SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 22,
2006, is made by and among Eagle Bulk Shipping Inc., a Xxxxxxxx Islands
corporation with headquarters located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
(the "Company"), and the investors listed on the Schedule of Investors attached
hereto as Exhibit A (individually, an "Investor" and collectively, the
"Investors").
WHEREAS:
The Company and each Investor is executing and delivering this Agreement in
reliance upon the exemption from registration of securities afforded by Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule
506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "Commission") under the Securities Act.
Each Investor, severally and not jointly, wishes to purchase, and the
Company wishes to issue and sell, upon the terms and conditions stated in this
Agreement, that aggregate number of shares of the Common Stock, par value $0.01
per share, of the Company (the "Common Stock"), set forth opposite such
Investor's name in column two (2) on the Schedule of Investors in Exhibit A
(which aggregate amount for all Investors together shall be 2,750,000 shares of
Common Stock and shall collectively be referred to herein as the "Common
Shares").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors, hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"Advice" has the meaning set forth in Section 6.6.
"Affiliate" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act.
"Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.
"Closing" means the closing of the purchase and sale of the Common Shares
pursuant to Section 2.1.
"Closing Date" means the date and time of the Closing and shall be
10:00 a.m., New York City Time, on three business days after the agreement date,
2006 (or such other date and time as is mutually agreed to by the Company and
each Investor).
"Company Counsel" means Xxxxxx & Xxxxxx LLP, counsel to the Company.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means an aggregate of 2,750,000 shares of Common Stock,
which are being issued and sold by the Company to the Investors at the Closing.
"Common Stock" means the common stock of the Company, par value $0.01 per
share.
"Damages Accrual Period" has the meaning set forth in Section 6.1(d).
"Disclosure Materials" has the meaning set forth in Section 3.1(g).
"Disposition" has the meaning set forth in Section 6.2(i).
"Effective Date" means the date that the Registration Statement is first
declared effective by the Commission.
"Effectiveness Period" has the meaning set forth in Section 6.1(b).
"Eligible Market" means any of the New York Stock Exchange, the American
Stock Exchange or the NASDAQ National Market.
"Event" has the meaning set forth in Section 6.1(d).
"Event Payments" has the meaning set forth in Section 6.1(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Investors" means UBS Securities LLC and its Affiliates.
"Filing Date" means 30 days after the closing date which is three business
days after the date of this Agreement.
"Indemnified Party" has the meaning set forth in Section 6.5(c).
"Indemnifying Party" has the meaning set forth in Section 6.5(c).
"Intellectual Property Rights" has the meaning set forth in Section 3.1(t).
"Investor Party" has the meaning set forth in Section 6.5(a).
"Lien" means any mortgage, lien, charge, security interest, encumbrance,
right of first refusal or other restriction.
"Losses" means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, costs of preparation and
reasonable attorneys' fees.
"Material Adverse Effect" means (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries, taken as a whole on a consolidated basis, or (iii) a material and
adverse impairment of the Company's ability to perform fully on a timely basis
its obligations under any of the Transaction Documents.
"Material Permits" has the meaning set forth in Section 3.1(v).
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock.
"Person" means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, or joint stock company.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened in writing.
"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus including post effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Common Shares" means any Common Shares issued or issuable
pursuant to the Transaction Documents, together with any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing.
"Registration Statement" means each registration statement required to be
filed under Article VI, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
"Required Effectiveness Date" means the date that is 120 days after the
Closing Date, provided however, that if the Commission advises the Company that
it will not review the Registration Statement the Required Effectiveness Date
shall be the date that is 90 days after the Closing Date.
"Rule 144," "Rule 415," and "Rule 424" means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the Securities
Act, as such Rules may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
"SEC Reports" has the meaning set forth in Section 3.1(g).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock.
"Short Sales" has the meaning set forth in Section 3.2(j).
"Subsidiary" means any Person in which the Company, directly or indirectly,
owns capital stock or holds an equity or similar interest.
"Trading Day" means (a) any day on which the Common Stock is listed or
quoted and traded on its primary Trading Market, (b) if the Common Stock is not
then listed or quoted and traded on any Eligible Market, then a day on which
trading occurs on the NASDAQ National Market (or any successor thereto), or (c)
if trading ceases to occur on the NASDAQ National Market (or any successor
thereto), any Business Day.
"Trading Market" means the Nasdaq National Market or any other Eligible
Market, or any national securities exchange, market or trading or quotation
facility on which the Common Stock is then listed or quoted.
"Transaction Documents" means this Agreement, the schedules and exhibits
attached hereto and the Transfer Agent Instructions.
"Transfer Agent" means Computershare Trust Company, Inc., or any successor
transfer agent for the Company.
"Transfer Agent Instructions" means, with respect to the Company, the
Irrevocable Transfer Agent Instructions, in the form of Exhibit D, executed by
the Company and delivered to and acknowledged in writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Investor, and
each Investor shall, severally and not jointly, purchase from the Company, such
number of Common Shares set forth opposite such Investor's name on Exhibit A
hereto under the heading "Common Shares." The date and time of the Closing and
shall be 10:00 a.m., New York City Time, on the Closing Date. The Closing shall
take place at the offices of Company Counsel.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered
to each Investor the following:
(i) one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing such number of Common Shares equal to the
number of Shares set forth opposite such Investor's name on Exhibit A
hereto under the heading "Common Shares," registered in the name of
such Investor;
(ii) a legal opinion of Company Counsel, in agreed form, executed
by such counsel and delivered to the Investors;
(iii) duly executed Transfer Agent Instructions acknowledged by
the Transfer Agent; and
(iv) Each of the parties listed on Schedule 2.2(iv) shall have
executed a Lock-Up Agreement in substantially the form attached hereto
as Exhibit E (the "Lock-Up Agreement").
