SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is entered into as of
July 23, 2003 by and between Convera Corporation, a Delaware corporation
(together with its successors and permitted assigns, the "Issuer"), and the
undersigned investor (together with its successors and permitted assigns, the
"Investor"). Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in Section 9.1.
RECITALS
Subject to the terms and conditions of this Agreement, the Investor
desires to subscribe for and purchase, and the Issuer desires to issue and sell
to the Investor, certain shares of the Issuer's Class A Common Stock, par value
$0.01 per share (the "Common Stock"). The Issuer is offering an aggregate of
5,000,000 shares of Common Stock in a private placement to the Investor and
other investors at a purchase price of $3.60 per share and on the other terms
and conditions contained in this Agreement (the "Offering"); provided, that the
Issuer reserves the right to issue and sell a lesser or greater number of
shares.
TERMS OF AGREEMENT
In consideration of the mutual representations and warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
1. SUBSCRIPTION AND ISSUANCE OF COMMON STOCK.
1.1 SUBSCRIPTION AND ISSUANCE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, the Issuer shall issue and sell to the Investor
and the Investor subscribes for and shall purchase from the Issuer the number of
shares of Common Stock set forth on the signature page hereof (the "Shares") for
the aggregate purchase price set forth on the signature page hereof, which shall
be equal to the product of the number of Shares subscribed for by the Investor
multiplied by the per share purchase price specified in the above Recitals to
this Agreement (the "Purchase Price").
1.2 LEGEND. Any certificate or certificates representing the Shares shall
bear the following legend, in addition to any legend that may be required by any
Requirements of Law:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE
WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH ANY
APPLICABLE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
2. CLOSING.
2.1 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall take place on a date designated by the Issuer, which date shall
be on or before July 29, 2003 (the "Closing Date"). The Closing shall take place
at the offices of Xxxxxx Xxxxxx White & XxXxxxxxx LLP, counsel for the Issuer,
000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. At the Closing, unless the
Investor and the Issuer otherwise agree (a) the Investor shall pay the Purchase
Price to the Issuer, by wire transfer of immediately available funds to an
account designated in writing by the Issuer, (b) the Issuer shall issue to the
Investor the Shares, and shall deliver or cause to be delivered to the Investor
a certificate or certificates representing the Shares duly registered in the
name of the Investor, as specified on the signature pages hereto, and (iii) all
other actions referred to in this Agreement which are required to be taken for
the Closing shall be taken and all other agreements and other documents referred
to in this Agreement which are required for the Closing shall be executed and
delivered.
2.2 TERMINATION. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of the Issuer and the Investor;
(b) by the Investor, upon a materially inaccurate representation
or material breach of any material warranty, covenant or agreement on
the part of the Issuer set forth in this Agreement, in either case
such that the conditions in Section 8.1 would be reasonably incapable
of being satisfied on or prior to the date of the Closing; or
(c) by the Issuer, upon a materially inaccurate representation or
material breach of any material warranty, covenant or agreement on the
part of the Investor set forth in this Agreement, in either case such
that the conditions in Section 8.2 would be reasonably incapable of
being satisfied on or prior to the date of the Closing.
2.3 EFFECT OF TERMINATION. In the event of termination of this Agreement
pursuant to Section 2.2, this Agreement shall forthwith become void, there shall
be no liability on the part of the Issuer or the Investor to each other and all
rights and obligations of any party hereto shall cease; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations and warranties, covenants or agreements set forth in
this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
As a material inducement to the Investor entering into this Agreement
and subscribing for the Shares, the Issuer represents and warrants to the
Investor as follows:
3.1 CORPORATE STATUS. The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Issuer and its Subsidiaries has full corporate power and authority to own
and hold its properties and to conduct its business as described in the Issuer's
SEC Reports. Each of the Issuer and its Subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business requires qualification or good standing, except for any failure to be
so qualified or be in good standing that would not have a Material Adverse
Effect.
3.2 CORPORATE POWER AND AUTHORITY. The Issuer has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. At or prior to
the Closing, the Issuer will have taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. No further approval or
authorization of any stockholder or the Board of Directors of the Issuer is
required for the issuance and sale of the Shares or, except as provided in
Section 6.2, the filing of the Shelf Registration Statement.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Issuer and (assuming it has been duly authorized, executed and delivered by
the Investor) constitutes a legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 NO VIOLATION. The execution and delivery by the Issuer of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by the Issuer with the terms and provisions hereof (including,
without limitation, the Issuer's issuance to the Investor of the Shares as
contemplated by and in accordance with this Agreement), will not result in a
default under (or give any other party the right, with the giving of notice or
the passage of time (or both), to declare a default or accelerate any obligation
under) or violate the Certificate of Incorporation or By-Laws of the Issuer or
any Contract to which the Issuer is a party (except to the extent such a
default, acceleration, or violation would not, in the case of a Contract, have a
Material Adverse Effect on the Issuer), or materially violate any Requirement of
Law applicable to the Issuer, or result in the creation or imposition of any
material Lien upon any of the capital stock, properties or assets of the Issuer
or any of its Subsidiaries (except where such violations of any Requirement of
Law or creations or impositions of any Liens would not have a Material Adverse
Effect on the Issuer). Neither the Issuer nor any of its Subsidiaries is (a) in
default under or in violation of any Contract to which it is a party or by which
it or any of its properties is bound or (b) to its knowledge, in violation of
any order of any Governmental Authority, which, in the case of clauses (a) and
(b), could reasonably be expected to have a Material Adverse Effect.
3.5 CONSENTS/APPROVALS. Except for the filing of a registration statement
in accordance with Article 6 hereof and filings with the SEC, the securities
commissions of the states in which the Shares are to be issued, and The Nasdaq
National Market, no consents, filings, authorizations or other actions of any
Governmental Authority are required to be obtained or made by the Issuer for the
Issuer's execution, delivery and performance of this Agreement which have not
already been obtained or made. No consent, approval, waiver or other action by
any Person under any Contract to which the Issuer is a party or by which the
Issuer or any of its properties or assets are bound is required or necessary for
the execution, delivery or performance by the Issuer of this Agreement and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents would not have a Material Adverse Effect on the Issuer.
3.6 VALID ISSUANCE. Upon payment of the Purchase Price by the Investor and
delivery to the Investor of the certificates for the Shares, such Shares will be
validly issued, fully paid and non-assessable and will be free and clear of all
Liens imposed by the Issuer and will not be subject to any preemptive rights or
other similar rights of stockholders of the Issuer.
