AMENDMENT AND EXCHANGE AGREEMENT
Exhibit 6
AMENDMENT
AND EXCHANGE AGREEMENT (the “Agreement”), dated
as of April 24, 2008, by and among
Firepond, Inc. (formerly known as FP Technology, Inc.), a Delaware corporation, with headquarters
located at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 (the ”Company”) and
(the “Investor”).
WHEREAS:
A. Pursuant to that certain Securities Purchase Agreement, dated March 29, 2006 (the “Original
CAP Purchase Agreement”), by and among the Investor (or its predecessors in interest) and certain
other investors signatory thereto (or their predecessors in interest) (the “Other Investors”, and
together with the Investor, the “Investors”) and the Company’s predecessor, AFG Enterprises USA,
Inc., the Investors acquired (i) certain Senior Secured Notes Due 2011 in the aggregate principal
amount of $50,000,000 (the “Original CAP Notes”) issued under an Indenture with The Bank of New
York, as Trustee, dated March 29, 2006 (the “Original CAP Indenture”); and (ii) certain warrants
(the “Original CAP Warrants”) to purchase shares of the Company’s common stock, par value $.001 per
share (the “Common Stock”).
B. Pursuant to that certain Master Exchange Agreement, dated as of January 24, 2007 (the “CAP
Exchange Agreement”), by and among each of the Investors (or their predecessors in interest) and
the Company, the Investors exchanged all of the Original CAP Notes and Original CAP Warrants in the
aggregate for (i) $45,000,000 in cash plus certain accrued interest on the Original CAP Notes, (ii)
certain Senior Secured Convertible Notes Due 2009 in an aggregate principal amount of $5,600,000
(the “Second CAP Notes”) issued under that certain Indenture with The Bank of New York, as Trustee
(the “Trustee”), dated January 24, 2007 (as amended and supplemented from time to time, the “Second
CAP Indenture”), which are convertible into shares of Common Stock (the “Second CAP Conversion
Shares”), (iii) certain warrants to purchase shares of Common Stock (the “Second CAP Warrants”, and
as exercised, the “Second CAP Warrant Shares”) and (iv) 1,500,000 additional shares of Common Stock
(the “Second CAP Common Shares”).
C. The Second CAP Notes are secured by a security interest in all of the assets of the Company
pursuant to that Security Agreement, dated January 24, 2007 (the “CAP Security Agreement”), by and
between the Company and The Bank of New York, as collateral agent (the “CAP Collateral Agent”).
D. The Company and certain of the Investors (the “Bridge Purchasers”) are parties to that
certain Securities Purchase Agreement, dated as of August 2, 2007 (the “Existing Bridge Securities
Purchase Agreement”), pursuant to which, among other things, certain Investors purchased from the
Company certain senior secured notes in an aggregate principal amount of $3,337,500 (the “Existing
Bridge Notes”).
E. The Existing Bridge Notes are secured by a security interest in substantially all of the
assets of the Company and in substantially all of the assets of certain subsidiaries of the
Company, if any (the “Future Subsidiaries”), as evidenced by (and as defined in) (i) the Security
Agreement, dated August 2, 2007 (the “Bridge Security Agreement”), by and among the Company and
Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio, in its capacity as
collateral agent (the “Bridge Collateral Agent”) for the other holders of the Existing Bridge
Notes, (ii) a pledge of the securities of any Future Subsidiaries of the Company (the “Bridge
Pledge Agreement”) and (iii) the Guaranty of each of any Future Subsidiaries. On August 2, 2007,
the Bridge Collateral Agent and the CAP Collateral Agent entered into that certain Intercreditor
and Subordination Agreement, pursuant to which the obligations under the Bridge Notes were
subordinated to the obligations under the Second CAP Indenture (the “Intercreditor Agreement”).
F. The Company, and the Investor desires to enter into this Agreement, pursuant to which,
among other things, on the Closing Date (as defined below), (i) the Second CAP Indenture, the
Existing Bridge Securities Purchase Agreement, the CAP Exchange Agreement and the Registration
Rights Agreement, dated January 24, 2007 (the “Registration Rights Agreement”), by and among the
Company and certain investors signatory thereto, shall terminate and be of no further force and
effect; (ii) the Company shall prepay interest on the Second CAP Notes held by the Investor, if
any, by paying to the Investor such cash amount set forth opposite the Investor’s name in column
(3) of the Schedule of Investors (the “Cash Interest Prepayment Amount”), which cash amount to all
the Investors, in the aggregate, shall equal $514,117.33, which amount shall represent a prepayment
of all interest due and owing under the Second CAP Notes through and including January 23, 2009;
(iii) the Company and the Investor shall exchange the Investor’s Second CAP Note, if any, in such
principal amount set forth opposite the Investor’s name in column (4) of the Schedule of Investors,
for an Amended and Restated Senior Secured Convertible Note in such principal amount set forth
opposite the Investor’s name in column (5) of the Schedule of Investors and in the form attached
hereto as Exhibit A (the “Exchanged CAP Notes”), which are convertible into shares of
Common Stock (the “Exchanged CAP Conversion Shares”), (iv) the Company and the Investor shall
exchange the Investor’s Second CAP Warrant, if any, exercisable into such number of shares of
Common Stock set forth opposite the Investor’s name in column (6) of the Schedule of Investors, for
an Amended and Restated Warrant to Purchase Common Stock exercisable into such number of shares of
Common Stock set forth opposite the Investor’s name in column (7) of the Schedule of Investors and
in the form attached hereto as Exhibit B (the “Exchanged CAP Warrants”, and as exercised,
the “Exchanged Cap Warrant Shares”), and (v) if the Investor is a Bridge Purchaser, the Company and
the Investor shall exchange the Investor’s Existing Bridge Note in such principal amount set forth
opposite the Investor’s name in column (8) of the Schedule of Investors for (x) an Amended and
Restated Senior Secured Subordinated Note in an aggregate principal amount as is set forth opposite
the Investor’s name in column (9) of the Schedule of Investors attached hereto and in the form
attached hereto as Exhibit C (the “Exchanged Bridge Notes”) and (y) such number of shares
of Common Stock as is set forth opposite the Investor’s name in column (10) of the Schedule of
Investors attached hereto (the “Exchanged Common Shares”).