(b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the purchase price set forth opposite such
Investor's name on Exhibit A hereto under the heading "Purchase Price" in
United States dollars and in immediately available funds, by wire transfer
to an account designated in writing to such Investor by the Company for
such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors as follows (which representations and
warranties shall be deemed to apply, where appropriate, to each Subsidiary of
the Company):
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a) hereto. Except as disclosed in
Schedule 3.1(a) hereto, the Company owns, directly or indirectly, all of
the capital stock or comparable equity interests of each Subsidiary free
and clear of any Lien and all the issued and outstanding membership
interests or comparable equity interest of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and
similar rights.
(b) Organization and Qualification. Each of the Company and the
Subsidiary is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite legal authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
bylaws, operating agreement or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to do business
and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate have a Material Adverse Effect.
(c) Authorization; Enforcement. The Company has the requisite
corporate authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents to which it is
a party by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each
of the Transaction Documents to which it is a party has been (or upon
delivery will be) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute, the valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to
or affecting the enforcement of creditors rights generally, and (ii) the
effect of rules of law governing the availability of specific performance
and other equitable remedies.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby do not, and will not, (i) conflict with or violate any provision of
the Company's or any Subsidiary's certificate or articles of incorporation,
bylaws, operating agreement or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that 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 (with or
without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is
a party or by which any property or asset of the Company or any Subsidiary
is bound, or affected, except to the extent that such conflict, default,
termination, amendment, acceleration or cancellation right could not
reasonably be expected to have a Material Adverse Effect, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company or a Subsidiary
is bound or affected, except to the extent that such violation could not
reasonably be expected to have a Material Adverse Effect.
(e) Issuance of the Securities. The Common Shares are duly authorized
and, when issued and paid for in accordance with the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and
clear of all Liens and shall not be subject to preemptive or similar rights
of stockholders.
(f) Capitalization. The aggregate number of shares and type of all
authorized, issued and outstanding classes of capital stock, options and
other securities of the Company (whether or not presently convertible into
or exercisable or exchangeable for shares of capital stock of the Company)
is set forth in Schedule 3.1(f) hereto. All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance with all applicable securities laws. Except
as disclosed in Schedule 3.1(f) hereto, the Company has not issued any
other options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or
entered into any agreement giving any Person any right to subscribe for or
acquire, any shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as set forth on Schedule
3.1(f) hereto, and except for customary adjustments as a result of stock
dividends, stock splits, combinations of shares, reorganizations,
recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement of the Company providing rights
to security holders) and the issuance and sale of the Common Shares will
not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Investors) and will not result in
a right of any holder of securities to adjust the exercise, conversion,
exchange or reset price under such securities. To the knowledge of the
Company, except as specifically disclosed in SEC Reports or in Schedule
3.1(f) hereto, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common Stock.
(g) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding
the date hereof (the foregoing materials (together with any materials filed
by the Company under the Exchange Act, whether or not required) being
collectively referred to herein as the "SEC Reports" and, together with
this Agreement and the Schedules to this Agreement, the "Disclosure
Materials") on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. The Company has made available to the Investors or
their respective representatives true, correct and complete copies of the
SEC Documents not available on the XXXXX system. As of their respective
dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments.
(h) Material Changes. Except as set forth in Schedule 3.1(h), since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has
been no event, occurrence or development that, individually or in the
aggregate, has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any material
liabilities other than (A) trade payables and accrued expenses incurred in
the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made
with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, except as disclosed in its SEC
Reports, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders, in their
capacities as such, or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (except for repurchases
by the Company of shares of capital stock held by employees, officers,
directors, or consultants pursuant to an option of the Company to
repurchase such shares upon the termination of employment or services), and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock-based
plans.
(i) Absence of Litigation. Except as disclosed in the Company's SEC
Reports, there is no action, suit, claim, or proceeding, or, to the
Company's knowledge, inquiry or investigation, before or by 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 or any of its Subsidiaries that could, individually
or in the aggregate, have a Material Adverse Effect.
(j) Compliance. Neither the Company nor any Subsidiary, except in each
case as could not, individually or in the aggregate, reasonably be expected
to have or result in a Material Adverse Effect, (i) is in default under or
in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary
received written notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority.
(k) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to
the business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for Liens that do not, individually or in the
aggregate, materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in material compliance.
(l) Placement Agent's Fees. Except as described in Schedule 3.1(l), no
brokerage or finder's fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement. The Investors shall have no
obligation with respect to any such fees or with respect to any claims
(other than such fees or commissions owed by an Investor pursuant to
agreements executed by or on behalf of such Investor which fees or
commissions shall be the sole responsibility of such Investor) made by or
on behalf of other Persons for fees of the type contemplated in this
Section that may be due in connection with the transactions contemplated by
this Agreement.
(m) Private Placement. Neither the Company nor, any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to
buy the Common Shares by means of any form of general solicitation or
advertising. Neither the Company nor any of its Affiliates, nor any Person
acting on the Company's behalf, has directly or indirectly, at any time
made any offer or sale of any security or solicitation of any offer to buy
any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities
Act in connection with the offer and sale by the Company of the Common
Shares as contemplated hereby or (ii) cause the offering of the Common
Shares pursuant to the Transaction Documents to be integrated with prior
offerings by the Company for purposes of any applicable law, regulation or
stockholder approval provisions, including, without limitation, under the
rules and regulations of any Trading Market.
(n) No Investment Company. The Company is not required to be
registered as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(o) Listing and Maintenance Requirements. The Company has not, in the
twelve months preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is in
compliance with all such listing and maintenance requirements.
(p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority
that have not been satisfied or waived.
(q) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under
the Company's charter documents or the laws of its state of incorporation
that is or could become applicable to any of the Investors as a result of
the Investors and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without
limitation, as a result of the Company's issuance of the Common Shares and
the Investors' ownership of the Common Shares.
(r) Disclosure. Neither the Company nor any officers, directors or
Affiliates, has provided any potential Investor (other than Excluded
Investors or Investors who have executed a non-disclosure agreement or
their agents or counsel with any information that constitutes or might
constitute material, nonpublic information (other than the existence and
terms of the issuance of Common Shares, as contemplated by this Agreement).