3.7 SEC FILINGS, OTHER FILINGS AND NASDAQ COMPLIANCE. The Issuer has timely
made all filings required to be made by it under the Exchange Act. The Issuer
has delivered or made accessible to the Investor true, accurate and complete
copies of (a) the Issuer's Annual Report on Form 10-K for the fiscal year ended
January 31, 2003, (b) the Issuer's Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2003, (c) the Issuer's definitive proxy statement, dated
May 28, 2003, relating to its 2003 Annual Meeting of Stockholders, and (d) the
Issuer's Current Report on Form 8-K, dated May 21, 2003 (the "SEC Reports"). The
SEC Reports, when filed, complied in all material respects with all applicable
requirements of the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002, if and to
the extent applicable, and the rules and regulations of the SEC thereunder
applicable to the SEC Reports. None of the SEC Reports, at the time of filing,
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 not misleading in light of the circumstances in which they were made.
The Issuer has filed in a timely manner all documents that the Issuer was
required to file under the Exchange Act during the twelve (12) months preceding
the date of this Agreement. The Issuer is currently eligible to register the
resale of the Shares in a secondary offering on a registration statement on Form
S-3 under the Securities Act. The Issuer has taken, or will have taken prior to
the Closing, all necessary actions to ensure its continued inclusion in, and the
continued eligibility of the Common Stock for trading on, The Nasdaq National
Market under all currently effective inclusion requirements. Each balance sheet
included in the SEC Reports (including any related notes and schedules) fairly
presents in all material respects the consolidated financial position of the
Issuer as of its date, and each of the other financial statements included in
the SEC Reports (including any related notes and schedules) fairly presents in
all material respects the consolidated results of operations of the Issuer for
the periods or as of the dates therein set forth in accordance with GAAP
consistently applied during the periods involved (except that the interim
reports are subject to adjustments which might be required as a result of year
end audit and except as otherwise stated therein). Such financial statements
included in the SEC Reports were, at that time they were filed, consistent with
the books and records of the Issuer in all material respects and complied as to
form in all material respects with then applicable accounting requirements and
with the rules and regulations of the SEC with respect thereto. The Issuer keeps
accounting records in accordance with GAAP in which all material assets and
liabilities, and all material transactions, including off-balance sheet
transactions, of the Issuer are recorded in material conformity with applicable
accounting principles and disclosed as required by Requirements of Law in the
SEC Reports.
3.8 COMMISSIONS. The Issuer has not incurred any other obligation for any
finder's, broker's or agent's fees or commissions in connection with the
transactions contemplated hereby, except that the Issuer will pay a cash
commission equal to five percent (5%) of the Purchase Price to Xxxxx & Company
LLC ("Xxxxx"), the placement agent for the Offering, in accordance with that
certain Placement Agency Agreement entered into between the Issuer and Xxxxx.
3.9 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of the Issuer consists of 100 million shares of Class A voting
common stock, par value $0.01 per share, 40 million shares of Class B non-voting
common stock, par value $0.01 per share, and five million shares of cumulative
convertible preferred stock, par value $0.01 per share. All issued and
outstanding shares of capital stock of the Issuer have been, and as of the
Closing Date will be, duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all applicable state and
federal securities laws in all material respects and were not issued in
violation of, or subject to, any preemptive, subscription or other similar
rights of any stockholder of the Issuer. As of June 30, 2003, the Issuer has
issued and outstanding 29,900,278 shares of Class A Common Stock, of which
835,547 shares are treasury stock. There are no shares of Class B Common Stock
or preferred stock issued or outstanding. Except as disclosed on Schedule 3.9 or
in the SEC Reports, as of June 30, 2003, there were no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal and similar rights) or agreements, orally or in writing, for the
purchase or acquisition from the Issuer of any shares of capital stock, and the
Issuer is not a party to or subject to any agreement or understanding and, to
the Issuer's knowledge, there is no agreement or understanding between any
Persons, which affects or relates to the voting or giving of written consents
with respect to any security by a director of the Issuer. The Issuer owns,
directly or indirectly, all of the capital stock of its Subsidiaries, free and
clear of any Liens or equitable interests other than as reflected in the SEC
Reports. The Issuer has no obligation, contingent or otherwise, to redeem or
repurchase any equity security or any security that is a combination of debt and
equity.
3.10 MATERIAL CHANGES. Except as set forth in the SEC Reports or as
otherwise contemplated herein, since April 30, 2003, there has been no Material
Adverse Effect in respect of the Issuer and its Subsidiaries taken as a whole.
Except as set forth in the SEC Reports, since April 30, 2003, there has not
been: (i) any direct or indirect redemption, purchase or other acquisition by
the Issuer of any shares of Common Stock; (ii) any declaration, setting aside or
payment of any dividend or other distribution by the Issuer with respect to the
Common Stock; (iii) any borrowings incurred or any material liabilities
(absolute, accrued or contingent) assumed, other than current liabilities
incurred in the ordinary course of business, liabilities under Contracts entered
into in the ordinary course of business, liabilities not required to be
reflected on the Issuer's financial statements pursuant to GAAP or required to
disclosed in the SEC Reports; (iv) any Lien or adverse claim on any of its
material properties or assets, except for Liens for taxes not yet due and
payable or otherwise in the ordinary course of business; (v) any sale,
assignment or transfer of any of its material assets, tangible or intangible,
except in the ordinary course of business; (vi) any extraordinary losses or
waiver of any rights of material value, other than in the ordinary course of
business; (vii) any material capital expenditures or commitments therefor other
than in the ordinary course of business; (viii) any other material transaction
other than in the ordinary course of business; (ix) any material change in the
nature or operations of the business of the Issuer and its Subsidiaries; (x) any
default in the payment of principal or interest in any material amount, or
violation of any material covenant, with respect to any outstanding debt
obligations that are material to the Issuer and its Subsidiaries as a whole;
(xi) any material changes to its critical accounting policies or material
deviations from historical accounting and other practices in connection with the
maintenance of the Issuer's books and records; or (xii) any agreement or
commitment to do any of the foregoing.
