EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
February 6, 2002, among Aspen Technology, Inc., a Delaware corporation (the
"Company"), and the purchasers identified on the signature pages hereto (each a
"Purchaser" and collectively the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), the Company desires to issue and sell to the Purchasers,
and the Purchasers, severally and not jointly, desire to purchase from the
Company, securities of the Company as more fully described in this Agreement.
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 Purchasers 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:
"ACTUAL MINIMUM" means, as of any date, the maximum aggregate number of
shares of Common Stock then issued or potentially issuable in the future
pursuant to the Transaction Documents, including any Underlying Shares issuable
upon exercise or conversion in full of all Warrants and Shares, ignoring any
limits on the number of shares of Common Stock that may be owned by a Purchaser
at any one time and (i) assuming that (a) any previously unconverted Shares are
held until the seventh anniversary of the Closing Date and all dividends therein
are paid in shares of Common Stock, and (b) the Closing Price at all times on
and after the date of determination equals 100% of the actual Closing Price on
the Trading Day immediately prior to the date of determination, and (ii) giving
effect to the Conversion Price (as defined in the Certificate of Designations)
as in effect on such date, without regard to potential changes in the Closing
Price that may occur thereafter.
"ADDITIONAL SHARES" means the shares of Series B-2 Preferred Stock
which are purchased by the Purchasers at the Second Closing.
"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. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
"AVERAGE MARKET PRICE" means the lesser of (i) 117.5% of the average of
the daily Volume Weighted Average Prices during the twenty (20) consecutive
Trading Days ending February 27, 2002, or (ii) 112.5% of the average of the
daily Volume Weighted Average Prices
during the three (3) consecutive Trading Days ending one Trading Day prior to
the Second Closing.
"BANKRUPTCY EVENT" means any of the following events: (a) the Company
or any Material Subsidiary commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Material Subsidiary thereof; (b) there is
commenced against the Company or any Material Subsidiary any such case or
proceeding that is not dismissed within 60 days after commencement; (c) the
Company or any Material Subsidiary is adjudicated insolvent or bankrupt or any
order of relief or other order approving any such case or proceeding is entered;
(d) the Company or any Material Subsidiary suffers any appointment of any
custodian or the like for it or any substantial part of its property that is not
discharged or stayed within 60 days; (e) the Company or any Material Subsidiary
makes a general assignment for the benefit of creditors; (f) the Company or any
Material Subsidiary fails to pay, or states in writing that it is unable to pay
or is unable to pay, its debts generally as they become due; or (g) the Company
or any Subsidiary, by any act or failure to act, expressly indicates its consent
to, approval of or acquiescence in any of the foregoing or takes any corporate
or other action that effects any of the foregoing.
"CERTIFICATE OF DESIGNATIONS" means a certificate of designations of
the Preferred Stock, in the form of Exhibit A.
"CHANGE OF CONTROL" means the occurrence of any of the following in one
or a series of related transactions: (i) an acquisition after the date hereof by
an individual or legal entity or "group" (as described in Rule 13d-5(b)(1) under
the Exchange Act) of a majority of the voting rights or equity interests in the
Company; (ii) a replacement of more than one-half of the members of the
Company's Board of Directors that is not approved by those individuals who are
members of the Board of Directors on the date hereof (or other directors
previously approved by such individuals); (iii) a merger or consolidation of the
Company or a sale of all or substantially all of the assets of the Company in
one or a series of related transactions, unless following such transaction or
series of transactions, the holders of the Company's securities prior to the
first such transaction continue to hold, directly or indirectly, at least a
majority of the voting rights and equity interests in the surviving entity or
acquirer of such assets; (iv) a recapitalization, reorganization or other
transaction involving the Company that constitutes or results in a transfer of a
majority of the voting rights or equity interests in the Company to Persons
other than holders of the Company's voting equity securities prior to such
transaction; or (v) consummation of a "Rule 13e-3 transaction" as defined in
Rule 13e-3 under the Exchange Act with respect to the Company other than a Rule
13e-3 transaction in which no Purchaser's interest in the Company has been
adversely changed or diluted in any material manner.
"CLOSING" means First Closing and/or Second Closing, as applicable.
"CLOSING DATE" means, with respect to the First Closing, the date of
the First Closing, and with respect to the Second Closing, the date of the
Second Closing.
"CLOSING PRICE" means, for any date, the price determined by the first
of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on an Eligible Market or
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any other national securities exchange, the last closing price per share of the
Common Stock for such date (or the nearest preceding date) on the primary
Eligible Market or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then quoted on the OTC Bulletin Board,
the average of the highest closing bid price and the lowest closing ask price
per share of the Common Stock for such date (or the nearest preceding date) so
quoted; (c) if prices for the Common Stock are then reported in the "Pink
Sheets" published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by a majority-in-interest of the
Purchasers and the Company.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value $0.10
per share.
"COMMON STOCK EQUIVALENTS" means, collectively, shares of Common Stock
and Convertible Securities.
"COMPANY COUNSEL" means Xxxx and Xxxx LLP, counsel to the Company.
"CONVERTIBLE SECURITIES" means any evidence of indebtedness, shares,
options, warrants or other securities directly or indirectly convertible into or
exercisable or exchangeable for shares of Common Stock.
"EFFECTIVE DATE" means the date that an Underlying Shares Registration
Statement is declared effective by the Commission.
"ELIGIBLE MARKET" means the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
"EVENT EQUITY VALUE" means 115% of the average of the Closing Prices
for the five Trading Days preceding the date of delivery of the notice requiring
payment of the Event Equity Value, provided that if the Company does not make
such required payment (together with any other payments, expenses and liquidated
damages then due and payable under the Transaction Documents) when due or, in
the event the Company disputes in good faith the occurrence of the Triggering
Event pursuant to which such notice relates, does not instead deposit such
required payment (together with such other payments, expenses and liquidated
damages then due) in escrow with an independent third-party escrow agent within
five Trading Days of the date such required payment is due, then the Event
Equity Value shall be 115% of the greater of (a) the average of the Closing
Prices for the five Trading Days preceding the date of delivery of the notice
requiring payment of the Event Equity Value and (b) the average of the Closing
Prices for the five Trading Days preceding the date on which such required
payment (together with such other payments, expenses and liquidated damages) is
paid in full.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXCLUDED STOCK" means any shares of Common Stock issued or issuable
(A) upon exercise, conversion or exchange of any Common Stock Equivalents
described in Schedule 3.1(g) (provided that such exercise or conversion occurs
in accordance with the terms thereof, without amendment or modification, and
that the applicable exercise or conversion price or ratio is described in such
schedule); (B) to officers, directors, employees or consultants of the Company
pursuant to a stock option plan, employee stock purchase plan or other equity
incentive plan approved by the Board of Directors of the Company; (C) pursuant
to as part of a bona fide firm commitment underwritten public offering with a
nationally recognized underwriter (including any "at the market offering," as
defined in Rule 415(a)(4) under the Securities Act, only if such offering does
not constitute an "equity line" and generates aggregate gross proceeds of at
least $50 million); (D) in connection with any transaction with a strategic
investor, vendor, lessor, customer, supplier, marketing partner, developer or
integrator or any similar arrangement, in each case the primary purpose of which
is not to raise equity capital; (E) in connection with a transaction involving a
merger or acquisition of an entity, business or assets (not principally for the
purpose of obtaining cash); or (F) in connection with any other transaction for
consideration other than cash up to 108,166 shares of Common Stock in the
aggregate (as adjusted for stock splits, stock combinations and similar events).
