conduct their respective
businesses as now operated (collectively, the "COMPANY IP"). SCHEDULE 5.13(a)
sets forth a full and complete list of all intellectual property rights of the
Company and its Subsidiaries. There is no claim or action by any Person
pertaining to, or proceeding pending, or to the Company's knowledge threatened,
that challenges the rights of the Company or its Subsidiaries with respect to
any Company IP. To the Company's knowledge, neither the Company's nor any of its
Subsidiaries' current and intended products and services infringe on any
patents, licenses, trademarks, service marks, service names, trade names,
copyrights or other intellectual property rights held by any Person and neither
the Company nor any of its Subsidiaries is aware of any facts or circumstances
that might give rise to any of the foregoing.
(b) Except as set forth in SCHEDULE 5.13(b), no proceedings or claims in
which the Company alleges that any Person is infringing upon, or otherwise
violating, any Company IP are pending, and none has been served by, instituted
or asserted by the Company or any of its Subsidiaries, nor are any proceedings
threatened alleging any such violation or infringement.
(c) The Company has taken and will take all commercially reasonable
actions that are necessary or advisable in order to fully protect the Company
IP, in a manner consistent with prudent commercial practice.
5.14 TAXES. The Company and each of its Subsidiaries has timely filed (or
caused to be filed) all Tax Returns that are required to be filed by (or with
respect to) it on or before the date hereof and has paid all Taxes due on or
before the date hereof whether or not reflected on such Tax Returns, including
pursuant to any assessment received by it. All such Tax Returns were true,
correct and complete in all material respects. None of such Tax Returns has been
audited by the relevant taxing authority, and no taxing authority has notified
(or threatened) the Company or any of its Subsidiaries, orally or in writing,
that such taxing authority will or may audit any such return. The Company and
its Subsidiaries have complied with all requirements of the Code, the Treasury
Regulations and any state, local or foreign law relating to the payment and
withholding of Taxes relating to them, and the Company and each of its
Subsidiaries have, within the time and in the manner prescribed by applicable
law, paid over to the proper taxing authorities all amounts required to be so
withheld and paid over relating to them. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of Taxes or other
governmental charges are adequate to cover any liability of the Company and its
Subsidiaries for Taxes through the date hereof. There are no liens for Taxes
with respect to any asset of the Company or any of its Subsidiaries, except for
liens with respect to Taxes that are not yet due and payable. No taxing
authority in a jurisdiction where the Company or any of its Subsidiaries, as the
case may be, does not file tax returns has made a claim, assertion or threat
that the Company or any of its Subsidiaries is or may be subject to taxation in
such jurisdiction.
5.15 INSURANCE. The Company maintains or is covered by valid policies of
workers' compensation insurance, product liability insurance, and insurance with
respect to its properties and business. The Company currently maintains in full
force insurance covering the respective risks of the Company and its
Subsidiaries of such types and in such amounts, with such deductibles and with
such insurance companies as are customary for other companies engaged in similar
lines of business. The Company currently maintains key man life insurance for
Xxxx Xxxxxx in the amount of $5,000,000, which is and will remain in full force
and effect through December 31, 2005.
13
5.16 COMMISSION DOCUMENTS. Except as set forth in SCHEDULE 5.16, the
Company has filed all registration statements, proxy statements, information
statements, reports and other documents required to be filed by it under the
Securities Act or the Exchange Act, and all amendments thereto (collectively,
the "COMMISSION DOCUMENTS"). Each Commission Document when filed with the
Commission was true and accurate in all material respects and in compliance in
all material respects with the requirements of its respective report form and
the rules and regulations of the Commission. No Commission Document 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
contained therein, in light of the circumstances under which made, not
misleading.
5.17 DISCLOSURE. Neither this Agreement nor any other document, certificate
or statement prepared by or on behalf of the Company by its authorized
representatives or agents and furnished to or made available to the Purchaser in
writing by or on behalf of the Company by its authorized representatives or
agents in connection herewith, contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements contained herein and therein, in the light of the
circumstances under which made, not misleading.
ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
Purchaser represents and warrants as to itself only as follows:
6.1 INVESTMENT PURPOSE. Purchaser is purchasing the Securities for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. Purchaser will not
resell the Securities except pursuant to sales that are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and/or sales registered under the Securities Act and all
applicable state securities laws. Purchaser understands that Purchaser may bear
the economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities
laws or an exemption from such registration is available.
6.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act. By reason of his business and financial experience,
sophistication and knowledge, Purchaser is capable of evaluating the risks and
merits of the investment made pursuant to this Agreement.
6.3 AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered by Purchaser and is the legally valid and
binding agreement of Purchaser enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability. As of the Closing Date, each
Ancillary Agreement to which Purchaser is a party will be the legally valid and
binding agreement of Purchaser enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
14
6.4 BROKER'S OR FINDER'S COMMISSIONS. Other than the fee payable to the
Placement Agent (which will be paid by the Company) no broker's or finder's or
placement fee or commission will be payable with respect to the sale or the
issuance of the Securities as a result of any act or omission by the Purchaser,
and the Purchaser will hold the Company harmless from any claim, demand or
liability for broker's or finder's or placement fees or commissions alleged to
have been incurred in connection with the sale or the issuance of the Securities
due to any actions of the Purchaser.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY COMPANY. In addition to all other sums due
hereunder or provided for in this Agreement, the Company agrees to indemnify and
hold harmless Purchaser to the fullest extent permitted by law from and against
any and all losses, claims, damages, expenses (including reasonable fees,
disbursements and other charges of counsel), damages or other liabilities
("LOSSES") resulting from:
(i) any breach of any representation or warranty, covenant or
agreement of the Company in this Agreement, or
(ii) any legal, administrative or other actions (including actions
brought by any equityholders of the Company or derivative actions brought
by any Person claiming through the Company or in the Company's name),
proceedings or investigations (whether formal or informal), or written
threats thereof, based upon, relating to or arising out of any of the
Transaction Documents or the Securities, the transactions contemplated
hereby or thereby, or any indemnified person's role therein;
PROVIDED, HOWEVER, that the Company shall not be liable under this SECTION 7.1:
(a) for any amount paid in settlement of claims without the Company's consent
(which consent shall not be unreasonably withheld or delayed) or (b) to the
extent that it is finally judicially determined that such Losses resulted
primarily from the willful misconduct, bad faith or gross negligence of
Purchaser or a breach of such Purchaser's representations in ARTICLE VI;
PROVIDED, FURTHER, that if and to the extent that such indemnification is
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such indemnified liability that shall be
permissible under applicable laws. In connection with the obligation of the
Company to indemnify for expenses as set forth above, the Company further agrees
to reimburse the Purchaser for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by the
Purchaser; PROVIDED, HOWEVER, that in no event shall the Company be required to
pay fees and expenses under this ARTICLE VII for more than one firm of attorneys
in addition to the firm of attorneys representing the Company in any
jurisdiction in any one legal action or group of related legal actions;
PROVIDED, FURTHER, that if the Purchaser is reimbursed hereunder for any
expenses, such reimbursement of expenses shall be refunded to the extent it is
finally judicially determined that the Losses in question resulted primarily
from the willful misconduct, bad faith or gross negligence of the Purchaser.
7.2 INDEMNIFICATION FOR REGISTRATION. (a) In the event of a registration
of the Common Shares and the Common Stock evidenced by the Common Stock Warrants
under the Securities Act pursuant to SECTION 4.4 herein, the Company shall
indemnify and hold harmless, to the
15
fullest extent permitted by law, the Purchaser, each underwriter of such
Eligible Securities and each other person, if any, who controls such underwriter
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which Purchaser, or any such underwriter or
controlling person, may become subject under the Securities Act or otherwise or
in any action in respect thereof, and will reimburse each such Person for any
legal or other expenses reasonably incurred by him or it in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Eligible Securities were registered
under the Securities Act pursuant to SECTION 4.4, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that the Company shall not
be liable to Purchaser or any such underwriter or controlling person, in any
such case if and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in conformity with information furnished by
Purchaser or any such underwriter or controlling person, in writing specifically
for use in such registration statement or prospectus.