3.11 LITIGATION. Except as disclosed in the SEC Reports, there is no
action, suit, proceeding or investigation pending or, to the Issuer's knowledge,
currently threatened against the Issuer or any of its Subsidiaries that
questions the validity of this Agreement or the right of the Issuer to enter
into it, or to consummate the transactions contemplated hereby, or that could
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect on the Issuer and its Subsidiaries taken as a whole or
any change in the current equity ownership of the Issuer. The foregoing
includes, without limitation, actions pending or, to the Issuer's knowledge,
threatened involving the prior employment of any of the Issuer's employees or
their use in connection with the Issuer's business of any information or
techniques allegedly proprietary to any of their former employers. Neither the
Issuer nor any of its Subsidiaries is a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or Governmental
Authority. There is no action, suit, proceeding or investigation by the Issuer
or any of its Subsidiaries currently pending or which the Issuer or any of its
Subsidiaries currently intends to initiate, which could reasonably be expected
to have a Material Adverse Effect.
3.12 RIGHTS OF REGISTRATION, VOTING RIGHTS AND ANTI-DILUTION. Except as
contemplated in this Agreement, the Issuer has not granted or agreed to grant
any registration rights, including piggyback rights, to any Person and, to the
Issuer's knowledge, no stockholder of the Issuer has entered into any agreements
with respect to the voting of capital shares of the Issuer. The issuance of the
Shares does not constitute an anti-dilution event for any existing security
holders of the Issuer, pursuant to which such security holders would be entitled
to additional securities or a reduction in the applicable conversion price or
exercise price of any securities.
3.13 OFFERINGS. Subject in part to the truth and accuracy of Investor's
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws, and neither the Issuer nor any Person acting on its behalf will
take any action hereafter that would cause the loss of such exemption. Neither
the Issuer nor any Person acting on its behalf has, in connection with the
offering of the Shares, engaged in (a) any form of general solicitation or
general advertising (as those terms are used within the meaning of Rule 502(c)
under the Securities Act) or (b) any action involving a public offering within
the meaning of Section 4(2) of the Securities Act. The Issuer has not made and
will not prior to Closing make, directly or indirectly, any offer or sale of the
Shares or of securities of the same or a similar class as the Shares if, as a
result, the offer and sale of the Shares contemplated hereby could fail to be
entitled to exemption from the registration requirements of the Securities Act.
As used herein, the terms "offer" and "sale" have the meaning specified in
Section 2(c) of the Securities Act.
3.14 DISCLOSURE. The Issuer is aware of no facts which leads any of its
executive officers to believe that the Disclosure Documents (as defined in
Section 4.7), as of their respective dates, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3.15 LICENSES AND PERMITS. To the Issuer's knowledge, each of the Issuer
and its Subsidiaries has all Permits under applicable Requirements of Law from
all applicable Governmental Authorities that are necessary to operate its
businesses as presently conducted and all such Permits are in full force and
effect, except where the failure to have any such Permits in full force and
effect would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. To the Issuer's knowledge, neither the Issuer
nor any of its Subsidiaries is in default under, or in violation of or
noncompliance with, any of such Permits, except for any such default, violation,
or noncompliance which would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. To the Issuer's knowledge, other
than as disclosed in the SEC Reports, there is no proposed change in any
Requirements of Law which would require the Issuer and its Subsidiaries to
obtain any Permits in order to conduct its business as presently conducted that
the Issuer and its Subsidiaries do not currently possess and the lack of which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
3.16 PATENTS AND TRADEMARKS. To the Issuer's knowledge, the Issuer and each
of its Subsidiaries has, or has rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and know-how (including trade secrets or other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
(collectively, the "Intellectual Property Rights") that are necessary for use in
connection with its business as presently conducted, except where the failure to
have such Intellectual Property Rights would not reasonably be expected to have
a Material Adverse Effect, and, to the Issuer's knowledge, there is no existing
infringement by another person or entity of any of the Intellectual Property
Rights that are necessary for use in connection with the Issuer's business as
presently conducted. To the Issuer's knowledge, the Issuer is not infringing on,
or in conflict with, any right of any other person with respect to any
intangibles nor is there any claim of infringement made or threatened by a third
party against or involving the Issuer.
3.17 INSURANCE. The Issuer maintains and will continue to maintain
insurance with such insurers, and insuring against such losses, in such amounts,
and subject to such deductibles and exclusions as are customary in the Issuer's
industry and otherwise reasonably prudent, all of which insurance is in full
force and effect.
3.18 MATERIAL CONTRACTS. All material Contracts to which the Issuer or its
Subsidiaries is a party and which are required to have been filed by the Issuer
on Exhibit 10 to the SEC Reports have been filed by the Issuer with the SEC
pursuant to the requirements of the Exchange Act. Each such material Contract is
in full force and effect, except as otherwise required pursuant to their
respective terms, and is binding on the Issuer or its Subsidiaries, as the case
may be, in each case, in accordance with their respective terms, and neither the
Issuer or any of its Subsidiaries nor, to the Issuer's knowledge, any other
party thereto is in breach of, or in default under, any such material Contract,
which breach or default would reasonably be expected to have a Material Adverse
Effect. There exists no actual or, to the knowledge of the Issuer, threatened
termination, cancellation or limitation of, or any material adverse modification
or change in, the business relationship of the Issuer or any of its
Subsidiaries, or the business of the Issuer or any of its Subsidiaries, with any
customer or supplier or any group of customers or suppliers whose purchases or
inventories provided to the business of the Issuer or any of its Subsidiaries
would, individually or in the aggregate, have a Material Adverse Effect.
3.19 INTERNAL CONTROLS/ACCOUNTING. The Issuer maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets; (c) access to assets is permitted only in accordance
with management's general or specific authorization; and (d) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.20 TAXES. The Issuer has filed all material federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Issuer has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it which is reasonably likely to have a
Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
As a material inducement to the Issuer entering into this Agreement and
issuing the Shares, the Investor represents, warrants, and covenants to the
Issuer as follows:
4.1 POWER AND AUTHORITY. The Investor, if other than a natural person, is
an entity duly organized, validly existing and in good standing under the laws
of the state of its incorporation or formation. The Investor has the corporate,
partnership or other power (or capacity) and authority under applicable law to
execute and deliver this Agreement and consummate the transactions contemplated
hereby, and has all necessary authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Investor has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
4.2 NO VIOLATION. The execution and delivery by the Investor of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by the Investor with the terms and provisions hereof, will not result
in a default under (or give any other party the right, with the giving of notice
or the passage of time (or both), to declare a default or accelerate any
obligation under) or violate any charter or similar documents of the Investor,
if other than a natural person, or any Contract to which the Investor is a party
or by which it or its properties or assets are bound, or violate any Requirement
of Law applicable to the Investor, other than such violations or defaults which,
individually and in the aggregate, do not and will not have a Material Adverse
Effect on the Investor. The Investor will comply with any Requirement of Law
applicable to it in connection with the Offering and any resale by the Investor
of the Shares.