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G. The exchange of (i) the Existing Bridge Notes of the Investor for the Exchanged Bridge
Notes and Exchanged Common Shares, (ii) the Second CAP Notes of the Investor for the Exchanged CAP
Notes, and (iii) the Second Cap Warrants of the Investor for the Exchanged CAP Warrants is being
made in reliance upon the exemption from registration provided by Section 3(a)(9) of the 1933 Act.
H. Concurrently herewith each of the Other Investors are also entering into agreements
identical to this Agreement (the “Other Agreements”) other than proportional changes (the
“Proportionate Changes”) (i) in the numbers reflecting the different principal amount of such Other
Investor’s Second CAP Notes and Exchanged CAP Notes, (ii) in the numbers reflecting the Cash
Interest Prepayment Amount, (iii) in the numbers reflecting the different number of shares of
Common Stock issuable upon exercise of the Second CAP Warrants and the Exchanged CAP Warrants and
(iv) if such Other Investor is a Bridge Purchaser, in the numbers reflecting the different
principal amount of such Other Investor’s Existing Bridge Notes, Exchanged Bridge Notes and
Exchanged Common Shares.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter
set forth, the Company and the Investor hereby agree as follows:
| 1. | EXCHANGE; INDENTURE; RELEASE OF LETTER OF CREDIT; WAIVER. |
(a) Exchange. Subject to satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, at the Closing:
(i) the Investor shall surrender to the Company its Second CAP Note (or such
other documentation reasonably satisfactory to the Company and the Trustee that the
Investor’s Second CAP Note has been lost or destroyed) with an aggregate principal
amount as is set forth opposite the Investor’s name in column (4) of the Schedule of
Investors attached hereto and the Company shall issue and deliver to the Investor an
Exchanged CAP Note with an aggregate principal amount as is set forth opposite the
Investor’s name in column (5) of the Schedule of Investors attached hereto.
(ii) the Investor shall surrender to the Company its Second Cap Warrant (or such
other documentation reasonably satisfactory to the Company that the Investor’s Second
Cap Warrant has been lost or destroyed) exercisable into such number of shares of
Common Stock set forth opposite the Investor’s name in column (6) of the Schedule of
Investors and the Company shall issue and deliver to the Investor an Exchanged CAP
Warrant exercisable into such number of shares of Common Stock set forth opposite the
Investor’s name in column (7) of the Schedule of Investors.
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(iii) if the Investor is a Bridge Purchaser, (x) the Investor shall surrender to
the Company its Existing Bridge Note (or such other documentation reasonably
satisfactory to the Company that the Investor’s Existing Bridge Note has been lost or
destroyed) in an aggregate principal amount as set forth opposite the Investor’s name
in column (8) on the Schedule of Investors attached hereto and the Company shall
issue and deliver to the Investor (x) an Exchanged Bridge Note with that aggregate
principal amount set forth opposite the Investor’s name in column (9) of the Schedule
of Investors attached hereto and (y) such number of Exchange Common Shares as set
forth opposite the Investor’s name in column (10) of the Schedule of Investors
attached hereto.
(b) Termination of Indenture. Subject to satisfaction (or waiver) of the
conditions to the Closing, as set forth in Sections 6 and 7 below, upon the occurrence of the
Closing, the Investor hereby consents to and approves the transactions contemplated hereby,
hereby further consents to the termination of the Second Cap Indenture, authorizes and directs
the Trustee to enter into the Termination Agreement (as defined below), dated the date hereof,
between the Company and the Trustee, and hereby agrees that the Second Cap Indenture is hereby
terminated in all respects as of the Closing.
(c) Termination of Securities Purchase Agreement. Subject to satisfaction (or
waiver) of the conditions to the Closing, as set forth in Sections 6 and 7 below, upon the
occurrence of the Closing, the Investor hereby consents to and approves the transactions
contemplated hereby, hereby further consents to the termination of the Original CAP Purchase
Agreement and hereby agrees that the Original CAP Purchase Agreement is hereby terminated in all
respects as of the Closing.
(d) Termination of Securities Purchase Agreement. Subject to satisfaction (or
waiver) of the conditions to the Closing, as set forth in Sections 6 and 7 below, upon the
occurrence of the Closing, the Investor, if the Investor is a Bridge Purchaser, hereby consents
to and approves the transactions contemplated hereby, hereby further consents to the termination
of the Existing Bridge Securities Purchase Agreement, and hereby agrees that the Existing Bridge
Securities Purchase Agreement is hereby terminated in all respects as of the Closing.
(e) Termination of Master Exchange Agreement. Subject to satisfaction (or waiver)
of the conditions to the Closing, as set forth in Sections 6 and 7 below, upon the occurrence of
the Closing, the Investor hereby consents to and approves the transactions contemplated hereby,
hereby further consents to the termination of the CAP Exchange Agreement and hereby agrees that
the CAP Exchange Agreement is hereby terminated in all respects as of the Closing.
(f) Termination of the Registration Rights Agreement. Subject to satisfaction (or
waiver) of the conditions to the Closing, as set forth in Sections 6 and 7 below, upon the
occurrence of the Closing, the Investor hereby
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consents to and approves the transactions contemplated hereby, hereby further consents to
the termination of the Registration Rights Agreement and agrees that the Registration Rights
Agreement is hereby terminated in all respects as of the Closing.
(g) Release of Letter of Credit. Subject to satisfaction (or waiver) of the
conditions to the Closing, as set forth in Sections 6 and 7 below, on the Closing Date the
Trustee will deliver to Xxxxx Fargo Bank (“WFB”) the original copy of that certain letter of
credit issued by WFB for the benefit of the Trustee (the “Letter of Credit”) and a letter from
the Trustee in the form attached hereto as Exhibit D-1, requesting the early
cancellation of the Letter of Credit, and the Company shall instruct WFB (the “WFB
Instructions”) to immediately release cash in the amount of $549,117.33 in account number
00000000 in the name of the Company with WFB (the “Account”), which as of the date hereof holds
an aggregate amount of approximately $597,000 (the “Letter of Credit Collateral”), to the
Trustee who shall then (i) wire $514,117.33 of such funds to the Investors in accordance with
the wire instructions set forth on Exhibit D-2, which amount to be wired to the Investor
shall equal the Cash Interest Prepayment Amount set forth opposite the Investor’s name in column
(3) of the Schedule of Investors; and (ii) apply the remaining $35,000.00 to the outstanding
fees and expenses of The Bank of New York. On the Closing Date, the approximately $48,000
thereafter remaining under the Letter of Credit Collateral shall be distributed by WFB in
accordance with the WFB Instructions and the Account shall be closed. Effective as of the
Closing Date, the Investor hereby (i) authorizes the Trustee to request the early cancellation
of the Letter of Credit and (ii) consents to the release of the Letter of Credit Collateral in
accordance with this Section 1(g).