"FIRST CLOSING" means the closing of the purchase and sale of the
Securities pursuant to Section 2.3(a).
"INITIAL SHARES" means the shares of Series B-1 Preferred Stock, which
are being purchased by the Purchasers at the First Closing.
"LOSSES" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of preparation
of legal action and reasonable attorneys' fees.
"MATERIAL SUBSIDIARY" means any significant subsidiary, as defined in
Rule 1-02(w) of Regulation S-X promulgated by the Commission, of the Company.
"QUALIFIED TRANSFER" means the assignment of rights by a Purchaser
under this Agreement and the Registration Rights Agreement to any Person to whom
such Purchaser assigns or transfers Securities convertible into or exercisable
for Underlying Shares having an aggregate value of at least $5,000,000 and who
agrees to be bound by the provisions of this Agreement and the Registration
Rights Agreement; provided, however, a Purchaser shall have the right (i)
together with any transferee of such Purchaser, to assign Securities in any
amount up to two transfers a year in the aggregate, (ii) to assign without
limitation to any Affiliate, any other Purchaser or any Affiliate of any other
Purchaser and (iii) to assign without limitation pursuant to a pledge in
connection with a bona fide margin account or other loan secured by such
Securities. For the purposes of calculating value pursuant to the preceding
sentence, the value of each Underlying Share shall be deemed to equal the
Closing Price of the Common Stock on the Trading Day immediately prior to the
effective date of such assignment, less the Exercise Price per share of any
Underlying Share that is a Warrant Share, but not less than the Stated Value.
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"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"PREFERRED STOCK" means, collectively, the Series B-1 Preferred Stock
and Series B-2 Preferred Stock.
"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.
"PURCHASER COUNSEL" means Proskauer Rose LLP, counsel to the
Purchasers.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Closing Date of the First Closing, among the Company
and the Purchasers, in the form of Exhibit B.
"REQUIRED EFFECTIVENESS DATE" means the date on which an Underlying
Shares Registration Statement is required to become effective pursuant to the
Registration Rights Agreement.
"REQUIRED MINIMUM" means, as of any date, the maximum aggregate number
of shares of Common Stock then issued or potentially issuable in the future
pursuant to the Transaction Documents, including any Underlying Shares issuable
upon exercise or conversion in full of all Warrants and Shares, ignoring any
limits on the number of shares of Common Stock that may be owned by a Purchaser
at any one time and assuming that (a) any previously unconverted Shares are held
until the seventh anniversary of the Closing Date or, if earlier, until
maturity, and all dividends thereon are paid in shares of Common Stock, (b) the
Closing Price at all times on and after the date of determination equals 75% of
the actual Closing Price on the Trading Day immediately prior to the date of
determination and (c) giving effect to the Conversion Price (as defined in the
Certificate of Designations) as in effect on such date, without regard to
potential changes in the Closing Price that may occur thereafter.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule 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.
"SECOND CLOSING" means the closing of the purchase and sale of the
Securities pursuant to Section 2.3(b).
"SECURITIES" means the Shares, the Warrants and the Underlying Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES B-1 PREFERRED STOCK" means the Series B-1 Convertible Preferred
Stock of the Company, which is convertible into shares of Common Stock.
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"SERIES B-2 PREFERRED STOCK" means the Series B-2 Convertible Preferred
Stock of the Company, which is convertible into shares of Common Stock.
"SHARES" means, collectively, the Initial Shares and Additional Shares.
"SUBSEQUENT PLACEMENT" shall have the meaning specified in Section
4.7(a).
"SUBSIDIARY" means any subsidiary, as defined in Rule 1-02(x) of
Regulation S-X promulgated by the Commission, of the Company.
"TRADING DAY" means (a) any day on which the Common Stock is traded on
its primary Trading Market, or (b) if the Common Stock is not then listed or
quoted on any national securities exchange, market or trading or quotation
facility, then a day on which trading occurs on the New York Stock Exchange (or
any successor thereto).
"TRADING MARKET" means the Nasdaq National Market or any other Eligible
Market on which the Common Stock is then listed or quoted.
"TRANSACTION DOCUMENTS" means this Agreement, the Registration Rights
Agreement, the Certificate of Designations and the Warrants.
"TRIGGERING EVENT" means any of the following events: (a) immediately
prior to any Bankruptcy Event; (b) the Common Stock is not listed or quoted, or
is suspended from trading, on an Eligible Market for a period of five
consecutive Trading Days or ten aggregate Trading Days in any 365 day period;
(c) the Company fails for any reason to deliver a certificate evidencing any
Securities to a Purchaser within ten Trading Days after delivery of such
certificate is required pursuant to any Transaction Document or the exercise or
conversion rights of the Holders pursuant to the Transaction Documents are
otherwise suspended for any reason; (d) the Company fails to have available both
(i) a sufficient number of authorized but unissued and otherwise unreserved
shares of Common Stock available to issue Underlying Shares upon any exercise of
the Warrants or any conversion of Shares and does not make available a
sufficient number of authorized but unissued and otherwise unreserved shares of
Common Stock for such issuance within 60 days after the occurrence of such
deficiency and (ii) at least 5,825,000 authorized but unissued and otherwise
unreserved shares of Common Stock, less reductions reasonably agreed to by the
Purchasers to reflect shares of Common Stock issued upon conversion of the
Shares (and, therefore, reduced aggregate dividend payments), as dividends on
the Shares, upon exercise of the Warrants or upon a redemption of the Shares;
(e) at any time after the Required Effectiveness Date, any Common Stock issuable
pursuant to the Transaction Documents is not listed on an Eligible Market; (f)
any other Event (as defined in the Registration Rights Agreement) occurs and
remains uncured for 60 days; (g) the Company fails to make any cash payment
required under the Transaction Documents and such failure is not cured within
five days after notice of such default is first given to the Company by a
Purchaser; (h) the Company defaults in the timely performance of any other
obligation under the Transaction Documents and such default continues uncured
for a period of 20 days after the date on which notice of such default is first
given to the Company by a Purchaser (it being understood that no prior notice
need be given in the case of a default that cannot reasonably be cured within 20
days), or (i) any Change of Control event.
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"UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of, or in redemption of, the Shares, as payment of dividends on the
Shares and upon exercise of the Warrants, and any securities issued in exchange
for, or upon conversion or in respect of, such shares.