4.3 CONSENTS/APPROVALS. No consents, filings, authorizations or actions of
any Governmental Authority are required for the Investor's execution, delivery
and performance of this Agreement. No consent, approval, waiver or other actions
by any Person under any Contract to which the Investor is a party or by which
the Investor or any of its properties or assets are bound is required or
necessary for the execution, delivery and performance by the Investor of this
Agreement and the consummation of the transactions contemplated hereby.
4.4 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Investor and (assuming it has been duly authorized, executed, and delivered
by the Issuer) constitutes a legal, valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in equity.
4.5 INVESTMENT INTENT. The Investor is acquiring the Shares hereunder for
its own account and with no present intention of distributing or selling such
Shares and further agrees not to transfer such Shares in violation of the
Securities Act or any applicable state securities law, and no one other than the
Investor has any beneficial interest in the Shares. The Investor agrees that it
will not sell or otherwise dispose of any of the Shares unless such sale or
other disposition has been registered under the Securities Act or, in the
opinion of counsel acceptable to the Issuer, is exempt from registration under
the Securities Act and has been registered or qualified or, in the opinion of
such counsel acceptable to the Issuer, is exempt from registration or
qualification under applicable state securities laws. The Investor understands
that the offer and sale by the Issuer of the Shares being acquired by the
Investor hereunder has not been registered under the Securities Act by reason of
their contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
thereof, and that the reliance of the Issuer on such exemption from registration
is predicated in part on these representations and warranties of the Investor.
The Investor acknowledges that pursuant to Section 1.2 of this Agreement a
restrictive legend consistent with the foregoing has been or will be placed on
the certificates for the Shares.
4.6 ACCREDITED INVESTOR. The Investor is an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D under the Securities Act, and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment to be made by it
hereunder.
4.7 ADEQUATE INFORMATION. The Investor has received from the Issuer, and
has reviewed, such information which the Investor considers necessary or
appropriate to evaluate the risks and merits of an investment in the Shares,
including without limitation, the documents listed on Exhibit A, which have been
received by the Investor as part of an informational packet of materials from
the Issuer (the "Disclosure Documents"). The Investor acknowledges that each of
the SEC Reports, including the risk factors contained therein, are specifically
incorporated herein by reference and form an integral part of this Agreement.
The Investor also acknowledges that the additional risk factors set forth on
Exhibit A and contained in the Disclosure Documents are specifically
incorporated herein by reference and form an integral part of this Agreement.
4.8 OPPORTUNITY TO QUESTION. The Investor has had the opportunity to
question, and has questioned, to the extent deemed necessary or appropriate,
representatives of the Issuer so as to receive answers and verify information
obtained in the Investor's examination of the Issuer, including the information
that the Investor has received and reviewed as referenced in Section 4.7 hereof
in relation to its investment in the Shares.
4.9 NO OTHER REPRESENTATIONS. No oral or written material representations
have been made to the Investor in connection with the Investor's acquisition of
the Shares which were in any way inconsistent with the information reviewed by
the Investor. The Investor acknowledges that in deciding whether to enter into
this Agreement and to purchase the Shares hereunder, it has not relied on any
representations or warranties of any type or description made to it by the
Issuer or any of its representatives with regard to the Issuer, any of its
Subsidiaries, any of their respective businesses, properties or prospects or the
investment contemplated herein, other than the representations and warranties
set forth in Section 3 hereof.
4.10 KNOWLEDGE AND EXPERIENCE. The Investor has such knowledge and
experience in financial and business matters, including substantial experience
in evaluating and investing in common stock and other securities (including the
common stock and other securities of speculative companies), so as to enable the
Investor to utilize the information referred to in Section 4.7 hereof and any
other information made available by the Issuer to the Investor in order to
evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto.
4.11 INDEPENDENT DECISION. Except as noted below, the Investor is not
relying on the Issuer or on any legal or other opinion in the materials reviewed
by the Investor with respect to the financial or tax considerations of the
Investor relating to its investment in the Shares. The Investor has relied
solely on the representations and warranties, covenants and agreements of the
Issuer in this Agreement (including the exhibits hereto) and on its examination
and independent investigation in making its decision to acquire the Shares.
4.12 COMMISSIONS. The Investor has not incurred any obligation for any
finder's, broker's or agent's fees or commissions in connection with the
transactions contemplated hereby.
5. COVENANTS.
5.1 PUBLIC ANNOUNCEMENTS. Except as required by applicable law, the
Investor agrees not to make any public announcement or issue any press release
or otherwise publicly disseminate any information about the subject matter of
this Agreement. Except as provided herein, the Issuer shall have the right to
make such public announcements and shall control, in its sole and absolute
discretion, the timing, form and content of all press releases or other public
communications of any sort relating to the subject matter of this Agreement, and
the method of their release, or publication thereof. The Issuer shall file
within three (3) business days after the Closing Date a Current Report on Form
8-K with the SEC in respect of the transactions contemplated by this Agreement.
The Issuer may issue an initial press release relating to the transactions
contemplated by this Agreement, but shall not identify any Investor in such
press release without the consent of such Investor, except as may be required by
any Requirement of Law or rule of any exchange on which the Issuer's securities
are listed.
5.2 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be reasonably necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby. Each of the Investor and the Issuer shall make on a prompt and timely
basis all governmental or regulatory notifications and filings required to be
made by it with or to any Governmental Authority in connection with the
consummation of the transactions contemplated hereby. The Issuer and the
Investor each agree to cooperate with the other in the preparation and filing of
all forms, notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any Requirement of Law or the rules of
The Nasdaq National Market in connection with the transactions contemplated by
this Agreement and to use their respective commercially reasonable efforts to
agree jointly on a method to overcome any objections by any Governmental
Authority to any such transactions. Except as may be specifically required
hereunder, neither of the parties hereto or their respective Affiliates shall be
required to agree to take any action that in the reasonable opinion of such
party would result in or produce a Material Adverse Effect on such party.