(h) Waiver of Existing Defaults. Subject to satisfaction (or waiver) of the
conditions to the Closing, as set forth in Sections 6 and 7 below, upon the occurrence of the
Closing, the Investor hereby irrevocably waives and fully releases the Company from any damages
it has suffered relating to any breach, default, Default (as defined in the Second CAP
Indenture), Event of Default (as defined in the Second CAP Indenture) or Event of Default (as
defined in the Existing Bridge Notes) arising prior to the Closing Date. The Investors do not,
by this instrument, waive any provision of the Exchanged Bridge Notes or Exchanged CAP Notes.
Notwithstanding anything herein to the contrary, nothing herein shall be deemed to constitute a
waiver by the Investor of any Event of Default (as defined in the Exchanged Bridge Notes) or
Event of Default (as defined in the Exchanged CAP Notes) arising after the Closing Date.
(i) Closing Date. The date and time of the closing (the “Closing”) of the
transactions contemplated hereby (the “Closing Date”) shall be 10:00 a.m., New York Time, on
April ___, 2008, subject to notification of satisfaction (or waiver) of the conditions to the
Closing set forth in Sections 6 and 7 below (or such earlier or later date as is mutually agreed
to by the Company and the Investor). The Closing shall occur on the Closing Date at the offices
of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
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| 2. | AMENDMENTS. |
(a) CAP Security Documents. On the Closing Date, the Company and the CAP Collateral
Agent shall amend and restate the CAP Security Agreement in the form attached hereto as
Exhibit E (the “Amended CAP Security Agreement”).
(b) Bridge Security Documents. On the Closing Date, the Company and the Bridge
Collateral Agent shall amend and restate the Bridge Security Agreement in the form attached hereto
as Exhibit F(the “Amended Bridge Security Agreement”).
(c) Amended Intercreditor Agreement. On the Closing Date, the CAP Collateral Agent
and the Bridge Collateral Agent shall amend and restate the Intercreditor Agreement in the form
attached hereto as Exhibit G (the “Amended Intercreditor Agreement”, and together with the
Amended Bridge Security Agreement and any ancillary documents related thereto and the Amended CAP
Security Agreement and any ancillary documents related thereto, the “Amended Security Documents”).
| 3. | REPRESENTATIONS AND WARRANTIES |
(a) Investor Representations. The Investor hereby represents and warrants to the
Company:
(i) Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and shall constitute the
legal, valid and binding obligations of the Investor enforceable against the Investor
in accordance with its terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally,
the enforcement of applicable creditors’ rights and remedies.
(ii) No Conflicts. The execution, delivery and performance by the
Investor of this Agreement and the consummation by the Investor of the transactions
contemplated hereby will not (x) result in a violation of the organizational
documents of the Investor or (y) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Investor is a party, or (z) result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to the Investor, except in the case of
clauses (y) and (z) above, for such conflicts, defaults, rights or violations which
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of the Investor to perform its obligations
hereunder.
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(iii) No Public Sale or Distribution. The Exchanged Bridge Notes,
Exchanged CAP Notes, Exchanged CAP Warrants, Exchanged CAP Warrant Shares, Exchanged
CAP Conversion Shares and Exchanged Common Shares (the “Securities”), as applicable,
being acquired by the Investor are being acquired for the Investor’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this Agreement,
the Investor further represents that the Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities.
(iv) Accredited Investor. The Investor is an “accredited investor”
within the meaning of Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the “Securities Act”), as such rule is presently in effect, and
a “qualified institutional buyer” within the meaning of Rule 144A under the
Securities Act.
(v) Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the issuance of the Securities which have been
requested by the Investor. The Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by the Investor or its advisors, if any,
or its representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained herein. The Investor
understands that its investment in the Securities involves a high degree of risk.
The Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision in respect of its acquisition of
the Securities.
(vi) Transfer or Resale. The Investor understands that: (i) the
Securities have not been and are not being registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Investor shall have delivered
to the Company an opinion of counsel, in a form reasonably acceptable to the Company,
to the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C) such
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the Securities Act (or a successor rule thereto) (collectively,
“Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller (or
the person (as defined in Section 3(s))
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through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the Securities and Exchange
Commission (the “SEC”) thereunder; and (iii) neither the Company nor any other person
is under any obligation to register the Securities under the Securities Act or any
state securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan or financing arrangement
secured by the Securities and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor effecting a
pledge of Securities shall be required to provide the Company with any notice thereof
or otherwise make any delivery to the Company pursuant to this Agreement.
(vii) Residency. The Investor is a resident of that jurisdiction
specified in the Schedule of Investors attached hereto.
(viii) Tax Liability. The Investor has reviewed with its own tax
advisors the federal, state, local and foreign tax consequences of this investment
and the transactions contemplated by this Agreement. The Investor relies solely on
such advisors and not on any statements or representations of the Company, the
Company’s counsel, or any of the Company’s agents. The Investor understands that it
(and not the Company) shall be responsible for its own tax liability that may arise
as a result of this investment or the transactions contemplated by this Agreement.
(ix) Legends. The Investor understands that the certificates or other
instruments representing the Exchanged Cap Warrant Shares, the Exchanged Bridge Notes
and the Exchanged Common Shares, except as set forth below, shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and a stop-transfer order may be placed against
transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
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The legend set forth above shall be removed and the Company shall issue a certificate
without such legend to the holder of the Securities upon which it is stamped or issue
to such holder by electronic delivery at the applicable balance account at The
Depository Trust Company (“DTC”), if, unless otherwise required by state securities
laws, (i) such Exchanged Cap Warrant Shares, Exchanged Bridge Notes and Exchanged
Common Shares are registered for resale under the Securities Act, (ii) in connection
with a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel in a form reasonably acceptable to the Company to the effect that
such sale, assignment or transfer of the Exchanged Cap Warrant Shares, the Exchanged
Bridge Notes and the Exchanged Common Shares may be made without registration under
the applicable requirements of the Securities Act and that such legend is no longer
required, or (iii) such holder provides the Company with reasonable assurance that
the Exchanged Cap Warrant Shares, the Exchanged Bridge Notes and the Exchanged Common
Shares can be sold, assigned or transferred pursuant to Rule 144. The Company shall
be responsible for the fees of its transfer agent and all DTC fees associated with
such issuance.