The term "Excluded Investors" means the Placement Agent and its Affiliates.
The Company understands and confirms that each of the Investors will rely
on the foregoing representations in effecting transactions in securities of
the Company (other than Excluded Investors). All disclosures in the
Disclosure Package are true and correct in all material respects and do not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
To the Company's knowledge, no event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries
or its or their business, properties, operations or financial conditions,
which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced
or disclosed. The Company acknowledges and agrees that no Investor (other
than Excluded Investors) makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than
those specifically set forth in the Transaction Documents.
(s) Acknowledgment Regarding Investors' Purchase of Common Shares.
Based upon the assumption that the transactions contemplated by this
Agreement are consummated in all material respects in conformity with the
Transaction Documents, the Company acknowledges and agrees that each of the
Investors (other than Excluded Investors) is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that no Investor (other than Excluded Investors) is acting as
a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by any Investor (other than Excluded Investors)
or any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investors' purchase of the Common Shares. The
Company further represents to each Investor that the Company's decision to
enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.
(t) Patents and Trademarks. The Company and the Subsidiary have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other
similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have does not have a Material Adverse Effect (collectively,
the "Intellectual Property Rights"). Except as set forth in Schedule
3.1(t), neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or such
Subsidiary violates or infringes upon the rights of any Person. All such
Intellectual Property Rights are enforceable and, to the Company's
knowledge, there is no existing infringement by another Person of any of
the Intellectual Property Rights.
(u) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
and location in which the Company and the Subsidiaries are engaged. Neither
the Company nor any Subsidiary has any knowledge that it will not be able
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(v) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits does not, individually or in the aggregate,
have or result in a Material Adverse Effect ("Material Permits"), and
neither the Company nor any Subsidiary has received any written notice of
proceedings relating to the revocation or modification of any Material
Permit.
(w) Transactions With Affiliates and Employees. Except as set forth in
SEC Reports filed at least ten (10) days prior to the date of this
Agreement, none of the officers or directors and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers or directors or the grant of stock options, restricted
stock or stock pursuant to the stock-based plans described in the SEC
Reports in connection with such service), including any contract, agreement
or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to
the Company's knowledge, any entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.
(x) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Based on the evaluation of
its internal controls over financial reporting, the Company is not aware of
(A) any significant deficiency or material weakness in the design or
operation of internal controls over financial reporting that are reasonably
likely to adversely affect the Company's ability to record, process,
summarize and report financial information or (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls over financial
reporting.
(y) Xxxxxxxx-Xxxxx Act. The Company is in compliance with currently
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable
rules and regulations promulgated by the SEC thereunder.
(z) Taxes. Except as set forth on Schedule 3.1(z), the Company and its
subsidiaries each (i) has filed all necessary federal, state and foreign
income and franchise tax returns which are due, (ii) has paid all federal
state, local and foreign taxes due and payable for which it is liable and
(iii) does not have any tax deficiency or claims outstanding or assessed
or, to the best of the Company's knowledge, proposed against it that would
have a Material Adverse Effect.
(aa) Transfer Taxes. No documentary, stamp or other issuance or
transfer taxes or duties and no capital gains, income, withholding or other
taxes are payable by or on behalf of the Placement Agent or any Investor to
the Republic of the Xxxxxxxx Islands, or to any political subdivision or
taxing authority thereof or therein in connection with the sale and
delivery by the Company of the Common Shares to or for the respective
accounts of any Investor or the issuance, sale and delivery by the Company
of the Common Shares to any Investor or the initial resales of the Common
Shares by the Investors in the manner contemplated by this Agreement, the
Registration Statement and the Prospectus.
(bb) Dividends. No Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the
Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiary's property or assets to the Company or
any other Subsidiary of the Company. All dividends and other distributions
declared and payable on the shares of capital stock of the Company may,
under the current laws and regulations of the Republic of the Xxxxxxxx
Islands and any political subdivisions thereof, be paid in U.S. dollars and
may be freely transferred out of the Republic of the Xxxxxxxx Islands, and
all such dividends and other distributions will not be subject to
withholding or other taxes under the laws and regulations of the Republic
of the Xxxxxxxx Islands and are otherwise free and clear of any other tax,
withholding or deduction and without the necessity of obtaining any
consents, approvals, authorizations, orders, licenses, registrations,
clearances and qualifications of or with any court or governmental agency
or body in the Republic of the Xxxxxxxx Islands.
(cc) FCPA. Neither the Company nor any of the Subsidiaries nor any
director, officer, agent, employee or affiliate of the Company or any of
the Subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the "Foreign Corrupt Practices Act"); and the Company, the
Subsidiaries and its affiliates have conducted their businesses in
compliance with the Foreign Corrupt Practices Act.
(dd) Currency Transactions. The operations of the Company and the
Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the
money laundering statutes the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental agency to which such operations are subject
(collectively, the "Money Laundering Laws"); and no action, suit or
proceeding by or before any court or governmental agency, authority or body
or any arbitrator or non-governmental authority involving the Company or
any of the Subsidiaries with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.
(ee) OFAC. Neither the Company nor any of the Subsidiaries nor any
director, officer, agent, employee or affiliate of the Company or any of
the Subsidiaries is currently subject to any United States sanctions
administered by the Office of Foreign Assets Control of the United States
Treasury Department ("OFAC"); and the Company will not directly or
indirectly use the proceeds of this offering, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint venture
partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any United States sanctions
administered by OFAC.