5.3 NOTIFICATION OF CERTAIN MATTERS. Prior to the Closing, each party
hereto shall give prompt notice to the other party of the occurrence, or
non-occurrence, of any event which would be likely to cause any representation
and warranty herein to be untrue or inaccurate, or any covenant, condition or
agreement herein not to be complied with or satisfied.
5.4 CONFIDENTIAL INFORMATION. The Investor agrees that no portion of the
Confidential Information (as defined below) shall be disclosed to third parties,
except as may be required by law, without the prior express written consent of
the Issuer; provided, that the Investor may share such information with such of
its officers and professional advisors as may need to know such information to
assist the Investor in its evaluation thereof on the condition that such parties
agree to be bound by the terms hereof. All Confidential Information received by
the Investor shall be promptly returned or destroyed, as directed by the Issuer.
"Confidential Information" means all oral or written data, reports, records or
materials and any and all other confidential or disclosure information or
materials obtained from the Issuer or its professional advisors, which are not
yet publicly available. Confidential Information excludes information that is
publicly available. Notwithstanding anything herein to the contrary, no Investor
shall be in violation of its obligations under this Section 5.4 if such Investor
discloses the federal income tax treatment of the Offering, any fact relevant to
understanding the federal tax treatment of the Offering and all materials of any
kind (including opinions or other tax analyses) relating to such federal income
tax treatment; provided that no Investor may disclose information or materials
unrelated to the purported or claimed federal income tax treatment of the
Offering and is not relevant to understanding the purported or claimed federal
income tax treatment of the Offering, including the name of or identifying
information of any party identified herein or in or any other nonpublic business
or financial information.
6. REGISTRATION RIGHTS.
The Investor shall have the following registration rights with respect
to the Registrable Securities owned by it:
6.1 TRANSFER OF REGISTRATION RIGHTS. The Investor may assign the
registration rights with respect to the Shares to any party or parties to which
it may from time to time transfer all of the Shares; provided, that the
transferee agrees in writing with the Issuer to be bound by the applicable
provisions of this Agreement regarding such registration rights and
indemnification relating thereto. Upon assignment of any registration rights
pursuant to this Section 6.1, the Investor shall deliver to the Issuer a notice
of such assignment which includes the identity and address of any assignee and
such other information reasonably requested by the Issuer in connection with
effecting any such registration (collectively, the Investor and each such
subsequent holder is referred to as a "Holder").
6.2 REQUIRED REGISTRATION. As promptly as practicable after the Closing,
but in no event later than thirty (30) days after the date of the Closing, the
Issuer agrees to file a Registration Statement on Form S-3 (the "Shelf
Registration Statement") to register the resale of all of the Shares. The Issuer
shall use commercially reasonable efforts to cause the SEC to declare the Shelf
Registration Statement effective no later than the 120th day after the date of
Closing; provided, however, that not less than two days prior to the filing of
the Shelf Registration Statement, the Issuer shall provide the Investor (or the
investment adviser of such Investor) with a copy of the Shelf Registration
Statement proposed to be filed and the Issuer agrees to consider all appropriate
comments provided by such Investor with respect to the Shelf Registration
Statement for inclusion in the Shelf Registration Statement. The Issuer shall
thereafter maintain the effectiveness of the Shelf Registration Statement until
the earlier of (a) the date on which all the Shares have been sold pursuant to
the Shelf Registration Statement or Rule 144 promulgated under the Securities
Act ("Rule 144"), and (b) such time as the Issuer reasonably determines, based
on an opinion of counsel, that all of the Holders will be eligible to sell under
Rule 144 all of the Shares then owned by the Holders within the volume
limitations imposed by paragraph (e) of Rule 144 in the three month period
immediately following the termination of the effectiveness of the Shelf
Registration Statement. The Issuer's obligations contained in this Section 6.2
shall terminate on the second anniversary of the date of the Closing.
6.3 REGISTRATION PROCEDURES.
(a) In case of the Shelf Registration Statement effected by the Issuer
subject to this Section 6, the Issuer shall keep the Investor, on behalf of
Holder, advised in writing as to the initiation of such registration, and as to
the completion thereof. In addition, subject to Section 6.2 above, the Issuer
shall, to the extent applicable to the Shelf Registration Statement:
(i) prepare and file with the SEC such amendments and supplements
to the Shelf Registration Statement as may be necessary to keep such
registration continuously effective and free from any material
misstatement or omission necessary to make the statements therein, in
light of the circumstances, not misleading, and comply with provisions
of the Securities Act with respect to the disposition of all
securities covered thereby during the period referred to in Section
6.2;
(ii) update, correct, amend and supplement the Shelf Registration
Statement as necessary;
(iii) notify Holder promptly when the Shelf Registration
Statement is declared effective by the SEC, and furnish such number of
prospectuses, including preliminary prospectuses, and other documents
incident thereto as Holder may reasonably request from time to time;
(iv) use its commercially reasonable efforts to register or
qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions of the United States where an
exemption is not available and as Holder may reasonably request to
enable it to consummate the disposition in such jurisdiction of the
Registrable Securities (provided that the Issuer will not be required
to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this provision, or
(B) consent to general service of process in any such jurisdiction, or
(C) subject itself to taxation in any jurisdiction where it is not
already subject to taxation);
(v) notify Holder at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in the Shelf Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and subject to Section
6.5, the Issuer will promptly prepare a supplement or amendment to
such prospectus, so that, as thereafter delivered to purchasers of
such shares, such prospectus will not contain any untrue statements of
a material fact or omit to state any fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading;
(vi) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Issuer
are then listed and obtain all necessary approvals from The Nasdaq
National Market for trading thereon;
(vii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of the Shelf
Registration Statement; and
(viii) upon the sale of any Registrable Securities pursuant to
the Shelf Registration Statement, direct the transfer agent to remove
all restrictive legends from all certificates or other instruments
evidencing the Registrable Securities.