(b) Company Representations. The Company hereby represents and warrants to the
Investor:
(i) Subsidiaries. The Company has no subsidiaries and does not own
directly or indirectly, any capital or other equity interest of any other entity,
other than, upon Closing, a 10% interest in CWC Holdings, LLC (“CWC”).
(ii) No Event of Default. To the knowledge of the Company, no Default
(as defined in the Second CAP Indenture), Event of Default (as defined in the Second
CAP Indenture) or Event of Default (as defined in the Existing Bridge Notes) has
occurred and is continuing as of the date hereof.
(iii) Organization and Qualification. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be expected to
have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of the
Company, taken as a whole, or
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on the transactions contemplated hereby and the other Transaction Documents or
by the agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its obligations
under the Transaction Documents.
(iv) Authorization; Enforcement; Validity. The Company has the
requisite power and authority to enter into and perform its obligations under this
Agreement, the Other Agreements, the Exchanged Cap Notes, the Exchanged Bridge Notes,
the Amended Security Documents, the Termination Agreement and each of the other
agreements entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the “Transaction Documents”) and to
issue the Securities in accordance with the terms hereof and thereof. The execution
and delivery of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, including, without
limitation, the exchange and issuance of the Exchanged Cap Notes, the Exchanged
Bridge Notes, the Exchanged CAP Warrants and the Exchanged Common Shares, and the
reservation and issuance of the Exchanged CAP Conversion Shares upon conversion of
the Exchanged CAP Notes and the Exchanged CAP Warrant Shares upon exercise of the
Exchanged CAP Warrants, have been duly authorized by the Company’s Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders. This Agreement and the other Transaction Documents
have been duly executed and delivered by the Company, and constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.
(v) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
exchange and issuance of the Exchanged Cap Notes, the Exchanged Bridge Notes, the
Exchange CAP Warrants and the Exchanged Common Shares, and the reservation and
issuance of the Exchanged CAP Conversion Shares upon conversion of the Exchanged CAP
Notes and the Exchanged CAP Warrant Shares upon exercise of the Exchanged CAP
Warrants) will not (i) result in a violation of the Certificate of Incorporation of
the Company, any capital stock of the Company or the Bylaws of the Company or
(ii) conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or (iii) result in a violation of
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any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of Pink Sheets
LLC or the OTC Bulletin Board (as applicable, the “Initial Principal Market”))
applicable to the Company or by which any property or asset of the Company is bound
or affected.
(vi) Consents. The Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other person
in order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents, in each case in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the Closing Date, and the Company and is unaware
of any facts or circumstances which might prevent the Company from obtaining or
effecting any of the registration, application or filings pursuant to the preceding
sentence. The Company is not in violation of the listing requirements of the Initial
Principal Market and has no knowledge of any facts which would reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future.
(vii) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by either Initial Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company, the Common
Stock or any of the Company’s officers or directors in their capacities as such, that
is expected to have a Material Adverse Effect.
(viii) Disclosure. To the Company’s knowledge, neither this Agreement,
the other Transaction Documents, nor any other written statements or certificates
made or delivered in connection herewith, when taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the circumstances
under which they were made.
| 4. | COVENANTS |
(a) Reasonable Best Efforts. Each party shall use its reasonable best efforts
timely to satisfy each of the covenants and the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. If required by applicable law, the Company agrees to file
a Form D in respect of the Securities and to provide a copy thereof to each Investor promptly
after such filing, if any. The Company, on or before
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the Closing Date, shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for issuance to the
Investor at the Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such qualification).
The Company shall make all filings and reports relating to the issuance of the Securities
required under applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.
(c) Pledge of Securities. The Company acknowledges and agrees that the Securities
may be pledged by the Investor in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and the Investor shall
not be required to provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document, including, without
limitation, Section 3(a)(vi) hereof. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in connection with a pledge
of the Securities to such pledgee by the Investor.
(d) Restriction on Redemption and Cash Dividends. So long as any Exchanged Bridge
Notes or Exchanged CAP Notes are outstanding, the Company shall not, directly or indirectly,
redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the
prior express written consent of the holders of Exchanged Bridge Notes and Exchanged CAP Notes
representing not less than a majority of the aggregate principal amount of the then outstanding
Exchanged Bridge Notes and Exchanged CAP Notes.
(e) Corporate Existence. So long as the Investor beneficially owns any Exchanged
Bridge Notes or Exchanged CAP Notes, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company’s assets, except upon the terms set forth
in the Exchanged Bridge Notes and the Exchanged CAP Notes.
(f) Future Guaranties and Pledges. In addition, if the Company shall hereafter
own, create or acquire any subsidiary that is not a party to a guaranty, then the Company shall
promptly notify, in writing, the Bridge Collateral Agent and the CAP Collateral Agent thereof,
and the Company shall, no later than ten (10) Trading Days (as defined in the Exchanged CAP
Notes) after such notice cause such subsidiary (A) to become a party to (i) a guaranty,
guaranteeing all the obligations of the Company hereunder, (ii) a pledge agreement, pledging all
right and interest in any collateral covered by the CAP Security Documents and the Bridge
Security Documents, as applicable, (iii) the Amended Bridge Security Agreement, as applicable,
and (iv) the Amended CAP Security Agreement, as applicable, and (B) to duly execute and/or
deliver such opinions of counsel and other documents, in form and substance reasonably
acceptable to the Bridge Collateral Agent and the CAP Collateral Agent.