"UNDERLYING SHARES REGISTRATION STATEMENT" means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement and covering the resale of the Underlying Shares by the Purchasers.
"VOLUME WEIGHTED AVERAGE PRICE" means, with respect to a Trading Day,
the average of the daily volume weighted average trading price (the total dollar
amount traded on each day divided by trading volume for such day) of the Common
Stock for the regular Trading Day session as reported at 4:15 (New York time) as
reported by Bloomberg, LP function key HP by using W to calculate the daily
weighted average.
"WARRANTS" means the Common Stock purchase warrants, in the forms of
Exhibit C-1 and Exhibit C-2.
ARTICLE II
PURCHASE AND SALE
2.1 Sale and Issuance of Preferred Stock at First Closing. Subject to
the terms and conditions of this Agreement, each Purchaser agrees, severally and
not jointly, to purchase at the First Closing and the Company agrees to sell and
issue to each Purchaser at the First Closing, that number of shares of Series
B-1 Preferred Stock set forth opposite such Purchaser's name on Schedule A
hereto under the heading "Initial Shares" and a Warrant in the form of Exhibit
C-1 hereto having the terms set forth in Section 2.6(a) below, for the aggregate
purchase price set forth opposite such Purchaser's name on Schedule A hereto
under the heading "First Closing Purchase Price".
2.2 Sale and Issuance of Preferred Stock at Second Closing. Subject to
the terms and conditions of this Agreement, including without limitation
Sections 2.3(d) and 2.5 hereof, each Purchaser agrees, severally and not
jointly, to purchase at the Second Closing and the Company agrees to sell and
issue to each Purchaser at the Second Closing, that number of shares of Series
B-2 Preferred Stock set forth opposite such Purchaser's name on Schedule A
hereto under the heading "Subsequent Shares", such shares having a conversion
price equal to the greater of (i) the Average Market Price or (ii) $15.00, and a
Warrant (the "Second Closing Warrant") in the form of Exhibit C-2 hereto having
the terms set forth in Section 2.6(b) below, for the aggregate purchase price
set forth opposite such Purchaser's name on Schedule A hereto under the heading
"Second Closing Purchase Price".
2.3 Closings.
(a) The purchase and sale of the Initial Shares pursuant to
the terms of Section 2.1 shall take place at the offices of Proskauer Rose LLP
in New York, New York, at 10:00 a.m. on February 6, 2002, or at such other time
and place as the Company and the Purchasers mutually agree upon in writing
(which time and place are designated as the "First Closing").
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(b) The purchase and sale of Additional Shares pursuant to the
terms and conditions of Sections 2.2 and this Section 2.3 shall take place at
the offices of Proskauer Rose LLP in New York, New York at 10:00 a.m. on
February 28, 2002, or at such other time as determined pursuant to Section
2.3(d) or at such other time and place as the Company and the Purchasers
mutually agree upon in writing (which time and place are designated as the
"Second Closing").
(c) In the event that Average Market Price is less than $15.00
(the "Floor Price"), then, except as specifically provided in Section 2.3(d)
below, the Second Closing shall not occur, and no Purchaser shall be obligated
to purchase and the Company shall not be obligated to sell any Additional
Shares.
(d) Notwithstanding anything to the contrary in Section 2.3(c)
above, in the event that the Average Market Price is less than the Floor Price,
then each Purchaser shall have the right (but not the obligation), with respect
to itself only, to require a Second Closing to purchase its respective Second
Closing Warrant and Additional Shares (or any portion of Additional Shares) for
the Second Closing Purchase Price applicable to such Purchaser (such Second
Closing Purchase Price proportionately reduced to the extent such Purchaser
purchases less than all of its respective Additional Shares). Such right shall
be exercised by delivery of written notice to such effect by such Purchaser to
the Company delivered on or before 5:30 P.M. on March 4, 2002. Upon such
delivery of written notice to the Company, the date of the Second Closing for
all purposes herein shall be the third Trading Day following delivery of such
notice. Any Purchaser delivering such notice may revoke such notice at any time
prior to the consummation of the Second Closing.
2.4 First Closing Deliveries.
(a) At the First Closing, the Company shall deliver or cause
to be delivered to each Purchaser the following:
(i) one or more stock certificates evidencing that
number of Initial Shares indicated on Schedule A hereto under the
heading "Initial Shares", registered in the name of such Purchaser;
(ii) a Warrant in the form of Exhibit C-1, registered
in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire that number of shares of Common Stock as set
forth in Section 2.6(a) below;
(iii) evidence that the Certificate of Designations
has been filed and become effective on or prior to the Closing Date of
the First Closing with the Secretary of State of Delaware, in form and
substance mutually agreed to by the parties;
(iv) the legal opinion of Company Counsel, in the
form of Exhibit D, executed by such counsel and delivered to the
Purchasers;
(v) the Registration Rights Agreement duly executed
by the Company; and
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(vi) any other documents reasonably requested by the
Purchasers or Purchaser Counsel in connection with the First Closing.
(b) At the First Closing, each Purchaser shall deliver or
cause to be delivered to the Company the following:
(i) the purchase price set forth opposite such
Purchaser's name on Schedule A hereto under the heading "First Closing
Purchase Price", in United States dollars and in immediately available
funds, by wire transfer to an account designated in writing by the
Company for such purpose; and
(ii) the Registration Rights Agreement duly executed
by such Purchaser.
2.5 Second Closing Deliveries.
(a) At the Second Closing (if and to the extent that such
Second Closing occurs), the Company shall deliver or cause to be delivered to
each applicable Purchaser the following:
(i) one or more stock certificates evidencing that
number of Additional Shares as set forth opposite such Purchaser's name
on Schedule A hereto under the heading "Additional Shares", registered
in the name of such Purchaser;
(ii) a Warrant in the form of Exhibit C-2, registered
in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire that number of shares of Common Stock as set
forth in Section 2.6(b);
(iii) the legal opinion of Company Counsel, in the
form of Exhibit E, executed by such counsel and delivered to the
Purchasers;
(iv) a certificate from the president of the Company
certifying that all the representations and warranties of the Company
contained in Section 3.1 herein are true and correct as of the Second
Closing; and
(v) any other documents reasonably requested by the
Purchasers or Purchaser Counsel in connection with the Second Closing.
(b) At the Second Closing, each applicable Purchaser shall
deliver or cause to be delivered to the Company the following:
(i) the purchase price set forth opposite such
Purchaser's name on Schedule A hereto under the heading "Second Closing
Purchase Price" (or as reduced in accordance with Section 2.3(d)), in
United States dollars and in immediately available funds, by wire
transfer to an account designated in writing by the Company for such
purpose; and
(ii) a certificate from such Purchaser, if an
individual, or an authorized executive officer of such Purchaser, if an
entity, certifying that all the representations and
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warranties of such Purchaser contained in Section 3.2 herein are true
and correct as of the Second Closing.