(ix) With a view to making available to the Holder the benefits
of certain rules and regulations of the SEC that at any time permit
the sale of the Registrable Securities to the public without
registration, so long as any Registrable Securities are outstanding,
the Issuer shall use its commercially reasonable efforts for a period
of two years following the date of Closing:
(1) to make and keep public information available, as those
terms are understood and defined in Rule 144(c) under the
Securities Act;
(2) to file with the SEC in a timely manner all reports and
other documents required of the Issuer under the Exchange Act;
and
(3) to furnish to the Holder upon any reasonable
request a written statement by the Issuer as to its
compliance with the public information requirements of Rule
144(c) under the Securities Act; and
(x) To advise the Holder promptly after it has received
notice or obtained knowledge of the existence of any stop
order by the SEC delaying or suspending the effectiveness of
the Shelf Registration Statement or of the initiation or
threat of any proceeding for that purpose, and to make every
commercially reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Shelf
Registration Statement at the earliest possible time.
(b) Notwithstanding anything stated or implied to the contrary in Section
6.3(a) above, the Issuer shall not be required to consent to any underwritten
offering of the Registrable Securities or to any specific underwriter
participating in any underwritten public offering of the Registrable Securities.
(c) Each Holder agrees that upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 6.3(a)(v), and
subject to Section 6.5, such Holder will forthwith discontinue such Holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
6.3(a)(v) and, if so directed by the Issuer, will deliver to the Issuer at the
Issuer's expense all copies, other than permanent file copies, then in such
Holder's possession, of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
(d) Except as required by law, all expenses incurred by the Issuer in
complying with this Section 6, including but not limited to, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Issuer, blue sky fees and expenses (including
fees and disbursements of counsel related to all blue sky matters) incurred in
connection with any registration, qualification or compliance pursuant to this
Section 6 shall be borne by the Issuer. All underwriting discounts and selling
commissions applicable to a sale incurred in connection with any registration of
Registrable Securities and the legal fees and other expenses of a Holder shall
be borne by such Holder.
6.4 FURTHER INFORMATION. If Registrable Securities owned by a Holder are
included in any registration, such Holder shall furnish the Issuer such
information regarding itself as the Issuer may reasonably request and as shall
be required in connection with any registration (or amendment or supplement
thereto), referred to in this Agreement, and Holder shall indemnify the Issuer
with respect thereto in accordance with Section 7 hereof. The Investor hereby
represents and warrants to the Issuer that it has accurately and completely
provided the requested information and answered the questions numbered (a)
through (d) on the signature pages of this Agreement, and the Investor agrees
and acknowledges that the Issuer may rely on such information as being true and
correct for purposes of preparing and filing the Shelf Registration Statement at
the time of filing thereof and at the time it is declared effective, unless the
Investor has notified the Issuer in writing to the contrary prior to such time.
6.5 RIGHT OF SUSPENSION.
(a) Notwithstanding any other provision of this Agreement or any related
agreement to the contrary, the Issuer shall have the right, at any time, to
suspend the effectiveness of the Shelf Registration Statement and offers and
sales of the Registrable Securities covered thereby whenever, in the good faith
judgment of the Issuer, (i) continuing such effectiveness or permitting such
offers and sales could reasonably be expected to have an adverse effect upon a
proposed sale of all or substantially all of the assets of the Issuer or a
merger, acquisition, reorganization, recapitalization or similar current
transaction materially affecting the capital structure or equity ownership of
the Issuer, (ii) there exists a material development or a potential material
development with respect to or involving the Issuer that the Issuer would be
obligated to disclose in the prospectus used in connection with the Shelf
Registration Statement, which disclosure, in the good faith judgment of the
Issuer, after considering the advice of counsel, would be premature or otherwise
inadvisable at such time, or (iii) the Shelf Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances, not misleading (a "Suspension Event").
In the event that the Issuer shall determine to so suspend the effectiveness of
the Shelf Registration Statement and offers and sales of the Registrable
Securities covered thereby, the Issuer shall, in addition to performing those
acts required to be performed under the Securities Act and/or the Exchange Act
or deemed advisable by the Issuer, deliver to each Holder written notice
thereof, signed by the Chief Financial Officer or Chief Executive Officer of the
Issuer. Upon receipt of such notice, the Holders shall discontinue disposition
of the Registrable Securities covered by the Shelf Registration Statement and
prospectus until such Holders (x) are advised in writing by the Issuer that the
use of the Shelf Registration Statement and prospectus (and offers and sales
thereunder) may be resumed, (y) have received copies of a supplemental or
amended prospectus, if applicable, and (z) have received copies of any
additional or supplemental filings which are incorporated or deemed to be
incorporated by reference into such prospectus. The Issuer will exercise
commercially reasonable efforts to ensure that the use of the Shelf Registration
Statement and prospectus may be resumed as quickly as practicable.
(b) The Issuer's right to suspend the effectiveness of the Shelf
Registration Statement and the offers and sales of the Registrable Securities
covered thereby, as described above, shall be for a period of time (the
"Suspension Period") beginning on the date of the occurrence of the Suspension
Event and expiring on the earlier to occur of (i) the date on which the
Suspension Event ceases, or (ii) forty-five (45) days after the occurrence of
the Suspension Event; provided, however, that there shall not be more than two
Suspension Periods in any 12 month period.
6.6 TRANSFER OF SHARES. An Investor may transfer all or any part of its
Shares to any Person under common management with the Investor; provided, that
any such transfer shall be effected in full compliance with all applicable
federal and state securities laws, including, but not limited to, the Securities
Act and the rules of the SEC promulgated thereunder. The Issuer will effect such
transfer of restricted certificates and will promptly amend the Prospectus
forming a part of the Shelf Registration Statement to add the transferee to the
selling stockholders in the Shelf Registration Statement; provided that the
transferor and transferee shall be required to provide the Issuer with the
information requested of the Investor in this Agreement, information reasonably
necessary for the Issuer to determine that the transfer was effected in
accordance with all applicable federal and state securities laws, including, but
not limited to, the Securities Act and the rules of the SEC promulgated
thereunder, and all other information reasonably requested by the Issuer from
time to time in connection with any transfer, registration, qualification or
compliance referred to in Section 6.4.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE ISSUER. The Issuer will indemnify and hold
harmless each Holder of Shares which are included in a registration statement
pursuant to the provisions of Section 6 hereof and any underwriter (as defined
in the Securities Act) for such Holder, and any person who controls such Holder
or such underwriter within the meaning of the Securities Act, and any officer,
director, employee, agent, partner, member or Affiliate of such Holder (each, an
"Indemnified Party"), from and against, and will reimburse each such Indemnified
Party with respect to, any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses to which such Holder or any such Indemnified
Party may become subject under the Securities Act or otherwise, insofar as such
claims, actions, demands, losses, damages, liabilities, costs or expenses arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any materially inaccurate representation or breach of any
material warranty, agreement or covenant of the Issuer contained herein;
provided, however, that the Issuer will not be liable in any such case to the
extent that any such claim, action, demand, loss, damage, liability, cost or
expense is caused by an untrue statement or alleged untrue statement or omission
or alleged omission (1) made in conformity with information furnished by such
Holder in writing specifically for use in the preparation thereof, or (2) which
was cured in an amendment or supplement to the prospectus (or any amendment or
supplement thereto) delivered to the Holder on a timely basis to permit proper
delivery thereof prior to the date on which any Shares were transferred or sold.