-12-
(g) CAP Collateral Agent. The Investor hereby (a) reaffirms, acknowledges and
appoints The Bank of New York, a New York banking corporation, as the CAP Collateral Agent
hereunder and under the Amended CAP Security Agreement and any ancillary documents related
thereto, and (b) authorizes the CAP Collateral Agent (and its officers, directors, employees and
agents) to take such action on the Investor’s behalf in accordance with the terms hereof and
thereof. The CAP Collateral Agent shall not have, by reason hereof or the Amended CAP Security
Agreement and any ancillary documents related thereto (collectively, the “CAP Security
Documents”), a fiduciary relationship in respect of the Investor. Neither the CAP Collateral
Agent nor any of its officers, directors, employees and agents shall have any liability to the
Investor for any action taken or omitted to be taken in connection herewith or any other CAP
Security Document except to the extent caused by its own gross negligence or willful misconduct,
and the Investor agrees to defend, protect, indemnify and hold harmless the CAP Collateral Agent
and all of its officers, directors, employees and agents (collectively, the “CAP Indemnitees”)
from and against any losses, damages, liabilities, obligations, penalties, actions, judgments,
suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees,
costs and expenses) incurred by such CAP Indemnitee, whether direct, indirect or consequential,
arising from or in connection with the performance by such CAP Indemnitee of the duties and
obligations of CAP Collateral Agent pursuant hereto or any of the CAP Security Documents. The
CAP Collateral Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the holders of a majority in principal amount
of the Exchanged CAP Notes then outstanding, and such instructions shall be binding upon all
holders of Exchanged CAP Notes; provided, however, that the CAP Collateral Agent
shall not be required to take any action which, in the reasonable opinion of the CAP Collateral
Agent, exposes the CAP Collateral Agent to liability or which is contrary to this Agreement or
any other Transaction Document or applicable law. The CAP Collateral Agent shall be entitled to
rely upon any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper person, and with respect to all matters pertaining to this
Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon
advice of counsel selected by it. The Investor hereby acknowledges and agrees that the CAP
Collateral Agent shall be entitled to all of the rights, privileges and immunities set forth in
the CAP Security Agreement (including, but not limited to, the provisions of Section 9 of the
CAP Security Agreement).
(h) Successor CAP Collateral Agent.
(i) The CAP Collateral Agent may resign from the performance of all its
functions and duties hereunder and under the other CAP Security Documents at any time
by giving at least thirty (30) Business Days’ prior written notice to the Company and
each holder of Exchanged CAP Notes. Such resignation shall take effect upon the
acceptance by a
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successor CAP Collateral Agent of appointment pursuant to clauses (ii) and (iii)
below or as otherwise provided below.
(ii) Upon any such notice of resignation, the holders of two-thirds in principal
amount of the Exchanged CAP Notes then outstanding shall appoint a successor
collateral agent. Upon the acceptance of any appointment as collateral agent
hereunder by a successor agent, such successor collateral agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties of
the collateral agent, and the CAP Collateral Agent shall be discharged from its
duties and obligations under this Agreement and the other CAP Security Documents.
After the CAP Collateral Agent’s resignation hereunder as the collateral agent, the
provisions of this Section 4(h) shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the CAP Collateral Agent under this Agreement
and the other CAP Security Documents.
(iii) If a successor collateral agent shall not have been so appointed within
said thirty (30) Business Day period, the CAP Collateral Agent shall then appoint a
successor collateral agent who shall serve as the collateral agent until such time,
if any, as the holders of a majority in principal amount of the Exchanged CAP Notes
then outstanding appoint a successor collateral agent as provided above.
(i) Bridge Collateral Agent. The Investor hereby (a) reaffirms, acknowledges and
appoints Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio, as the
Bridge Collateral Agent hereunder and under the Amended Bridge Security Agreement and any
ancillary documents related thereto, and (b) authorizes the Bridge Collateral Agent (and its
officers, directors, employees and agents) to take such action on the Investor’s behalf in
accordance with the terms hereof and thereof. The Bridge Collateral Agent shall not have, by
reason hereof or the Amended Bridge Security Agreement and any ancillary documents related
thereto (collectively, the “Bridge Security Documents”), a fiduciary relationship in respect of
the Investor. Neither the Bridge Collateral Agent nor any of its officers, directors, employees
and agents shall have any liability to the Investor for any action taken or omitted to be taken
in connection herewith or any other CAP Security Document except to the extent caused by its own
gross negligence or willful misconduct, and the Investor agrees to defend, protect, indemnify
and hold harmless the Bridge Collateral Agent and all of its officers, directors, employees and
agents (collectively, the “Bridge Indemnitees”) from and against any losses, damages,
liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses
(including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such
Bridge Indemnitee, whether direct, indirect or consequential, arising from or in connection with
the performance by such Bridge Indemnitee of the duties and obligations of Bridge Collateral
Agent pursuant hereto or any of the Bridge Security Documents. The Bridge Collateral Agent
shall not be required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the holders of
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a majority in principal amount of the Exchanged Bridge Notes then outstanding, and such
instructions shall be binding upon all holders of Exchanged Bridge Notes; provided,
however, that the Bridge Collateral Agent shall not be required to take any action
which, in the reasonable opinion of the Bridge Collateral Agent, exposes the Bridge Collateral
Agent to liability or which is contrary to this Agreement or any other Transaction Document or
applicable law. The Bridge Collateral Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any telephone message believed by it in
good faith to be genuine and correct and to have been signed, sent or made by the proper person,
and with respect to all matters pertaining to this Agreement or any of the other Transaction
Documents and its duties hereunder or thereunder, upon advice of counsel selected by it. The
Investor hereby acknowledges and agrees that the Bridge Collateral Agent shall be entitled to
all of the rights, privileges and immunities set forth in the Bridge Security Agreement
(including, but not limited to, the provisions of Section 9 of the Bridge Security Agreement).
(j) Successor Bridge Collateral Agent.
(i) The Bridge Collateral Agent may resign from the performance of all its
functions and duties hereunder and under the other Bridge Security Documents at any
time by giving at least thirty (30) Business Days’ prior written notice to the
Company and each holder of Exchanged Bridge Notes. Such resignation shall take
effect upon the acceptance by a successor Bridge Collateral Agent of appointment
pursuant to clauses (ii) and (iii) below or as otherwise provided below.
(ii) Upon any such notice of resignation, the holders of two-thirds in principal
amount of the Exchanged Bridge Notes then outstanding shall appoint a successor
collateral agent. Upon the acceptance of any appointment as collateral agent
hereunder by a successor agent, such successor collateral agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties of
the collateral agent, and the Bridge Collateral Agent shall be discharged from its
duties and obligations under this Agreement and the other Bridge Security Documents.
After the Bridge Collateral Agent’s resignation hereunder as the collateral agent,
the provisions of this Section 4(j) shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Bridge Collateral Agent under
this Agreement and the other Bridge Security Documents.