2.6 Warrants.
(a) At the First Closing, each Purchaser shall be issued a
Warrant in the form of Exhibit C-1 hereto that shall be exercisable for a number
of shares of Common Stock equal to the product of (X) the quotient of (i)
$6,750,000 divided by (ii) the Warrant Market Price (as defined below), times
(Y) the quotient of (I) the aggregate First Closing Purchase Price paid by such
Purchaser, divided by (II) $30,000,000 rounded up to the nearest share. Such
Warrant shall have an exercise price per share equal to 130% of the Warrant
Market Price.
(b) At the Second Closing, each Purchaser shall be issued a
Warrant in the form of Exhibit C-2 hereto that shall be exercisable for a number
of shares equal to the product of (X) the quotient of (i) $4,500,000 divided by
(ii) the Warrant Market Price (as defined below), times (Y) the quotient of (I)
the aggregate Second Closing Purchase Price paid by such Purchaser, divided by
(II) $20,000,000 rounded up to the nearest share. Such Warrant shall have an
exercise price per share equal to 130% of the Warrant Market Price.
(c) The term "Warrant Market Price" means (i) 18.45, in the
case of the First Closing, and (ii) the Volume Weighted Average Price on
February 27, 2002, in the case of the Second Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to each of the Purchasers:
(a) Subsidiaries. The Company does not directly or indirectly
control or own any interest in any other corporation, partnership, joint venture
or other business association or entity, other than those listed in Schedule
3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns, directly or
indirectly, all of the capital stock of each Subsidiary free and clear of any
lien, charge, claim, security interest, encumbrance, right of first refusal or
other restriction (collectively, "Liens"), and all the issued and outstanding
shares of capital stock 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 Material Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Material Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Material 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
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standing, as the case may be, could not, individually or in the aggregate, (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, prospects, business or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any of the Transaction Documents (any of (i), (ii) or (iii), a "Material Adverse
Effect").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents 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 (except to
the extent that stockholder approval may be required pursuant to the rules of
the Nasdaq National Market for the issuance of Underlying Shares equal to or
greater than 20% of the number of shares of Common Stock outstanding immediately
prior to the First Closing Date (the "Nasdaq Stockholder Approval Rule")). Each
of the Transaction Documents 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.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby, including the filing of the
Certificate of Designations pursuant to Section 2.4 and the issuance of the
Shares, do not and will not (i) conflict with or violate any provision of the
Company's certificate of incorporation or bylaws, or (ii) subject to obtaining
the Required Approvals (as defined below), 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, 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 in the case of each of clauses (ii)
and (iii), such as could not reasonably be expected to have or result in,
individually or in the aggregate, a Material Adverse Effect.
(e) Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required under Section 4.8 and
the required filing of the Certificate of Designations pursuant to Section
11
2.4, (ii) the filing with the Commission of the Underlying Shares Registration
Statement, (iii) the application(s) to each Trading Market for the listing of
the Underlying Shares for trading thereon in the time and manner required
thereby, (iv) applicable Blue Sky filings, (v) approval of the stockholders
pursuant to the Nasdaq Stockholder Approval Rule, and (vi) in all other cases
where the failure to obtain such consent, waiver, authorization or order, or to
give such notice or make such filing or registration could not reasonably be
expected to have or result in, individually or in the aggregate, a Material
Adverse Effect (collectively, the "Required Approvals").
(f) Issuance of the Securities. The Shares and the Underlying
Shares have been 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 rights or similar rights of stockholders. The Warrants have been duly
authorized and the issuance thereof is not subject to preemptive rights or
similar rights of stockholders. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of the
Securities (including the Underlying Shares) at least equal to the Required
Minimum on the date hereof.
(g) Capitalization. The number of shares and type of all
authorized, issued and outstanding 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) are set forth in
Schedule 3.1(g). 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(g),
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible into or exercisable or exchangeable for shares
of Common Stock. Except as disclosed in Schedule 3.1(g), there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) and the
issue and sale of the Securities (including the Underlying Shares) will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset
price under such securities. To the knowledge of the Company, except as
specifically disclosed in Schedule 3.1(g), 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, ignoring for such purposes any limitation on the number of shares of
Common Stock that may be owned at any single time.
(h) 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 two years preceding the date
hereof (or such shorter period as the Company was required by law to file such
material) (the foregoing materials being collectively referred to
12
herein as the "SEC Reports" and, together with this Agreement and the Schedules
to this Agreement, the "Disclosure Materials"). The Company has delivered to the
Purchasers a copy of all SEC Reports filed within the 10 days preceding the date
hereof. As of their respective dates, the SEC Reports complied in all material
respects with the requirements of 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 light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Reports complied 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 were
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 and the absence of footnotes. All material agreements to which the
Company or any Subsidiary is a party or to which the property or assets of the
Company or any Subsidiary are subject have been included as part of or
specifically identified in the SEC Reports to the extent required by the rules
and regulations of the Commission.
(i) Material Changes. 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 has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business, (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
and (C) as set forth in the press release issued by the Company on January 23,
2002, (iii) the Company has not altered its method of accounting or the identity
of its auditors, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock (other than in connection with restricted stock grants to employees), and
(v) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans.
(j) Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws with
respect to the Company or a Subsidiary or a claim of breach of fiduciary duty
with respect to the Company or a Subsidiary. The Company
13
does not have pending before the Commission any request for confidential
treatment of information, and the Company does not expect to make any such
request prior to the Required Effectiveness Date. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company with respect to the Company or a Subsidiary.
The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act. No strike, work
stoppage, slow down or other material labor problem exists or, to the knowledge
of the Company, is threatened or imminent with respect to any of the employees
of the Company or the Subsidiaries.
(k) Compliance. Neither the Company nor any Subsidiary (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 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, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as, individually or in the aggregate, are not reasonably likely to
have or result in a Material Adverse Effect.
(l) 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, individually or in the aggregate, are not
reasonably likely to have or result in a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
(m) Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least ten days prior to the date hereof, none of
the officers or directors of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), 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
officer or director or, to the knowledge of the Company, any entity in which any
officer or director has a material interest.
(n) 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 generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific
14
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.
(o) Certain Fees. Except for the fees described in Schedule
3.1(o), all of which are payable to registered broker-dealers, 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, and the Company has not taken any action that would cause any
Purchaser to be liable for any such fees or commissions.
(p) 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 Securities 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 within the past
six months, 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 an exemption from registration under the Securities Act in
connection with the offer and sale of the Securities as contemplated hereby or
(ii) cause the offering of the Securities pursuant to the Transaction Documents
to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or shareholder approval provisions, including without
limitation under the rules and regulations of any Trading Market. The Company is
not, and is not an Affiliate of, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended. The Company is not a United
States real property holding corporation within the meaning of the Foreign
Investment in Real Property Tax Act of 1980.