(ff) Employee Matters. Neither the Company nor any of the Subsidiaries
is engaged in any unfair labor practice (as defined in the National Labor
Relations Act); except for matters which would not, individually or in the
aggregate, have a Material Adverse Effect, (i) there is (A) no unfair labor
practice complaint pending or, to the Company's knowledge after due
inquiry, threatened against the Company or any of the Subsidiaries before
the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is
pending or threatened, (B) no strike, labor dispute, slowdown or stoppage
pending or, to the Company's knowledge, threatened against the Company or
any of the Subsidiaries and (C) no union representation dispute currently
existing concerning the employees of the Company or any of the
Subsidiaries, and (ii) to the Company's knowledge, there has been no
violation of any applicable federal, state, local or foreign law relating
to discrimination in the hiring, promotion or pay of employees, any
applicable wage or hour laws or any applicable provision of the Employee
Retirement Income Security Act of 1974 or the rules and regulations
promulgated thereunder concerning the employees of the Company or any of
the Subsidiaries.
(gg) Environmental. The Company and the Subsidiaries and their
properties, assets and operations are in compliance with, and hold all
permits, authorizations and approvals required under, Environmental Laws
(as defined below), except to the extent that failure to so comply or to
hold such permits, authorizations or approvals would not, individually or
in the aggregate, have a Material Adverse Effect; except as set forth on
Schedule (gg), there are no past or present events, conditions,
circumstances, activities, practices, actions, omissions or plans that
could reasonably be expected to give rise to any material costs or
liabilities to the Company or the Subsidiaries under, or to interfere with
or prevent compliance by the Company or the Subsidiaries with,
Environmental Laws; except as would not, individually or in the aggregate,
have a Material Adverse Effect, neither the Company nor any of the
Subsidiaries (i) is the subject of any investigation, (ii) has received any
notice or claim, (iii) is a party to or affected by any pending or
threatened action, suit or proceeding, (iv) is bound by any judgment,
decree or order or (v) has entered into any agreement, in each case
relating to any alleged violation of any Environmental Law or any actual or
alleged release or threatened release or cleanup at any location of any
Hazardous Materials (as defined below) (as used herein, "Environmental Law"
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit, license,
authorization or other binding requirement or common law (including any
applicable regulations and standards adopted by the International Maritime
Organization) relating to health, safety or the protection, cleanup or
restoration of the environment or natural resources, including those
relating to the distribution, processing, generation, treatment, storage,
disposal, transportation, other handling or release or threatened release
of Hazardous Materials, and "Hazardous Materials" means any material
(including, without limitation, pollutants, contaminants, hazardous or
toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental Law).
3.2 Representations and Warranties of the Investors. Each Investor hereby,
as to itself only and for no other Investor, represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The purchase by such
Investor of the Common Shares hereunder has been duly authorized by all
necessary action on the part of such Investor. This Agreement has been duly
executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance
with its terms.
(b) No Public Sale or Distribution; Investment Intent. Such Investor
is acquiring the Common Shares in the ordinary course of business for its
own account for investment purposes only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered under the Securities Act or under an
exemption from such registration and in compliance with applicable federal
and state securities laws, and such Investor does not have a present
intention nor a present arrangement to effect any distribution of the
Common Shares to or through any person or entity; provided, however, that
by making the representations herein, such Investor does not agree to hold
any of the Common Shares for any minimum or other specific term and
reserves the right to dispose of the Common Shares at any time in
accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
(c) General Solicitation. Such Investor is not purchasing the Common
Shares as a result of any advertisement, article, notice or other
communication regarding the Common Shares published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
(d) Investor Status. At the time such Investor was offered the Common
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Such Investor is not a
member of the National Association of Securities Dealers, Inc. or the New
York Stock Exchange.
(e) Experience of Such Investor. Such Investor, either alone or
together with its representatives has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Common
Shares, and has so evaluated the merits and risks of such investment. Such
Investor is able to bear the economic risk of an investment in the Common
Shares and, at the present time, is able to afford a complete loss of such
investment.
(f) Access to Information. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded: (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Common Shares and the merits and
risks of investing in the Common Shares; (ii) access to information about
the Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by
or on behalf of such Investor or its representatives or counsel shall
modify, amend or affect such Investor's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
(g) No Governmental Review. Such Investor understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Common Shares or the fairness or suitability of the investment in the
Common Shares nor have such authorities passed upon or endorsed the merits
of the offering of the Common Shares.
(h) No Conflicts. The execution, delivery and performance by such
Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Investor 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 such Investor is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Investor,
except in the case of clauses (ii) and (iii) above, for such that are not
material and do not otherwise affect the ability of such Investor to
consummate the transactions contemplated hereby.
(i) No Legal, Tax or Investment Advice. Such Investor understands that
nothing in this Agreement or any other materials presented by or on behalf
of the Company to the Investor in connection with the purchase of the
Common Shares constitutes legal, tax or investment advice. Such Investor
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of the Common Shares. Such Investor understands that the Agent has
acted solely as the agent of the Company in this placement of the Common
Shares, and that the Agent makes no representation or warranty with regard
to the merits of this transaction or as to the accuracy of any information
such Investor may have received in connection therewith. Such Investor
acknowledges that he has not relied on any information or advice furnished
by or on behalf of the Agent.
(j) Trading in Common Stock. Since the date such Investor initially
was contacted by the Agent through the date of this Agreement, such
Investor has not entered into any purchase or sale of the Common Stock or
executed any Short Sales. For purposes of this Section, "Short Sales" means
all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, short sales, swaps (including on a total return
basis) and sales. Such Investor covenants that neither it or any Person
acting on its behalf or pursuant to any understanding with it will engage
in any transactions in the Common Stock (including Short Sales) prior to
the time that the transactions contemplated by this Agreement are publicly
disclosed.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Investors covenant that the Common Shares will only be
disposed of pursuant to an effective registration statement under, and in
compliance with the requirements of, the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities
Act, and in compliance with any applicable state securities laws. In
connection with any transfer of Common Shares other than pursuant to an
effective registration statement or to the Company, or pursuant to Rule 144
or in connection with a pledge as contemplated by Section 4.1(c) except as
otherwise set forth herein, the Company may require the transferor to
provide to the Company an opinion of counsel selected by the transferor,
the form and substance of which opinion shall be reasonably satisfactory to
the Company, to the effect that such transfer does not require registration
under the Securities Act. Notwithstanding the foregoing, the Company hereby
consents to and agrees to register on the books of the Company and with its
transfer agent, without any such legal opinion, except to the extent that
the transfer agent requests such legal opinion, any transfer of Common
Shares by an Investor to an Affiliate of such Investor, provided that the
transferee certifies to the Company that (i) is an Affiliate of the
Investor and (ii) it is an "accredited investor" as defined in Rule 501(a)
under the Securities Act, and further provided that such Affiliate does not
request any removal of any existing legends on any certificate evidencing
the Common Shares.