7.2 INDEMNIFICATION BY THE HOLDER. Each Holder of Shares which are included
in a registration pursuant to the provisions of Section 6 hereof will indemnify
and hold harmless the Issuer, and any Person who controls the Issuer within the
meaning of the Securities Act, and any officer, director, employee, agent,
partner, member or Affiliate of the Issuer (each, an "Issuer Indemnified Party")
from and against, and will reimburse the Issuer Indemnified Parties with respect
to, any and all losses, damages, liabilities, costs or expenses to which such
Issuer Indemnified Parties may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or are caused by the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was so made solely in reliance upon and in conformity with
written information furnished by such Holder specifically for use in the
preparation thereof; provided, however, that the liability of any Holder
pursuant to this Section 7.2 shall be limited to an amount not to exceed the net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to the registration statement which gives rise to such obligation to
indemnify.
7.3 PROCEDURES. Promptly after receipt by a party indemnified pursuant to
the provisions of Section 7.1 or Section 7.2 of notice of the commencement of
any action involving the subject matter of the foregoing indemnity provisions,
such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Section 7.1 or Section 7.2,
notify the indemnifying party of the commencement thereof; but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 7 and shall
not relieve the indemnifying party from liability under this Section 7 unless
such indemnifying party is materially prejudiced by such omission. In case such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall have the right
to participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of Section 7.1 or Section 7.2 for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claim without the consent of the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
8. CONDITIONS TO CLOSING.
8.1 CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR. The obligation of the
Investor to proceed with the Closing is subject to the following conditions any
and all of which may be waived by the Investor, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. Each of the representations and
warranties of the Issuer contained in this Agreement shall be true and correct
in all material respects as of the Closing as though made on and as of the
Closing, except (i) for changes specifically permitted by this Agreement, (ii)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, and (iii) such
failures to be true and correct which would not, individually or in the
aggregate, have a Material Adverse Effect on the Issuer. Unless the Investor
receives written notice to the contrary at the Closing, Investor shall be
entitled to assume that the preceding is accurate in all respects at the
Closing.
(b) Agreement and Covenants. The Issuer shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Investor receives written notice to the contrary at the Closing,
Investor shall be entitled to assume that the preceding is accurate in all
respects at the Closing.
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
(d) Opinion of Issuer's Counsel. The Holder shall have received an opinion
of Issuer's counsel, dated the Closing Date, with respect to legal matters
customary for private offerings of this type.
(e) Closing Certificate. The Investor shall have received a certificate
executed by the Chief Executive Officer or Chief Financial Officer of the
Issuer, dated as of the Closing, to the effect that the representations and
warranties of the Issuer contained in Section 3 hereof are true and correct in
all material respects as of the Closing, and that all covenants, agreements and
conditions required to be satisfied by the Issuer under this Agreement at or
prior to the Closing have been performed, satisfied and complied with by the
Issuer in all material respects.
8.2 CONDITIONS TO THE OBLIGATIONS OF THE ISSUER. The obligation of the
Issuer to proceed with the Closing is subject to the following conditions any
and all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. Each of the representations and
warranties of the Investor contained in this Agreement shall be true and correct
as of the Closing as though made on and as of the Closing, except (i) for
changes specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date. Unless the Issuer receives
written notification to the contrary at the Closing, the Issuer shall be
entitled to assume that the preceding is accurate in all respects at the
Closing.
(b) Agreement and Covenants. The Investor shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Issuer receives written notification to the contrary at the Closing,
the Issuer shall be entitled to assume that the preceding is accurate in all
respects at the Closing.
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
9. MISCELLANEOUS.
9.1 DEFINED TERMS. As used herein the following terms shall have the
following meanings:
(a) "Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
(b) "Agreement" has the meaning specified in the preamble to this
Agreement.
(c) "Xxxxx" has the meaning specified in Section 3.8 of this Agreement.
(d) "Bylaws" means the Bylaws of the Issuer, as the same may be
supplemented, amended, or restated from time to time.
(e) "Certificate of Incorporation" means the Issuer's Certificate of
Incorporation, as the same may be supplemented, amended or restated from time to
time.
(f) "Closing" has the meaning specified in Section 2.2 of this Agreement.
(g) "Common Stock" has the meaning specified in the Recitals to this
Agreement.
(h) "Confidential Information" has the meaning specified in Section 5.4 of
this Agreement.
(i) "Contract" means any indenture, lease, sublease, loan agreement,
mortgage, note, restriction, commitment, obligation or other contract, agreement
or instrument.
(j) "Disclosure Documents" has the meaning specified in Section 4.7 of this
Agreement.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "GAAP" means generally accepted accounting principles in effect in the
United States of America.
(m) "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
(n) "Holder" has the meaning specified in Section 6.1 of this Agreement.
(o) "Indemnified Party" has the meaning specified in Section 7.1 of this
Agreement.
(p) "Investor" has the meaning specified in the preamble to this Agreement.
(q) "Issuer" has the meaning specified in the preamble to this Agreement.
(r) "Issuer Indemnified Party" has the meaning specified in Section 7.2 of
this Agreement.
(s) "Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
(t) "Material Adverse Effect" means a material and adverse change in, or
effect on, the financial condition, properties, assets, liabilities, rights,
obligations, operations or business, of a Person and its Subsidiaries taken as a
whole.
(u) "Offering" has the meaning specified in the Recitals to this Agreement.
(v) "Permit" means any permit, certificate, consent, approval,
authorization, order, license, variance, franchise or other similar indicia of
authority issued or granted by any Governmental Authority.
(w) "Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority or other entity, of whatever nature.
(x) "Purchase Price" has the meaning specified in Section 1.1 of this
Agreement.