(q) Form S-3 Eligibility. The Company has the ability to
register its Common Stock for resale by the Purchasers under Form S-3
promulgated under the Securities Act.
(r) Listing and Maintenance Requirements. The Company has not,
in the two years 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, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(s) Registration Rights. Except as described in Schedule
3.1(s), 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.
(t) Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's certificate of incorporation or the
laws of its state of incorporation that is or could become applicable to the
Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or
15
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Purchasers'
ownership of the Securities.
(u) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that constitutes or could reasonably be
expected to constitute material, nonpublic information. The Company understands
and confirms that each of the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company. The
Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2.
(v) Acknowledgment Regarding Purchasers' Purchase of
Securities. The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser 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 Purchaser or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchasers'
purchase of the Securities. The Company further represents to each Purchaser
that the Company's decision to enter into this Agreement has been based solely
on the independent evaluation of the Company and its representatives.
3.2 Representations and Warranties of the Purchasers.Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser 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 thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities pursuant to
an effective registration statement under the Securities Act or under an
exemption from such registration and in compliance with applicable federal and
state securities laws. Nothing contained herein shall be deemed a representation
or warranty by such Purchaser to hold Securities for any period of time. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.
16
Such Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
(c) Purchaser Status. From the time such Purchaser was
initially offered the Securities through the Second Closing Date, the Purchaser
has been or will be, as the case may be, an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, 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 Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(e) Access to Information. Such Purchaser 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 Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition 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 Purchaser or its representatives or counsel, nor any other
provisions of this Section 3.2, shall modify, amend or affect such Purchaser'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. Such Purchaser does not have actual knowledge that any
representation or warranty of the Company in the Transaction Documents is not
accurate as of the date hereof.
(f) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities 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.
(g) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
17
(a) Securities may only be disposed of pursuant to an
effective registration statement under 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 Securities other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k), 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. The
Securities and the rights and obligations of each Purchaser under this Agreement
may be assigned by such Purchaser only pursuant to a Qualified Transfer.
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, any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser, provided that the transferee certifies to the Company that it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act and
is purchasing such Shares for investment only and not with a view to
distributing or reselling such Securities and agrees in writing to be bound by
the provisions of this Agreement.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on any certificate
evidencing Securities:
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 THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Certificates evidencing Securities shall not be required to
contain such legend or any other legend (i) pursuant to or
following any sale of such Securities pursuant to an effective
Registration Statement covering the resale of such Securities
under the Securities Act, (ii) following any sale of such
Securities pursuant to Rule 144, (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is
not, in the reasonable opinion of the Company Counsel,
required under the circumstances under applicable requirements
of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission).
Following the Effective Date or at such earlier time as a
legend is no longer required for certain Securities, the
Company will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Company's
transfer agent of a legended certificate representing such
Securities,
18
deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all
restrictive and other legends. In addition, each certificate
for the Shares shall bear the following Legend: "THE NUMBER OF
PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE MAY BE LESS
THAN THE NUMBER OF PREFERRED SHARES STATED ON THE FACE HEREOF
PURSUANT TO SECTION 8(c) OF THE CERTIFICATE OF DESIGNATIONS
RELATING TO THE PREFERRED SHARES REPRESENTED BY THIS
CERTIFICATE." The Company may not make any notation on its
records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in
this Section, except as may be required by applicable law.
(c) The Company acknowledges and agrees that a Purchaser may
from time to time pledge pursuant to a bona fide margin agreement or grant a
security interest in some or all of the Securities and, if required under the
terms of such arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith except as
required by applicable law. Further, no notice shall be required of such pledge.
At the appropriate Purchaser's expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
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.
(d) In addition to any other rights available to a Purchaser,
if the Company fails to deliver to such Purchaser a certificate representing
Common Stock by the third Trading Day after the date on which delivery of such
certificate is required by any Transaction Document, and if after such third
Trading Day such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Purchaser of the shares that the Purchaser anticipated receiving from the
Company (a "Buy-In"), then the Company shall, within three Trading Days after
such Purchaser's request and in such Purchaser's discretion, either (i) pay cash
to such Purchaser in an amount equal to such Purchaser's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased (the "Buy-In Price"), at which point the Company's obligation to
deliver such certificate (and to issue such Common Stock) shall terminate and
the Purchaser shall have been deemed to have tendered the Securities to which
the Underlying Securities relate to the Company for cancellation and shall do so
promptly after the occurrence of such event, or (ii) promptly honor its
obligation to deliver to such Purchaser a certificate or certificates
representing such Common Stock and pay cash to such Purchaser in an amount equal
to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Common Stock, times (B) the Closing Price on the date of the event
giving rise to the Company's obligation to deliver such certificate.
4.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Securities (including the Underlying Shares) will result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The
19
Company further acknowledges that, subject to the satisfaction by the Purchasers
of their obligations under the Transaction Documents, the Company's obligations
under the Transaction Documents, including without limitation its obligation to
issue the Securities (including the Underlying Shares) pursuant to the
Transaction Documents, are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction, regardless of the effect of
any such dilution or any claim that the Company may have against any Purchaser.
4.3 Furnishing of Information. As long as any Purchaser owns
Securities, 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. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Purchasers and make publicly available in accordance with paragraph (c) of
Rule 144 such information as is required for the Purchasers to sell the
Securities under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request to satisfy the
provisions of Rule 144 applicable to the issuer of securities relating to
transactions for the sale of securities pursuant to Rule 144.
4.4 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company 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 Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for purposes
of the rules and regulations of any Trading Market.
4.5 Reservation and Listing of Securities.
(a) The Company shall reserve for issuance and maintain a
reserve of 5,825,000 shares of Common Stock for issuance pursuant to the
Transaction Documents less any shares of Common Stock issued upon conversion of
the Shares, as dividends on the Shares, upon exercise of the Warrants or upon a
redemption of the Shares or, if smaller, a sufficient number of authorized but
unissued and otherwise unreserved shares of Common Stock available to issue
Underlying Shares upon any exercise of the Warrants or any conversion of Shares.
(b) If, on any date, the number of authorized but unissued
(and otherwise unreserved) shares of Common Stock (the "Remaining Authorized
Shares") is less than 125% of (i) the Actual Minimum on such date, minus (ii)
the number of shares of Common Stock previously issued pursuant to the
Transaction Documents, then the Board of Directors of the Company shall use its
best efforts to amend the Company's certificate of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time (minus the number of shares of Common Stock
previously issued pursuant to the Transaction Documents), as soon as possible
and in any event not later than the 60th day after such date; provided that the
Company will not be required at any time to authorize a number of shares of
Common Stock greater than the maximum remaining number of shares of Common Stock
that could possibly be issued after such time pursuant to the Transaction
Documents.