(b) Purchaser will indemnify and hold harmless the Company, each
underwriter and each person, if any, who controls the Company or any underwriter
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each other seller of
securities registered by the registration statement covering such Eligible
Securities and each person, if any, who controls such seller, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or any such officer, director, underwriter, other seller or controlling person
may become subject under the Securities Act or otherwise, and shall reimburse
the Company and each such officer, director, underwriter, other seller and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
action in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of material fact, or omission or alleged omission of a
material fact required to be stated therein, made in reliance upon and in
conformity with information pertaining to Purchaser furnished in writing to the
Company by Purchaser specifically for use in the registration statement or
prospectus relating to such Eligible Securities. Notwithstanding the immediately
preceding sentence, the aggregate liability of Purchaser hereunder shall not in
any event exceed the net proceeds received by Purchaser from the sale of
Eligible Securities covered by such registration statement.
(c) The reimbursements required by this SECTION 7.2 shall be made by
periodic payment during the course of the investigation or defense, as and when
bills are received and expenses incurred.
(d) The indemnification provided for under this SECTION 7.2 shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director, employee, agent, or
controlling person of such indemnified party and shall survive the transfer of
securities.
16
7.3 NOTIFICATION. Each indemnified party under this ARTICLE VII shall,
promptly (and in any event within 20 days) after the receipt of notice of the
commencement of any action or other proceeding against such indemnified party in
respect of which indemnity may be sought from the Company under this ARTICLE
VII, notify the Company in writing of the commencement thereof. The failure of
any indemnified party so to notify the Company of any such action shall not
relieve the Company from any liability that it may have to such indemnified
party pursuant to this ARTICLE VII, except to the extent that such failure
causes material prejudice to the Company. In case any such action or other
proceeding shall be brought against any indemnified party and it shall notify
the Company of the commencement thereof, the Company shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, that any indemnified party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
in any action or proceeding in which both the Company and an indemnified party
is, or is reasonably likely to become, a party, such indemnified party shall
have the right to employ separate counsel at the Company's expense and to
control its own defense of such action or proceeding if, in the reasonable
written opinion of counsel to such indemnified party (obtained at the expense of
the Company), (a) there are or may be legal defenses available to such
indemnified party or to other indemnified parties that are different from or
additional to those available to the Company or (b) any conflict or potential
conflict exists between the Company and such indemnified party that would make
such separate representation advisable; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this ARTICLE VII
for more than one firm of attorneys in addition to the firm of attorneys
representing the Company in any jurisdiction in any one legal action or group of
related legal actions. The Company shall not, without the consent of the
indemnified party (which consent shall not be unreasonably withheld), consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or that requires action other than the payment of money by the
Company. The rights accorded to indemnified parties hereunder shall be in
addition to any rights that any indemnified party may have at common law, by
separate agreement or otherwise.
7.4 PAYMENT. No indemnifying party shall be liable for any amounts paid in
a settlement effected without the consent of such indemnifying party, which
consent shall not be unreasonably withheld or delayed. No indemnifying party
shall, without the indemnified party's prior written consent, consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the plaintiff to the indemnified party
of a release from all liability in respect of such claim or litigation.
7.5 SURVIVAL OF PROVISIONS OF ARTICLE VII. The obligations of the Company
under this ARTICLE VII shall survive indefinitely.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES. The Company agrees to pay, and save Purchaser harmless
against liability for the payment of, all reasonable out-of-pocket expenses
arising in connection with:
17
(a) the negotiation and execution of the Transaction Documents and
the issuance of the Securities, including all taxes (including any
intangible personal property tax, together in each case with interest and
penalties, if any, and also including any filing fees payable to any
governmental authority, and any income tax payable by any Purchaser in
respect of any reimbursement for any such tax or fee) that may be payable
in respect of the execution and delivery of the Transaction Documents or
the issuance, delivery or acquisition (but not the holding, ownership or
transfer) of any of the Securities issued pursuant to this Agreement or any
Common Stock issuable upon exercise of the Common Stock Warrants;
(b) the reasonable fees and expenses of Purchaser's special counsel,
if any, in connection with execution of, and any subsequent modification
of, the Transaction Documents or any consent with respect thereto
(including any proposed modification or consent, whether or not finalized);
and
(c) the cost and expenses, including reasonable attorney's fees,
incurred by Purchaser in enforcing any of its rights hereunder, including,
without limitation, costs and expenses incurred in any bankruptcy case.