(b) The Investors agree to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on any certificate evidencing
Common Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
Certificates evidencing Common Shares shall not be required to contain such
legend or any other legend (i) after a Registration Statement is effective
under the Securities Act covering the resale of such Common Shares, (ii)
following any sale of such Common Shares pursuant to Rule 144, (iii) if
such Common Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including controlling judicial interpretations and pronouncements issued
by the Staff of the Commission). The Company shall cause its counsel to
issue a legal opinion to the Transfer Agent on the Effective Date.
Following the Effective Date or at such earlier time as a legend is no
longer required for certain Common Shares, the Company will no later than
three Trading Days following the delivery by an Investor to the Company or
the Transfer Agent of a legended certificate representing such Common
Shares and an opinion of counsel to the extent required by Section 4.1(a),
deliver or cause to be delivered to such Investor a certificate
representing such Common Shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section.
(c) The Company will not object to and shall permit (except
as prohibited by law) an Investor to pledge or grant a security interest
in some or all of the Common Shares in connection with a bona fide
margin agreement or other loan or financing arrangement secured by the
Common Shares, and if required under the terms of such agreement, loan
or arrangement, the Company will not object to and shall permit (except
as prohibited by law) such Investor to transfer pledged or secured
Common Shares to the pledgees or secured parties. Except as required by
law, such a pledge or transfer would not be subject to approval of the
Company, no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith, and no notice shall be required of
such pledge. Each Investor acknowledges that the Company shall not be
responsible for any pledges relating to, or the grant of any security
interest in, any of the Common Shares or for any agreement,
understanding or arrangement between any Investor and its pledgee or
secured party. At the appropriate Investor's expense, the Company will
execute and deliver such reasonable documentation as a pledgee or
secured party of Common Shares may reasonably request in connection with
a pledge or transfer of the Common Shares, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
Provided that the Company is in compliance with the terms of this
Section 4.1(c), the Company's indemnification obligations pursuant to
Section 7.1 shall not extend to any Proceeding or Losses arising out of
or related to this Section 4.1(c).
4.2 Furnishing of Information. As long as any Investor owns Common Shares
and is not eligible to dispose of such Common Shares pursuant to Rule 144(k) or
pursuant to an effective registration statement, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. Upon the reasonable request of any
Investor, the Company shall deliver to such Investor a written certification of
a duly authorized officer as to whether it has complied with the preceding
sentence. The Company further covenants that it will take such further action as
any holder of Common Shares may reasonably request to satisfy the provisions of
this Section 4.2.
4.3 Integration. The Company shall not, and shall use its reasonable best
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Common Shares in a manner that would require the
registration under the Securities Act of the sale of the Common Shares to the
Investors or that would be integrated with the offer or sale of the Common
Shares for purposes of the rules and regulations of any Trading Market.
4.4 Reservation of Common Shares. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.
4.5 Securities Laws Disclosure; Publicity. By 9:00 a.m. (Eastern Time) on
the Trading Day following the execution of this Agreement, and by 9:00 a.m.
(Eastern Time) on the Trading Day following the Closing Date, the Company shall
issue press releases disclosing the transactions contemplated hereby and the
Closing. On the Trading Day following the execution of this Agreement, the
Company will file a Current Report on Form 8-K disclosing the material terms of
the Transaction Documents (and attach as exhibits thereto the Transaction
Documents), and on the Trading Day following the Closing Date the Company will
file an additional Current Report on Form 8-K to disclose the Closing. In
addition, the Company will make such other filings and notices in the manner and
time required by the Commission and the Trading Market on which the Common Stock
is listed. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to
the extent such disclosure is required by law or Trading Market regulations.
4.6 Use of Proceeds. The Company agrees to use the net proceeds from the
sale of the Common Shares for the acquisitions of the assets described on
Schedule 4.6. Pending these uses, the Company intends to invest the net proceeds
from this offering in short-term, interest-bearing, investment-grade securities,
or as otherwise pursuant to the Company's customary investment policies.
4.7 Listing of Common Stock. The Company hereby agrees to use best efforts
to maintain the listing and trading of its Common Stock on the Nasdaq National
Market (or another nationally recognized Trading Market). The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application the Common Shares, and will
take such other action as is necessary or desirable to cause all of the Common
Shares to be listed on such other Trading Market as promptly as possible.
4.8 Form S-1 Eligibility. The Company is currently eligible to register the
resale of the Common Shares by the Investors under the incorporation by
reference format permitted by General Instruction VII of Form S-1 promulgated
under the Securities Act and expects to be eligible to register such resale on
Form S-3 commencing July 3, 2006, and the Company hereby covenants and agrees to
use its reasonable best efforts to maintain its eligibility to use this Form S-1
format (or Form S-3, as the case may be) until the Registration Statement
covering the resale of the Common Shares shall have been filed with, and
declared effective by, the Commission.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Investors. The
obligation of each Investor to acquire Common Shares at the Closing is subject
to the satisfaction or waiver by such Investor, at or before the Closing, of
each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing as though made on
and as of such date (other than those representations and warranties
qualified as to materiality which shall be true and correct in all
respects); and
(b) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by it at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(d) No Suspensions of Trading in Common Stock. Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market
(except for any suspensions of trading of not more than one Trading Day
solely to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for
trading on a Trading Market;
(e) Company Deliverables. The Company shall have delivered the
documents and instruments to be delivered by it in accordance with Section
2.2(a); and
(f) Lock-up Agreement. Each of the parties set forth on Schedule
2.2(iv) shall have executed a Lock-up Agreement for delivery to [ ], as
representative of the several Investors.