(iii) If a successor collateral agent shall not have been so appointed within
said thirty (30) Business Day period, the Bridge Collateral Agent shall then appoint
a successor collateral agent who shall serve as the collateral agent until such time,
if any, as the holders of a majority in principal amount of the Exchanged Bridge
Notes then outstanding appoint a successor collateral agent as provided above.
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(k) Public Information. At any time during the period commencing on the Closing Date
and ending at such time that all of the Exchanged Common Shares, Exchanged CAP Conversion Shares
and Exchanged CAP Warrant Shares can be sold without the requirement to be in compliance with Rule
144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if a registration
statement is not available for the resale of all of the Exchanged Common Shares, Exchanged CAP
Conversion Shares and Exchanged CAP Warrant Shares and the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c)(1) (a “Public Information
Failure”) then, as partial relief for the damages to any holder of Exchanged Common Shares,
Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares by reason of any such delay in or
reduction of its ability to sell the Exchanged Common Shares, Exchanged CAP Conversion Shares and
Exchanged CAP Warrant Shares (which remedy shall not be exclusive of any other remedies available
at law or in equity), the Company shall pay to each such holder an amount in cash equal to two
percent (2.0%) of the aggregate Purchase Price of such holder’s Exchanged Common Shares, Exchanged
CAP Conversion Shares and Exchanged CAP Warrant Shares on the day of a Public Information Failure
and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until
the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such
public information is no longer required pursuant to Rule 144. The payments to which a holder
shall be entitled pursuant to this Section 4(k) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (I) the
last day of the calendar month during which such Public Information Failure Payments are incurred
and (II) the third Business Day after the event or failure giving rise to the Public Information
Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the
rate of 1.5% per month (prorated for partial months) until paid in full. For the purpose of this
Section 4(k), “Purchase Price” means, (x) with respect to the Exchanged Common Shares, $1.40 per
share (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and
other similar event with respect to each such share), (y) with respect to each Exchanged CAP
Conversion Share, the conversion price of such Exchanged CAP Conversion Share on the date the
holder of the Exchanged CAP Note delivered the Conversion Notice (as defined in the Exchanged CAP
Note) with respect to such Exchange CAP Conversion Share, and (z) with respect to each Exchanged
CAP Warrant Share, the exercise price of such Exchanged CAP Warrant Share on the date the holder of
the Exchanged CAP Warrant delivered the Exercise Notice (as defined in the Exchanged CAP Warrant)
with respect to such Exchange CAP Warrant Share.
(l) Holding Period. For the purposes of Rule 144(d), the Company acknowledges that
the holding period of the Existing Bridge Notes may be tacked onto the holding period of the
Exchanged Bridge Notes and the Exchanged Common Shares, the holding period of the Second CAP Notes
may be tacked onto the holding period of the Exchanged CAP Notes and Exchanged CAP Conversion
Shares, the holding period of the Second CAP Warrants may be tacked onto the holding period of the
Exchanged CAP Warrants and the Exchanged CAP Warrants Shares. The Company agrees not to take a
position contrary to this Section 4(l).
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| 5. | FEES AND EXPENSES |
At the Closing, the Company shall reimburse Radcliffe SPC, Ltd., for and on behalf of the
Class A Segregated Portfolio, for its legal and due diligence fees and expenses, not to exceed
$50,000.00, in connection with the preparation and negotiation of this Agreement and the related
documents by paying such amount to Xxxxxxx Xxxx & Xxxxx LLP (the “Investor Counsel Expense”).
Except as otherwise set forth in this Agreement, each party (other than the Trustee and the CAP
Collateral Agent) shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all
stamp and other non-income taxes and duties levied in connection with the issuance of the
Securities.
| 6. | CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER. |
The obligations of the Company to the Investor hereunder are subject to the satisfaction of
each of the following conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in its sole discretion by providing the Investor with
prior written notice thereof:
(a) The Investor shall have executed this Agreement and delivered the same to the
Company.
(b) Each Other Investor shall have executed the Other Agreements and delivered the
same to the Company.
(c) The Investor and each Other Investor shall have delivered to the Company its
Second CAP Note being exchanged at the Closing or such other documentation reasonably
satisfactory to the Company and the Trustee that the Investor’s Second CAP Note has been
lost or destroyed.
(d) The Investor and each Other Investor shall have delivered to the Company its
Second Cap Warrant being exchanged at the Closing or such other documentation reasonably
satisfactory to the Company that the Investor’s Second CAP Warrant has been lost or
destroyed.
(e) Any Investor that is a Bridge Purchaser shall have delivered to the Company its
Existing Bridge Note being exchanged at the Closing or such other documentation reasonably
satisfactory to the Company that the Investor’s Existing Bridge Note has been lost or
destroyed.
(f) The representations and warranties of the Investors in Section 3(a) hereof
shall be true and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which shall be
true and correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for
-17-
representations and warranties that speak as of a specific date, which shall be true
and correct as of such specified date).
(g) The CAP Collateral Agent shall have executed and delivered to the Company a copy
of the Amended and Restated CAP Security Agreement and Amended and Restated Intercreditor
Agreement.
(h) The Bridge Collateral Agent shall have executed and delivered to the Company a
copy of the Amended and Restated Bridge Security Agreement and Amended and Restated
Intercreditor Agreement.
(i) The Trustee shall have executed and delivered to the Company the Termination
Agreement, in the form attached hereto as Exhibit H (the “Termination Agreement”).
| 7. | CONDITIONS TO THE INVESTOR’S OBLIGATIONS HEREUNDER. |
The obligations of the Investor hereunder are subject to the satisfaction of each of the
following conditions, provided that these conditions are for the Investor’s sole benefit and may be
waived by the Investor at any time in its sole discretion by providing the Company with prior
written notice thereof:
(a) The Company shall have duly executed and delivered to the Investor (i) this
Agreement, (ii) the Amended Security Documents, (iii) the Exchanged CAP Notes, (iv) the
Exchanged Cap Warrants, and (v) if the Investor is a Bridge Purchaser, the Exchanged Bridge
Notes (as set forth on the Schedule of Investors attached hereto) being issued to the
Investor at the Closing pursuant to this Agreement.
(b) The Company shall have duly executed and delivered to the Investor, if a Bridge
Purchaser, the Exchanged Common Shares in accordance with the instructions set forth
opposite the Investor’s name in column (11) of the Schedule of Investors.