20
(c) If, at the time any Purchaser requests an exercise or
conversion of any Securities, the Actual Minimum minus the number of shares of
Common Stock previously issued pursuant to the Transaction Documents exceeds the
Remaining Authorized Shares, then the Company shall issue to the Purchaser
requesting such exercise or conversion a number of Underlying Shares not
exceeding such Purchaser's pro-rata portion of the Remaining Authorized Shares
(based on such Purchaser's share of the aggregate purchase price paid hereunder
and considering any Underlying Shares previously issued to such Purchaser), and
the remainder of the Underlying Shares issuable in connection with such exercise
or conversion (if any) shall constitute "Excess Shares" pursuant to Section
4.5(g) below.
(d) The Company shall (i) in the time and manner required by
each Trading Market, prepare and file with such Trading Market an additional
shares listing application covering a number of shares of Common Stock at least
equal to the greater of (A) the Required Minimum on the applicable Closing Date
and (B) the Required Minimum on the date of such application, (ii) take all
steps necessary to cause such shares of Common Stock to be approved for listing
on each Trading Market as soon as possible thereafter, (iii) provide to the
Purchasers evidence of such listing, and (iv) maintain the listing of such
Common Stock on each such Trading Market or another Eligible Market.
(e) If, on any date, the number of shares of Common Stock
previously listed on a Trading Market is less than 125% of the Actual Minimum on
such date, then the Company shall take the necessary actions to list on such
Trading Market, as soon as reasonably possible, a number of shares of Common
Stock at least equal to the Required Minimum on such date; provided that the
Company will not be required at any time to list a number of shares of Common
Stock greater than the maximum number of shares of Common Stock that could
possibly be issued pursuant to the Transaction Documents.
(f) If the Trading Market is the Nasdaq National Market or the
Nasdaq SmallCap Market, then the maximum number of shares of Common Stock that
the Company may issue pursuant to the Transaction Documents at an effective
purchase price less than the Closing Price on the Trading Day immediately
preceding the date of the First Closing shall be 6,401,394 shares (the "Issuable
Maximum"), unless the Company obtains shareholder approval in accordance with
the rules and regulations of such Trading Market. If, at the time any Purchaser
requests an exercise or conversion of any Securities, the Actual Minimum
(excluding any shares issued or issuable at an effective purchase price in
excess of the Closing Price on the Trading Day immediately preceding the date of
the First Closing) exceeds the Issuable Maximum (and if the Company has not have
previously obtained the required shareholder approval), then the Company shall
issue to the Purchaser requesting such exercise or conversion a number of
Underlying Shares of Common Stock not exceeding such Purchaser's pro-rata
portion of the Issuable Maximum (based on such Purchaser's share of the
aggregate purchase price paid hereunder and considering any Underlying Shares
previously issued to such Purchaser), and the remainder of the Underlying Shares
issuable in connection with such exercise or conversion (if any) shall
constitute "Excess Shares" pursuant to Section 4.5(g) below.
(g) Any Purchaser to which Excess Shares are attributed based
on the number of Remaining Authorized Shares or the Issuable Maximum shall have
the option, by notice to the Company, to require the Company to either: (i) use
its best efforts to obtain the required
21
shareholder approval necessary to permit the issuance of such Excess Shares as
soon as is possible, but in any event not later than the 60th day after such
notice, or (ii) within five Trading Days after such notice, pay cash to such
Purchaser, as liquidated damages and not as a penalty, in an amount equal to the
number of Excess Shares times the average Closing Price over the five Trading
Days immediately prior to the date of such notice less the exercise price
thereof in the case of any Underlying Shares issuable upon exercise of the
Warrants (the "Cash Amount") and the Company shall have no further obligation to
issue or deliver such Excess Shares and the Purchaser shall have been deemed to
have tendered the Securities to which the Underlying Securities related to the
Company for cancellation and shall do so promptly after the occurrence of such
event. If the exercising or converting Purchaser elects the first option under
the preceding sentence and the Company fails to obtain the required shareholder
approval on or prior to the 60th day after such notice, then within three
Trading Days after such 60th day, the Company shall pay the Cash Amount to such
Purchaser, as liquidated damages and not as penalty and the Company shall have
no further obligation to issue or deliver such Excess Shares.
4.6 Conversion and Exercise Procedures. The form of Election to
Purchase included in the Warrants and the form of Conversion Notice included in
the Certificate of Designations set forth the totality of the procedures
required in order to exercise the Warrants or convert the Shares under the
Transaction Documents. No additional legal opinion or other information or
instructions shall be necessary to enable the Purchasers to exercise their
Warrants or convert their Shares except as may be required by law. The Company
shall honor exercises of the Warrants and conversions of the Shares and shall
deliver Underlying Shares in accordance with the terms, conditions and time
periods set forth in the Transaction Documents.
4.7 Subsequent Placements.
(a) Until the second anniversary of the Second Closing Date,
the Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or the Subsidiaries'
equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its
life and under any circumstances, convertible into or exercisable or
exchangeable for Common Stock (any such offer, sale, grant, disposition or
announcement being referred to as a "SUBSEQUENT PLACEMENT") unless the Company
shall have first complied with this Section 4.7(a).
(i) The Company shall deliver to each Purchaser a
written notice (the "Offer") of any proposed or intended issuance or
sale or exchange of the securities being offered (the "Offered
Securities") in a Subsequent Placement, which Offer shall (w) identify
and describe the Offered Securities, (x) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the
number or amount of the Offered Securities to be issued, sold or
exchanged, (y) identify the persons or entities (if known) to which or
with which the Offered Securities are to be offered, issued, sold or
exchanged and (z) offer to issue and sell to or exchange with the
Purchasers fifty percent (50%) of the Offered Securities (the
"Purchaser Allocation"), allocated among the Purchasers (A) first,
based on each Purchaser's pro rata portion of the aggregate purchase
price paid by the Purchasers for all of the Securities purchased
hereunder (the "Basic Amount"), and (B) with respect to each Purchaser
that elects to purchase its Basic Amount, based upon
22
any additional portion of the Offered Securities attributable to the
Basic Amounts of other Purchasers as such Purchaser shall indicate it
will purchase or acquire should the other Purchasers subscribe for less
than their Basic Amounts (the "Undersubscription Amount").
(ii) To accept an Offer, in whole or in part, a
Purchaser must deliver a written notice to the Company prior to the end
of the ten (10) Trading Day period of the Offer, setting forth the
portion of the Purchaser's Basic Amount that such Purchaser elects to
purchase and, if such Purchaser shall elect to purchase all of its
Basic Amount, the Undersubscription Amount, if any, that such Purchaser
elects to purchase (in either case, the "Notice of Acceptance"). If the
Basic Amounts subscribed for by all Purchasers are less than the total
of all of the Basic Amounts, then each Purchaser who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled
to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that
if the Undersubscription Amounts subscribed for exceed the difference
between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the "Available Undersubscription Amount"), each
Purchaser who has subscribed for any Undersubscription Amount shall be
entitled to purchase on that portion of the Available Undersubscription
Amount as the Basic Amount of such Purchaser bears to the total Basic
Amounts of all Purchasers that have subscribed for Undersubscription
Amounts, subject to rounding by the Board of Directors to the extent
its deems reasonably necessary. If the Purchasers in the aggregate have
not agreed to purchase the full Purchaser Allocation, none of the
Purchasers shall be entitled to purchase any of the Offered Securities,
provided the Offered Securities are sold as described in the following
clause (iii).