5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell the Common Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of each Investor contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made
on and as of such date; and
(b) Performance. Each Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court of governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(d) Investors Deliverables. Each Investor shall have delivered the
Purchase Price payable by it in accordance with Section 2.2(b); and
(e) Registration Statement Questionnaire. Each Investor shall have
delivered to the Company a fully completed Selling Stockholder
Questionnaire, the form of which is attached as Exhibit B-3 to this
Agreement.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Shelf Registration.
(a) As promptly as possible, and in any event on or prior to the
Filing Date, the Company shall prepare and file with the Commission a
"Shelf" Registration Statement covering the resale of all Registrable
Common Shares for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (if made
subsequent to July 3, 2006, and on Form S-1 if made prior thereto) (except
if the Company is not then eligible to register for resale the Registrable
Common Shares on Form S-3, in which case such registration shall be on
another appropriate form in accordance with the Securities Act and the
Exchange Act and as consented to by the Investors) and shall contain
(except if otherwise directed by the Investors or the Commission) the "Plan
of Distribution" attached hereto as Exhibit C.
(b) The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof, but in any event prior to
the Required Effectiveness Date, and shall use its reasonable best efforts
to keep the Registration Statement continuously effective under the
Securities Act until the earlier of the date that all Registrable Common
Shares covered by such Registration Statement have been sold or may be sold
publicly under Rule 144(k) (the "Effectiveness Period").
(c) The Company shall notify each Investor in writing promptly (and in
any event within three business days) after receiving notification from the
Commission that the Registration Statement has been declared effective.
(d) Commencing on (and including) any date on which an Event (as
defined below) has begun and ending on (but excluding) the next date on
which there is no Event (a "Damages Accrual Period"), the Company shall pay
within five business days as partial relief for the damages suffered
therefrom by the Investors (which remedy shall not be exclusive of any
other remedies available under this Agreement, at law or in equity), to
each Investor an amount in cash, as liquidated damages and not as a
penalty, accruing for each day in the Damages Accrual Period an amount
equal to 1.0% of (i) the number of Common Shares held by such Investor as
of the date of such Event, multiplied by (ii) the purchase price paid by
such Investor for such Common Shares then held, divided by 30. The payments
to which an Investor shall be entitled pursuant to this Section 6.1(d) are
referred to herein as "Event Payments", provided however, that in no event
shall the aggregate Event Payments exceed 18.0% of the aggregate purchase
price for all of Common Shares purchased pursuant to this Agreement. Any
Event Payments payable pursuant to the terms hereof shall apply on a
pro-rata basis for any portion of a month prior to the cure of an Event. In
the event the Company fails to make Event Payments in a timely manner, such
Event Payments shall bear interest at the rate of 1.0% per month (prorated
for partial months) until paid in full.
For such purposes, each of the following shall constitute an "Event":
(i) the Registration Statement is not filed on or prior to the
Filing Date; is not declared effective on or prior to the Required
Effectiveness Date; or
(ii) the aggregate duration or number of suspension periods
exceeds the number of days or number of times, as the case may be,
permitted under Section 6.1(e).
(e) Notwithstanding anything in this Agreement to the contrary, after
60 consecutive Trading Days of continuous effectiveness of the initial
Registration Statement filed and declared effective pursuant to this
Agreement, the Company may, by written notice to the Investors, suspend
sales under a Registration Statement after the Effective Date thereof
and/or require that the Investors immediately cease the sale of Common
Shares pursuant thereto and/or defer the filing of any subsequent
Registration Statement if the Company is engaged in a material merger,
acquisition or sale and the Board of Directors determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would
be materially detrimental to the Company (other than as relating solely to
the price of the Common Stock) to maintain a Registration Statement at such
time and (B) it is in the best interests of the Company (as determined by
its Board of Directors) to defer proceeding with such registration at such
time. Upon receipt of such notice, each Investor shall immediately
discontinue any sales of Registrable Common Shares pursuant to such
registration until such Investor has received copies of a supplemented or
amended Prospectus or until such Investor is advised in writing by the
Company that the then-current Prospectus may be used and has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus. In no event, however,
shall this right be exercised to suspend sales beyond the period during
which (in the good faith determination of the Company's Board of Directors)
the failure to require such suspension would be materially detrimental to
the Company. The Company's rights under this Section 6.1(e) may be
exercised for a period of no more than 20 days at a time and not more than
three times in any twelve-month period, without such suspension being
considered as part of an Event Payment determination. Immediately after the
end of any suspension period under this Section 6.1(e), the Company shall
take all necessary actions (including filing any required supplemental
prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Investors to publicly resell their
Registrable Common Shares pursuant to such effective Registration
Statement.
(f) The Company shall not, from the date hereof until the Effective
Date of the Registration Statement, prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities
except on Form S-8 to register an equity incentive plan approved by the
Company's stockholders or on a Form S-1 or Form S-3 to cover a dividend
reinvestment plan and direct stock purchase plan.
6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than two Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto, furnish to the Investors for their review copies of
such documents. The Company shall not file a Registration Statement, any
Prospectus or any amendments or supplements thereto in which the "Selling
Stockholder" section thereof differs from the disclosure received from a
Holder in its Selling Stockholder Questionnaire (as amended or
supplemented).