The obligations of the Company under this SECTION 8.1 shall survive the transfer
of any Securities by Purchaser.
8.2 RESTRICTIVE LEGENDS. The Securities shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS AND NEITHER THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY
AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A STOCK TRADING
AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE COMPANY.
Said legends shall be removed by the Company, upon the request of the Purchaser,
at such time as the restrictions on the transfer of the applicable security
under applicable securities laws and the obligations imposed on the Purchaser
under the Stock Trading Agreement shall have terminated.
18
8.3 CONSENT TO AMENDMENTS. This Agreement may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
of Purchaser to such amendment, action or omission to act.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES. All
representations, warranties, covenants and agreements contained herein or made
in writing by the Company in connection herewith shall survive the execution,
delivery and performance of this Agreement and the Ancillary Agreements,
regardless of any investigation made by the Purchaser or on the Purchaser's
behalf.
8.5 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
8.6 NOTICES. All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by certified mail, return receipt requested or (c) when
received by the addressee, if sent by Express Mail, Federal Express or other
reputable express delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate as to itself by notice
to the other parties):
(i) If to the Company, to: 0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, XX 00000
Fax No. 000-000-0000
Attention: Treasurer
(ii) If to Purchaser: at the address set forth on SCHEDULE I.
8.7 ACCOUNTING TERMS. Unless otherwise set forth herein, all accounting
terms and provisions in this Agreement or any Ancillary Agreement shall be
construed to be as determined in accordance with generally accepted accounting
principles in the United States then in effect.
8.8 GOVERNING LAW. Except as to matters governed by the General
Corporation Law of the State of Delaware and decisions thereunder of the
Delaware courts applicable to Delaware corporations, which shall be governed by
such laws and decisions, this Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Illinois. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement is sought.
8.9 HEADINGS. The descriptive headings of the several paragraphs of this
Agreement and the table of contents are inserted for convenience only and do not
constitute a part of this Agreement.
8.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be deemed but one and the same instrument and
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart for each of the parties hereto. Delivery by facsimile by any
19
of the parties hereto of an executed counterpart of this Agreement shall be
effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
8.11 NON-BUSINESS DAYS. If the date for making any payment or the last date
for performance of any act or the exercising of any right, as provided in this
Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day, with the same
force and effect as if done on the nominal date provided in this Agreement.
8.12 FURTHER ASSURANCES. The Company shall from time to time and at all
times hereafter make, do, execute or cause or procure to be made, done and
executed such further acts, deeds, conveyances, consents and assurances, without
further consideration, that may reasonably be required to effect the
transactions contemplated by this Agreement or any Ancillary Agreement.
8.13 INTEGRATION. This Agreement and the Ancillary Agreements, together
with the exhibits hereto and thereto, embody the entire agreement by and among
the parties hereto with respect to the matters set forth herein and supersede
any and all previous agreements, whether oral or written, on the same subject
matter.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
20
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the day and year first above written.
COMPANY: PURCHASER:
ELECTRIC CITY CORP.,
a Delaware corporation
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxx
----------------------------- ---------------------------
Name: Xxxx Xxxxxx XXXXXXX XXXXXXX
Title: Chief Executive Officer
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
SCHEDULE I
NO. OF NO. OF
SHARES OF COMMON
COMMON STOCK TOTAL AGGREGATE
PURCHASER STOCK WARRANTS PURCHASE PRICE
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx
x/x Xxxxxxx Xxxxx & Xx. 000,000 125,974 $ 419,914
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
EXHIBIT A
LEGAL OPINION