(iii) The Company shall have ten (10) Trading Days
from the expiration of the period set forth in Section 4.7(a)(ii) above
to issue, sell or exchange (A) fifty percent (50%) of the Offered
Securities, if the Purchasers in the aggregate have agreed to purchase
the full Purchaser Allocation, or (B) all of the Offered Securities, if
the Purchasers in the aggregate have not agreed to purchase the full
Purchaser Allocation (the Offered Securities so available for issuance,
sale or exchange to persons other than the Purchasers being referred to
herein as the "Available Securities"), provided that the Available
Securities are issued, sold or exchanged only to the offerees described
in the Offer (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer.
(iv) In the event the Company shall propose to sell
less than all the Available Securities (any such sale to be in the
manner and on the terms specified in Section 4.7(a)(iii) above), then
each Purchaser shall be deemed to reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount
that shall be not less than the number or amount of the Offered
Securities that the Purchaser elected to purchase pursuant to Section
4.7(a)(ii) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company
actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Purchasers pursuant to Section
4.7(a)(ii) above prior to such reduction) and (ii)
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the denominator of which shall be the original amount of the Offered
Securities. The Company may not issue, sell or exchange more than the
reduced number or amount of the Offered Securities unless and until
such Offered Securities have again been offered to the Purchasers in
accordance with Section 4.7(a)(i) above.
(v) Upon the closing of the issuance, sale or
exchange of all or less than all of the Available Securities, the
Purchasers shall acquire from the Company, and the Company shall issue
to the Purchasers, the number or amount of Offered Securities specified
in the Notices of Acceptance, as reduced pursuant to Section 4.7(a)(iv)
above, upon the terms and conditions specified in the Offer. The
purchase by the Purchasers of any Offered Securities is subject in all
cases to the preparation, execution and delivery by the Company and the
Purchasers of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Purchasers and
their respective counsel.
(vi) Any Offered Securities not acquired by the
Purchasers or other persons in accordance with Section 4.7(a)(iii)
above may not be issued, sold or exchanged until they are again offered
to the Purchasers under the procedures specified in this Agreement.
(b) The restrictions contained in paragraph (a) of this
Section shall not apply to the issuance of Excluded Stock.
4.8 Securities Laws Disclosure; Publicity. The Company shall, on each
Closing Date, issue a press release acceptable to the Purchasers disclosing all
material terms of the transactions contemplated hereby. Thereafter, the Company
shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby and provide
copies thereof to the Purchasers promptly after filing. The Company shall, at
least two Trading Days prior to the filing or dissemination of any disclosure
required by this paragraph, provide a copy thereof to the Purchasers for their
review. The Company and the Purchasers shall consult with each other in issuing
any press releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or Trading Market
with respect to the transactions contemplated hereby, and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other communication without the prior consent of the other (which consent
shall not be unreasonably withheld), except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure (but not any
disclosure as to the controlling Persons thereof) is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure. Neither the Company nor any Person acting on
its behalf will provide any Purchaser with material, nonpublic information about
the Company unless such Purchaser consents to receive such information in
writing in advance even if otherwise required pursuant to the terms of any
Transaction Document.
24
4.9 Repurchase Upon Occurrence of a Bankruptcy Event. Upon the
occurrence of any Bankruptcy Event, the Company shall immediately be obligated,
without any further action by any Purchaser, to repurchase all outstanding
shares of Series B Preferred Stock and all such Underlying Shares at the Event
Price as if each Holder had delivered an Event Notice immediately prior to the
occurrence of such Bankruptcy Event pursuant to Section 10 of the Certificate of
Designations.
4.10 Reimbursement.
(a) The Company shall indemnify and hold harmless each
Purchaser and any of its Affiliates or any officer, director, partner,
controlling person, employee or agent of a Purchaser or any of its Affiliates (a
"Related Person") from and against any and all Losses, as incurred, arising out
of or relating to any breach by the Company of any of the representations,
warranties or covenants made by the Company in this Agreement or any other
Transaction Document, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
5(c) of the Registration Rights Agreement. The indemnification obligations of
the Company under this paragraph shall be in addition to any liability that the
Company may otherwise have and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of the Purchasers
and any such Related Persons. In no event shall the Company's liability under
this Section 4.10(a) to a Purchaser or its Related Persons exceed the total
purchase price paid by the Purchaser under this Agreement. If the Company
breaches its obligations under any Transaction Document, then, in addition to
any other liabilities the Company may have under any Transaction Document or
applicable law, the Company shall pay or reimburse the Purchasers on demand for
all costs of collection and enforcement (including reasonable attorney's fees
and expenses). Without limiting the generality of the foregoing, the Company
specifically agrees to reimburse the Purchasers on demand for all costs of
enforcing the indemnification obligations in this paragraph.
(b) Each Purchaser shall severally indemnify and hold harmless
the Company from and against any and all Losses, as incurred, arising out of or
relating to any breach by such Purchaser of any of the representations,
warranties or covenants made by such Purchaser in this Agreement or any other
Transaction Document, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
5(c) of the Registration Rights Agreement. The indemnification obligations of
such Purchaser under this paragraph shall be in addition to any liability that
such Purchaser may otherwise have and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company. In no event shall a Purchaser's liability under this Section 4.10(b) to
the Company exceed the total purchase price paid by such Purchaser under this
Agreement. If such Purchaser breaches its obligations under any Transaction
Document, then, in addition to any other liabilities such Purchaser may have
under any Transaction Document or applicable law, such Purchaser shall pay or
reimburse the Company on demand for all costs of collection and enforcement
(including reasonable attorney's fees and expenses). Without limiting the
generality of the foregoing, such Purchaser specifically agrees to reimburse the
Company on demand for all costs of enforcing the indemnification obligations in
this paragraph.
25
4.11 Default Interest. If the Company fails to make any cash payment
required by any Transaction Document in full when due, then the Company shall
pay interest thereon at a rate of 12% per annum (or such lesser maximum rate
that is permitted to be paid under applicable law) from the date such payment
was due until such amount, plus all such interest thereon, is paid in full.
4.12 Rights of Shareholders. Each time the Company delivers a notice or
other communication to holders of the Common Stock it will contemporaneously
deliver a copy of such notice or communication to the Purchasers. The Company
acknowledges and agrees that, for so long as a Purchaser holds any Shares
(whether or not such Purchaser holds shares of Common Stock), (a) the officers
and directors of the Company will owe the same duties (fiduciary and otherwise)
to such Purchaser with respect to the Shares owned by such Purchaser as are owed
to a holder of Common Stock and (b) such Purchaser will be entitled to all
rights and remedies with respect to such duties with respect to the Shares owned
by such Purchaser as are available to a holder of Common Stock under the
corporate law of the Company's jurisdiction of incorporation.