(b) (i) Subject to Section 6.1(e), prepare and file with the
Commission such amendments, including post-effective amendments, to each
Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective,
as to the applicable Registrable Common Shares for the Effectiveness Period
and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the Registrable Common Shares; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible, to any comments received from the
Commission with respect to the Registration Statement or any amendment
thereto; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Common Shares covered by the Registration Statement during
the applicable period in accordance with the intended methods of
disposition by the Investors thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify each Investor as promptly as reasonably possible, and (if
requested by an Investor confirm such notice in writing no later than two
Trading Days thereafter, of any of the following events: (i) the Commission
notifies the Company whether there will be a "review" of any Registration
Statement; (ii) the Commission comments in writing on any Registration
Statement; (iii) any Registration Statement or any post-effective amendment
is declared effective; (iv) the Commission or any other Federal or state
governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information
related thereto; (v) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings
for that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Common
Shares for sale in any jurisdiction, or the initiation or threat of any
Proceeding for such purpose; or (vii) the financial statements included in
any Registration Statement become ineligible for inclusion therein or any
statement made in any Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference is untrue in
any material respect or any revision to a Registration Statement,
Prospectus or other document is required so that it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(d) Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness
of any Registration Statement, or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Common Shares
for sale in any jurisdiction, as soon as possible.
(e) If requested by an Investor, provide such Investor, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(f) Promptly deliver to each Investor, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and
each amendment or supplement thereto as such Persons may reasonably
request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Investors in
connection with the offering and sale of the Registrable Common Shares
covered by such Prospectus and any amendment or supplement thereto to the
extent permitted by federal and state securities laws and regulations.
(g) (i) In the time and manner required by each Trading Market,
prepare and file with such Trading Market an additional shares listing
application, if required, covering all of the Registrable Common Shares;
(ii) take all steps necessary to cause such Registrable Common Shares to be
approved for listing on each Trading Market as soon as possible thereafter;
(iii) provide to each Investor evidence of such listing; and (iv) maintain
the listing of such Registrable Common Shares on each such Trading Market
or another Eligible Market.
(h) Prior to any public offering of Registrable Common Shares, use its
reasonable best efforts to register or qualify or cooperate with the
selling Investors in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Common Shares for offer and sale under the securities or blue sky laws of
such jurisdictions within the United States as any Investor requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective for so long as required, but not to exceed the
duration of the Effectiveness Period, and to do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Common Shares covered by a Registration
Statement; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(i) Cooperate with the Investors to facilitate the timely preparation
and delivery of certificates representing Registrable Common Shares to be
delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement and
under law, of all restrictive legends, and to enable such Registrable
Common Shares to be in such denominations and registered in such names as
any such Investors may reasonably request.
(j) Upon the occurrence of any event described in Section 6.2(c)(vii),
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration
Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
6.3 Obligations of the Investors. In connection with the registration of
the Registrable Common Shares, the Investors shall have the following
obligations:
(a) In connection with the registration of the Registrable Common
Shares, it shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Common Shares of a particular Investor (or to make any payments
or other damages to such Investor pursuant to Section 6.1 hereof) that such
Investor shall furnish to the Company the Selling Stockholder Questionnaire
set forth in Exhibit B-3 hereto within five (5) Trading Days of the
Company's written request.
(b) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
6.1(e) hereof, such Investor will immediately discontinue disposition of
Registrable Common Shares pursuant to the Registration Statement covering
the Registrable Common Shares until such Investor's receipt of the copies
of supplemented or amended prospectus contemplated by Section 6.1(e) hereof
and, if so directed by the Company, such Investor shall deliver to the
Company (at the expense of the Company) or destroy (and deliver the Company
a certificate of destruction) all copies in the Investor's possession or
under its control, of the Prospectus covering the Registrable Common Shares
current at the time of the receipt of such notice.
6.4 Registration Expenses. The Company shall pay all fees and expenses
incident to the performance of or compliance with Article VI of this Agreement
by the Company, including without limitation (a) all registration and filing
fees and expenses, including without limitation those related to filings with
the Commission, any Trading Market and in connection with applicable state
securities or blue sky laws, (b) printing expenses (including without limitation
expenses of printing certificates for Registrable Common Shares), (c) messenger,
telephone and delivery expenses, (d) fees and disbursements of counsel for the
Company, (e) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, and (f) all listing fees to be paid by the Company to the Trading
Market.
6.5 Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each
Investor, the officers, directors, agents, investment advisors, partners,
members and employees of each of them, each Person who controls any such
Investor (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees
of each such controlling Person (each an "Investor Party"), to the fullest
extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, settlement costs and expenses, including,
without limitation, reasonable costs of preparation and reasonable
attorneys' fees (collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the
extent, that (1) such untrue statements or omissions are based solely upon
information regarding such Investor furnished in writing to the Company by
such Investor expressly for use therein, or to the extent that such
information relates to such Investor or such Investor's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Investor expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto (it being understood that the Investor has approved
Exhibit C hereto for this purpose) or (2) in the case of an occurrence of
an event of the type specified in Section 6.2(c)(v)-(vii), the use by such
Investor of an outdated or defective Prospectus after the Company has
notified such Investor in writing that the Prospectus is outdated or
defective and prior to the receipt by such Investor of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that
following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have
been corrected. The Company shall notify the Investors promptly of the
institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Investors. Each Investor shall, severally and
not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising
solely out of any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto, or arising solely out of any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading to the extent, but only to the extent, that such
untrue statement or omission is contained in any information furnished in
writing by such Investor to the Company specifically for inclusion in such
Registration Statement or such Prospectus or to the extent that (i) such
untrue statements or omissions are based solely upon information regarding
such Investor furnished in writing to the Company by such Investor
expressly for use therein. In no event shall the liability of any selling
Investor hereunder be greater in amount than the dollar amount of the net
proceeds received by such Investor upon the sale of the Registrable Common
Shares giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (ii) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any
such Proceeding; or (iii) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). It being understood, however, that the Indemnifying
Party shall not, in connection with any one such Proceeding be liable for
the fees and expenses of more than one separate firm of attorneys at any
time for all Indemnified Parties, which firm shall be appointed by a
majority of the Indemnified Parties; provided, however, that in the case a
single firm of attorneys would be inappropriate due to actual or potential
differing interests of conflicts between such Indemnified Parties and any
other party represented by such counsel in such Proceeding or otherwise,
then the Indemnifying Party shall be liable for the fees and expenses of
one additional firm of attorneys with respect to such Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,
unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating
or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within
ten Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under Section 6.5(a)
or (b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 6.4(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6.5(d),
no Investor shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the proceeds actually received by such
Investor from the sale of the Registrable Common Shares subject to the
Proceeding exceeds the amount of any damages that such Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
6.6 Dispositions. Each Investor agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Common Shares pursuant to the Registration
Statement. Each Investor further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v), (vi) or (vii), such Investor will discontinue disposition of such
Registrable Common Shares under the Registration Statement until such Investor's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing by
the Company (the "Advice") that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Common Shares and the Company shall determine to prepare and file
with the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Investor written notice of
such determination and if, within ten days after receipt of such notice, any
such Investor shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Common Shares such
Investor requests to be registered, but in case such registration statement
relates to shares of Common Stock then owned by Eagle Ventures LLC ("Eagle
Ventures") pursuant to the agreement described in Schedule 3.1(p) hereto, then
the number of Registrable Common Shares registered on behalf of such Investor
shall be in such relative proportion as the number of Investor's then owned
Registration Common Shares bears to the number of shares of Common Stock then
owned by Eagle Ventures.