(c) Each of the Other Investors shall have (i) executed the Other Agreements, (ii)
satisfied or waived all conditions to the closings contemplated by such agreements, (iii)
surrendered such principal amount of their Second CAP Notes being exchanged at the Closing
or such other documentation reasonably satisfactory to the Company and the Trustee that
such Other Investor’s Second CAP Note has been lost or destroyed and (iv) if such Other
Investors are Bridge Investors, surrendered such principal amount of their Existing Bridge
Notes being exchanged at the Closing or such other documentation reasonably satisfactory to
the Company that such Other Purchaser’s Existing Bridge Note has been lost or destroyed.
-18-
(d) The Investors shall have received the opinion of Vorys, Xxxxx, Xxxxxxx and Xxxxx
LLP, the Company’s counsel, dated as of the Closing Date, in substantially the form of
Exhibit I attached hereto.
(e) The Trustee shall have executed and delivered to the Investor a copy of the letter
in the form of Exhibit D-1 attached hereto and the Termination Agreement in the
form of Exhibit H attached hereto.
(f) The CAP Collateral Agent shall have executed and delivered to the Investors a copy
of the Amended CAP Security Agreement and Amended Intercreditor Agreement.
(g) The Bridge Collateral Agent shall have executed and delivered to the Investors a
copy of the Amended Bridge Security Agreement and Amended Intercreditor Agreement.
(h) The Company shall have delivered to the Investors a certificate evidencing the
formation and good standing of the Company issued by the Secretary of State of the State of
Delaware, as of a date within seven (7) days of the Closing Date.
(i) The Company shall have delivered to the Investors a certificate evidencing the
Company’s qualification as a foreign corporation and good standing issued by the Secretary
of State (or comparable office) of each jurisdiction in which the Company is qualified to
do business as a foreign corporation, as of a date within three (3) days of the Closing
Date.
(j) The Company shall have delivered to the Investors a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the State of
Delaware (or a fax or pdf copy of such certificate) within ten (10) days of the Closing
Date.
(k) The Company shall have delivered to the Investors a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions
consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form
reasonably acceptable to the Investor, (ii) the Certificate of Incorporation, in the form
attached hereto as Exhibit J, and (iii) the Bylaws, in the form attached hereto as
Exhibit K, each as in effect at the Closing,.
(l) The representations and warranties of the Company in Section 3(b) shall be
true and correct in all material respects (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants and
conditions
-19-
required by the Transaction Documents to be performed, satisfied or complied with by
the Company at or prior to the Closing Date. The Investors shall have received a
certificate, executed by the Chief Executive Officer or Chief Financial Officer of the
Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto
as Exhibit L
(m) The Company shall have delivered to the Investors a letter from the Company’s
transfer agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.
(n) The Common Stock (I) shall be designated for quotation or listed on the OTC
Bulletin Board (the “Principal Market”) and (II) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor,
except as set forth in the Company’s filings with the SEC, shall suspension by the SEC or
the Principal Market have been threatened, as of the Closing Date, either (A) in writing by
the SEC or the Principal Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market.
(o) In accordance with the terms of the Amended CAP Security Agreement, the Company
shall have delivered to the CAP Collateral Agent (i) certificates representing the
Company’s subsidiaries’ shares of capital stock to the extent such subsidiary is a
corporation or otherwise has certificated capital stock, along with duly executed blank
stock powers, (ii) appropriate financing statements on Form UCC-I to be duly filed by the
Company in such office or offices as may be necessary or, in the opinion of the CAP
Collateral Agent, desirable to perfect the security interests purported to be created by
the Amended CAP Security Agreement.
(p) In accordance with the terms of the Amended Bridge Security Agreement, the Company
shall have delivered to the Bridge Collateral Agent appropriate financing statements on
Form UCC-I to be duly filed in such office or offices as may be necessary or, in the
opinion of the Bridge Collateral Agent, desirable to perfect the security interests
purported to be created by the Amended Bridge Security Agreement.
(q) Within two (2) Business Days prior to the Closing, the Company shall have
delivered or caused to be delivered to the Investors (i) true copies of UCC search results,
listing all effective financing statements which name as debtor the Company or any of its
subsidiaries filed in the prior five years to perfect an interest in any assets thereof,
together with copies of such financing statements, none of which, except as otherwise
agreed in writing by the Investor, shall cover any of the Collateral (as defined in the
Amended Security Documents) and the results of searches for any tax lien and judgment lien
filed against such person or its property, which results, except as otherwise agreed to in
writing by the Investors and except with respect to any Permitted Liens (as defined in the
-00-
Xxxxxxxxx Xxxxxx Notes and the Exchanged CAP Notes) shall not show any such Liens (as
defined in the Exchanged Bridge Notes and the Exchanged CAP Notes).
(r) On or prior to the Closing Date, (i) FP Tech Holdings, LLC (“FP Tech”) shall have
entered into an agreement to convert into shares of Common Stock at a conversion price of
$1.40 per share all amounts outstanding, including, without limitation, any principal and
interest, pursuant to (x) $336,000 in aggregate principal amount of Second CAP Notes held
by FP Tech and (y) that certain equipment financing agreement, dated February 11, 2008, by
and between the Company and FP Tech (which amount, including all principal and interest
accrued thereon, equals $101,444.51 as of April 17, 2008, and accrues interest at the rate
of $22.22 per day); and (ii) FP Tech shall have entered into an agreement to purchase
1,071,429 shares of Common Stock from the Company at a price of $1.40 per share in cash, in
each case, pursuant to agreements reasonably satisfactory to the holders of a majority of
the Exchanged CAP Notes.
(s) On or prior to the Closing Date, the Company will enter into a transaction,
pursuant to an agreement reasonably satisfactory to the holders of a majority of the Second
CAP Notes, with CWC.
(t) On or prior to the Closing Date, the Company shall have appointed Xxxxx Xxxxx and
Xxxxx Xxxxxxxx to the Board of Directors of the Company.
(u) On or prior to the Closing Date, the Company shall have delivered evidence to the
Investors that any employment agreement by and between the Company and any of its executive
officers (or their affiliates) shall have been amended to make such executive officers “at
will” employees.