(y) "Register", "registered" and "registration" refer to a registration of
the offering and sale or resale of Common Stock effected by preparing and filing
a registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration statement.
(z) "Registrable Securities" means all Shares of Common Stock acquired by
the Investor pursuant to this Agreement and any other shares of Common Stock or
other securities issued in respect of such Shares by way of a stock dividend or
stock split or in connection with a combination or subdivision of the Issuer's
Common Stock or by way of a recapitalization, merger or consolidation or
reorganization of the Issuer; provided, however, that as to any particular
securities, such securities will cease to be Registrable Securities when they
have been sold pursuant to registration or in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.
(aa) "Requirements of Law" means as to any Person, the certificate of
incorporation, by-laws or other organizational or governing documents of such
Person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to, or binding upon,
such Person or any of its properties or to which such Person or any of its
property is subject.
(bb) "SEC" means the Securities and Exchange Commission.
(cc) "SEC Reports" has the meaning specified in Section 3.7 of this
Agreement.
(dd) "Securities Act" means the Securities Act of 1933, as amended.
(ee) "Shares" has the meaning specified in Section 1.1 of this Agreement.
(ff) "Shelf Registration Statement" has the meaning specified in Section
6.2 of this Agreement.
(gg) "Subsidiary" means as to any Person, a corporation or limited
partnership of which more than 50% of the outstanding capital stock or
partnership interests having full voting power is at the time directly or
indirectly owned or controlled by such Person.
(hh) "Suspension Event" has the meaning specified in Section 6.5(a) of this
Agreement.
(ii) "Suspension Period" has the meaning specified in Section 6.5(b) of
this Agreement.
9.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificates, reports or other documents made or delivered
pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
(c) All accounting terms shall have a meaning determined in accordance with
GAAP.
(d) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any exhibits hereto) and not to any particular provision of this
Agreement.
9.3 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
subsequently designate in writing to the other party):
(a) if to the Issuer to:
Convera Corporation
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to the Investor to the address set forth next to its name on the
signature page hereto.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered by hand, by messenger or by courier, or if sent by facsimile, upon
confirmation of receipt.
9.4 ENTIRE AGREEMENT. This Agreement (including the exhibits attached
hereto) and other documents delivered at the Closing pursuant hereto, contain
the entire understanding of the parties in respect of its subject matter and
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
9.5 EXPENSES; TAXES. Except as otherwise provided in this Agreement, the
parties shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby. Any sales tax, stamp duty, deed transfer or other tax (except taxes
based on the income of the Investor) arising out of the issuance of the Shares
(but not with respect to subsequent transfers) by the Issuer to the Investor and
consummation of the transactions contemplated by this Agreement shall be paid by
the Issuer.
9.6 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
both parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
9.7 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and legal assigns. The rights and obligations of this
Agreement may not be assigned by any party without the prior written consent of
the other party.
9.8 COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be executed by
facsimile signature and in any number of counterparts, each of which shall be an
original but all of which together shall constitute one and the same instrument.
9.9 HEADINGS. The headings contained in this Agreement are for convenience
of reference only and are not to be given any legal effect and shall not affect
the meaning or interpretation of this Agreement.
9.10 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of New
York applicable to contracts executed and to be wholly performed within such
State.
9.11 SEVERABILITY. The parties stipulate that the terms and provisions of
this Agreement are fair and reasonable as of the date of this Agreement.
However, any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, activity or subject, it shall be
construed by limiting, reducing or defining it, so as to be enforceable.
[SIGNATURES AND OTHER INFORMATION ON NEXT THREE PAGES]
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed and delivered as of the date set forth below.
NAME OF INVESTOR (please print) ADDRESS FOR NOTICE (please print)
Attention:
Tax Identification #:
SIGNATURE
By:
Name:
Title:
Date:
Exact name to appear on stock certificate: Number of Shares subscribed for:
Aggregate Purchase Price (see Section 1.1):
$
The Investor hereby provides the following additional information:
(a) Excluding the shares of Common Stock subscribed for above, set forth
below is the number of shares of Common Stock and options rights or warrants of
Convera Corporation ("Options" and together with the Common Stock, "Securities")
which the Investor beneficially owns or of which the Investor is the record
owner on the date hereof. Please refer to the definition of beneficial ownership
on Exhibit B attached hereto. If none, please so state.
Number of Shares: __________________ (excluding the Shares subscribed for
above) Number of Options: __________________
Please indicate by an asterisk (*) above if the Investor disclaims "beneficial
ownership" of any of the above listed Securities, and indicate in response to
question (b) below who has beneficial ownership.
(b) If the Investor disclaims "beneficial ownership" in question (a), please
furnish the following information with respect to the person(s) other than the
Investor who is the beneficial owner(s) of the Securities in question. If not
applicable, please check box: |_|
Name of Beneficial Owner:____________________________________
Relationship to the Investor:____________________________________
Number of Securities Beneficially Owned:________________________
NAME OF INVESTOR:____________________________
(c) Are any of the Securities listed in response to question (a) the subject of
a voting agreement, contract or other arrangement whereby others have voting
control over, or any other interest in, any of the Investor's Securities?
|_| Yes |_| No
If the answer is "Yes", please give details:______________________________.
(d) Please describe each position, office or other material relationship which
the Investor has had with the Issuer or any of its Affiliates, including any
Subsidiary of the Issuer, within the past three years. Please include a
description of any loans or other indebtedness, and any contracts or other
arrangements or transactions involving a material amount, payable by the
Investor to the Issuer or any of its Affiliates, including its Subsidiaries, or
by the Issuer or any of its Affiliates, including its Subsidiaries, to the
Investor. "Affiliates" of the Issuer include its directors and executive
officers, and any other person controlling or controlled by the Issuer. If none,
please so state.
Answer:
(e) Please provide the name and address of other person(s), if any, to whom any
proxy statements, registration statements (including notice of effectiveness
thereof), prospectuses or similar documents and information should be delivered
by the Issuer on behalf of the Investor in the future, with respect to the
Investor's shares:
============================ =============================
============================ =============================
(f) Please advise of special stock certificate delivery requirements for
closing, if any:
(g) Please advise if a NASD member has placed with you the Shares being
purchased hereunder: (Name of Member:)
------------------------------------------
ACCEPTED THIS 23RD DAY OF JULY, 2003 BY:
CONVERA CORPORATION
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