ARTICLE VII
MISCELLANEOUS
7.1 Indemnification of Investors. In addition to the indemnity provided in
the Section 6.5(a), the Company will indemnify and hold each, Investor Party
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all Losses that any such
Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document.
7.2 Termination. This Agreement may be terminated by the Company or any
Investor (but only with respect to that Investor), by written notice to the
other parties, if the Closing has not been consummated by the third Business Day
following the date of this Agreement; provided that no such termination will
affect the right of any party to xxx for any breach by the other party (or
parties).
7.3 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party 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 Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of their applicable Common Shares.
7.4 Entire Agreement. The Transaction Documents, together with the Exhibits
and Schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Investors such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents.
7.5 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
addresses and facsimile numbers for such notices and communications are those
set forth on the signature pages hereof, or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by any
such Person.
7.6 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Investors holding at least two-thirds of the Common Shares,
provided that no such wavier or amendment shall act to the detriment of any
Investor that does not agree to such wavier or amendment. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Investors under Article VI may be given by Investors holding at least a majority
of the Registrable Common Shares to which such waiver or consent relates.
7.7 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 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.
7.8 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Investors holding at least a majority of
the Registrable Common Shares. Any Investor may assign its rights under this
Agreement to any Person to whom such Investor assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions hereof that apply to the
"Investors." Notwithstanding anything to the contrary herein, Common Shares may
be assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Common Shares.
7.9 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Investor Party is an intended third party
beneficiary of Section 6.5 and 7.1 and (in each case) may enforce the provisions
of such Sections directly against the parties with obligations thereunder.
7.10 Governing Law; Venue; Waiver of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this agreement
shall be governed by and construed and enforced in accordance with the laws of
the state of New York without regard to the principles of conflicts of laws
thereof. The company and investors hereby irrevocably submit 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 brought by the company
or any investor hereunder, in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the transaction documents), and hereby irrevocably waive,
and agree not to assert in any suit, action or proceeding brought by the company
or any investor, any claim that it is not personally subject to the jurisdiction
of any such court, or that 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 via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
The Company hereby irrevocably appoints Xxxxxx & Xxxxxx LLP, Xxx Xxxxxxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its agent to accept and acknowledge on its
behalf service of any and all process which may be served in any action,
proceeding or counterclaim in any way relating to or arising out of this
Agreement. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.11 Survival. The representations and warranties contained herein shall
survive the deliver by the Company to the Investors of the Common Shares.
7.12 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together 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, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.13 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.14 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option owed to such Investor by the Company under a Transaction Document and
the Company does not timely perform its related obligations within the periods
therein provided, then, prior to the performance by the Company of the Company's
related obligation, such Investor may rescind or withdraw, in its sole
discretion from time to time upon written notice to such Seller, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
7.15 Replacement of Common Shares. If any certificate or instrument
evidencing any Common Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and the execution
by the holder thereof of a customary lost certificate affidavit of that fact and
an agreement to indemnify and hold harmless the Company for any losses in
connection therewith. The applicants for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs associated
with the issuance of such replacement certificates or instruments.
7.16 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to seek specific performance under
the Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation (other than in
connection with any action for temporary restraining order) the defense that a
remedy at law would be adequate.
7.17 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Investor hereunder or any Investor enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
7.18 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.19 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Common Shares pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Investor or by any agent or employee of any other
Investor, and no Investor or any of its agents or employees shall have any
liability to any other Investor (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Investor
pursuant thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
EAGLE BULK SHIPPING INC.
By:
---------------------------
Name:
Title:
Address for Notices
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Attn: Chief Executive Officer
With a copy to: Xxxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Attn: Xxxx X. Xxxxx, Esq.
Investor Signature Page
-----------------------
By its execution and delivery of this signature page, the undersigned
Investor hereby joins in and agrees to be bound by the terms and conditions of
the Common Shares Purchase Agreement dated as of June 22, 2006 (the "Purchase
Agreement") by and among Eagle Bulk Shipping Inc. and the Investors (as defined
therein), as to the number of shares of Common Stock set forth below, and
authorizes this signature page to be attached to the Purchase Agreement or
counterparts thereof.
Name of Investor:
By:
------------------------------------------
Name:
Title:
Address:
-------------------------------------
---------------------------------------------
Telephone No.:
-------------------------------
Facsimile No.:
-------------------------------
Number of Shares:
----------------------------
Aggregate Purchase Price: $
------------------
Agreed to and accepted this
____ day of July, 2006
EAGLE BULK SHIPPING INC.
By:
-----------------------------------------------------------------
Name:
Title:
[Schedules and Exhibits have been omitted]
SK 25083 0001 678291 v9