(v) The Company shall have delivered to the Investor such other documents relating to
the transactions contemplated by this Agreement as the Investor or its counsel may
reasonably request.
| 8. | MISCELLANEOUS. |
(a) Disclosure of Transactions and Other Material Information. On or before 8:30
a.m., New York City time, on the second Business Day following the date of this Agreement (the
“8-K Filing Time”), the Company shall file a Current Report on Form 8-K describing the terms of
the transactions contemplated hereby (including, without limitation, the transactions referenced
in Section 7(r) and (s) above) in the form required by the Securities and Exchange Act of 1934,
as amended (the “1934 Act”), and attaching the material transaction documents that have not
previously been filed with the SEC by the Company (including, without limitation, this
Agreement, the Amended Security Documents, the Termination Agreement and the form of the
Exchanged CAP Notes, Exchanged CAP Warrants and Exchanged Bridge Notes) as exhibits to such
filing (including all attachments, the “8-K Filing”). From and after the filing of the 8-K
Filing with the SEC, the Investor shall
-21-
not be in possession of any material, nonpublic information received from the Company, any
of its subsidiaries or any of its respective officers, directors, employees or agents that is
not disclosed in the 8-K Filing. The Company shall not, and shall cause each of its
subsidiaries and its and each of their respective officers, directors, employees and agents, not
to, provide the Investors with any material, nonpublic information regarding the Company or any
of its subsidiaries from and after the filing of the 8-K Filing with the SEC without the express
written consent of the Investors. In the event of a breach of the foregoing covenant by the
Company, any of its subsidiaries, or any of its or their respective officers, directors,
employees and agents, in addition to any other remedy provided herein or in the Transaction
Documents, the Investors shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its subsidiaries, or any of its or their respective
officers, directors, employees or agents. The Investors shall not have any liability to the
Company, its subsidiaries, or any of its or their respective officers, directors, employees,
stockholders or agents for any such disclosure. Subject to the foregoing, neither the Company
nor the Investors shall issue any press releases or any other public statements in respect of
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Investors, to make any press release or other
public disclosure in respect of such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations
(provided that in the case of clause (i) the Investor shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its release).
Without the prior written consent of the Investor and other than as required by applicable law,
including the 1934 Act and the 8-K Filing, neither the Company, its subsidiaries or anyone
acting on their behalf shall disclose the name of the Investor in any filing, amendment or
otherwise.
(b) Proposed Financing. On or prior to January 1, 2009, the Company shall have
engaged an investment banking firm reasonably acceptable to (i) the Investors holding Exchanged
CAP Notes representing a majority of the aggregate outstanding principal amount of the Exchanged
CAP Notes; (ii) the Investors holding Exchanged Bridge Notes representing a majority of the
aggregate outstanding principal amount of the Exchanged Bridge Notes; and (iii) FP Tech, with
respect to a proposed financing of debt or equity of the Company with net proceeds in an amount
that is adequate to pay off in full the Exchanged Bridge Notes and the Exchanged CAP Notes to be
consummated prior to June 30, 2009.
(c) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of
any dispute
-22-
hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(d) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.
(e) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
(f) Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the
provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended
to apply to the broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the remaining provisions of
this Agreement so long as this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the prohibited, invalid or
unenforceable provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).
(g) No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto, the Trustee, the CAP Collateral Agent and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
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(h) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(i) Indemnification. In consideration of the Investor’s execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless the Investor and each other holder of the Securities and all of
their stockholders, partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of,
or relating to (x) any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (y) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby or (z) any cause of action, suit or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative action brought on
behalf of the Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities,
or (iii) the status of the Investor or holder of the Securities as an investor in the Company.
To the extent that the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(j) No Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
(k) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
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(l) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one Business Day after deposit with an
overnight courier service, in each case properly addressed to the party to receive the same.
The addresses and facsimile numbers for such communications shall be:
If to the Company:
Firepond, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: 000 000 0000 x 0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxx, CEO
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: 000 000 0000 x 0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxx, CEO
with a copy (for informational purposes only) to:
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
2100 One Cleveland Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
2100 One Cleveland Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
If to the Transfer Agent:
Corporate Stock Transfer
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxx
If to an Investor, to its address and facsimile number set forth on the Schedule of Investors,
with copies to the Investor’s representatives as set forth on the Schedule of Investors
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with a copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party five (5) days prior
to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.
(m) Remedies. The Investor shall have all rights and remedies set forth in this
Agreement and all of the rights which the Investor has under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights granted by law.
Furthermore, the Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under this Agreement, any remedy at law may prove to be
inadequate relief to the Investor. The Company therefore agrees that the Investor shall be
entitled to seek temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages and without posting a bond or other security.
(n) Independent Nature of Investor’s Obligations and Rights. The obligations of
the Investor under this Agreement are several and not joint with the obligations of any Other
Investor, and the Investor shall not be responsible in any way for the performance of the
obligations of any Other Investor. Nothing contained herein, and no action taken by the
Investor pursuant hereto, shall be deemed to constitute the Investor and the Other Investors as
a partnership, an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group with respect to
such obligations or the transactions contemplated by this Agreement and the Company acknowledges
that the Investors are not acting in concert or as a group with respect to such obligations or
the transactions contemplated by this Agreement. The Company and the Investor confirms that the
Investor has independently participated in the negotiation of the transactions contemplated
hereby with the advice of its own counsel and advisors. The Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the rights arising
out of this Agreement, and it shall not be
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necessary for any Other Investor to be joined as an additional party in any proceeding for
such purpose.
(o) Most Favored Nation. The Company hereby represents and warrants as of the date
hereof and covenants and agrees from and after the date hereof that none of the terms offered to
any person with respect to any amendment, settlement or waiver (each a “Settlement Document”)
relating to the terms, conditions and transactions contemplated hereby, is or will be more
favorable to such person than those of the Investor and this Agreement shall be, without any
further action by the Investor or the Company, deemed amended and modified in an economically and
legally equivalent manner such that the Investor shall receive the benefit of the more favorable
terms contained in such Settlement Document. Notwithstanding the foregoing, the Company agrees,
at its expense, to take such other actions (such as entering into amendments to the Transaction
Documents) as the Investor may reasonably request to further effectuate the foregoing.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page
to this Amendment and Exchange Agreement to be duly executed as of the date first written above.
| COMPANY: | ||||||
| FIREPOND, INC. | ||||||
| By: | ||||||
| Title: | ||||||
[Signature Page to Amendment and Exchange Agreement]
IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page
to this Amendment and Exchange Agreement to be duly executed as of the date first written above.
| INVESTOR: | ||||||
| (Name of Investor as it should appear on Securities) | ||||||
| By: | ||||||
| By: | ||||||
| Title: | ||||||