4.13 Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company
or any other Person that any Purchaser is an "Acquiring Person" under any such
plan or in any way could be deemed to trigger the provisions of such plan by
virtue of receiving Securities under the Transaction Documents.
4.14 Certain Trading Limitations. For so long as a Purchaser or its
Affiliates hold the Shares originally purchased by it under this Agreement such
Purchaser agrees that it will not enter into any Short Sales. For purposes of
this Section 4.14, a "Short Sale" by a Purchaser means to sell, contract to
sell, grant any option to purchase, or make any short sale of Common Stock,
establish a "put equivalent position" (as such term is defined in Rule 16a-1(h)
under the Exchange Act) or engage in any transaction the result of which will
involve any of the foregoing, at a time when such Purchaser has no equivalent
offsetting long position in the Common Stock. For purposes of determining
whether a Purchaser has an equivalent offsetting long position in the Common
Stock, all Common Stock held by such Purchaser, all Underlying Shares that would
be issuable upon conversion or exercise in full of all Securities then held by
such Purchaser (assuming that such Securities were then fully convertible or
exercisable, notwithstanding any provisions to the contrary, and giving effect
to any conversion or exercise price adjustments scheduled to take effect in the
future) and all shares of Common Stock issuable upon exercise of any call option
or "call equivalent position" (as defined in Rule 16a-1(b) under the Exchange
Act) held by such Purchaser (assuming that such call position was then fully
convertible or exercisable, notwithstanding any provisions to the contrary, and
giving effect to any conversion or exercise price adjustments scheduled to take
effect in the future) shall be deemed to be held long by such Purchaser.
26
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the applicable Closing is
subject to the satisfaction or waiver by such Purchaser, at or before such
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 applicable Closing as
though made on and as of such date except for those representations and
warranties made as of a specific date which shall be true and correct in all
material respects as of such date;
(b) Performance. The Company and each other Purchaser 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 applicable
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; Listing.
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
an Eligible Market; and
(e) Adverse Changes. Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
could be expected to have or result in a Material Adverse Effect.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the applicable Closing is
subject to the satisfaction or waiver by the Company, at or before such Closing,
of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of each Closing Date as though
made on and as of such date;
(b) Performance. The Purchasers 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 the Purchasers at or prior to the applicable Closing; and
(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.
27
ARTICLE VI
MISCELLANEOUS
6.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the First 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).
6.2 Fees and Expenses. At the Closing, the Company shall pay to Pine
Ridge Financial, Inc., the reasonable legal fees and expenses incurred by the
Purchasers in connection with the preparation and negotiation of the Transaction
Documents up to $50,000 in the aggregate. In lieu of the foregoing payments, the
Pine Ridge Financial, Inc. may retain the amount of such payments instead of
delivering such amounts to the Company at the First Closing or require the
Company to pay such amounts directly to Purchaser Counsel. 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 issuance of any Securities and any and all costs and
expenses relating to compliance with the Company's obligations under Section
4.5.
6.3 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 First Closing, and without further consideration, the Company will
execute and deliver to the Purchasers such further documents as may be
reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
6.4 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 5:30 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 5:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such notices and communications are those set forth on the
signature pages hereof, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.
6.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed by the Company and holders of
at least a majority of the shares of Common Stock issued or issuable upon
conversion of the Shares. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be
28
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.
6.6 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.
6.7 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 the Purchasers. Any Purchaser may only
assign its rights under this Agreement and the Registration Rights Agreement
pursuant to a Qualified Transfer.
6.8 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 Related Person is an intended third party
beneficiary of Section 4.10 and may enforce the provisions of such Section
directly against the Company.
6.9 Governing Law; Venue; Waiver Of Jury Trial. THE CORPORATE LAWS OF
THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS. 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.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR
THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR 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
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS 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 WAIVES ALL
RIGHTS TO A TRIAL BY JURY.
29
6.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive each Closing and the delivery,
conversion and/or, exercise of the Securities, as applicable.
6.11 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.
6.12 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.
6.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
6.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities 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 customary and reasonable
indemnity, if requested. 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 Securities.
6.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to 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 the defense that a
remedy at law would be adequate.
6.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be
30
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, 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.
6.17 Usury. To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the "Maximum Rate"), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate. It is
agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate of interest
applicable to the Transaction Documents from the effective date forward, unless
such application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser's election.
6.18 Independent Nature of Purchasers. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Shares pursuant
to this Agreement has been made by such Purchaser independently of any other
Purchaser 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 Purchaser or by any agent or employee of any other Purchaser, and
no Purchaser or any of its agents or employees shall have any liability to any
other Purchaser (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 Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers 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
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of
31
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
6.19 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 this Agreement to a number of shares or a price per share shall be
amended to appropriately account for such event.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
32
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.
ASPEN TECHNOLOGY, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President, Finance and
Chief Financial Officer
Address for Notice:
00 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.:(000) 000-0000
Telephone No.:(000) 000-0000
Attn: Chief Executive Officer and General
Counsel
With a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASERS FOLLOWS
33
PINE RIDGE FINANCIAL INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
-----------------------------
Title: Attorney-in-fact
----------------------------
Pine Ridge Financial Inc.
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.:(000) 000-0000
Attn: Avi Vigder
With a copy to
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
34
SMITHFIELD FIDUCIARY LLC
By: /s/Xxx X. Xxxxxx
----------------
Name: Xxx X. Xxxxxx
Title: Authorized Signatory
Address for Notice:
Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.:(000) 000-0000
Telephone No.:(000) 000-0000
Attn: Xxx X. Xxxxxx / Xxxx X. Chill
With a copy to
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
35
PERSEVERANCE LLC
By: /s/ Xxxxx Xxxxxxx
-----------------
Name: Xxxxx Xxxxxxx
Title: Director
Perseverance LLC.
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.:(000) 000-0000
Attn: Avi Vigder
With a copy to
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
36
TABLE OF CONTENTS
Page Number
-----------
ARTICLE I DEFINITIONS.......................................................... 1
1.1 Definitions........................................................ 1
ARTICLE II PURCHASE AND SALE................................................... 7
2.1 Sale and Issuance of Preferred Stock at First Closing.............. 7
2.2 Sale and Issuance of Preferred Stock at Second Closing............. 7
2.3 Closings........................................................... 7
2.4 First Closing Deliveries........................................... 8
2.5 Second Closing Deliveries.......................................... 9
2.6 Warrants........................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................... 10
3.1 Representations and Warranties of the Company...................... 10
3.2 Representations and Warranties of the Purchasers................... 16
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES..................................... 18
4.1 Transfer Restrictions.............................................. 18
4.2 Acknowledgment of Dilution......................................... 20
4.3 Furnishing of Information.......................................... 20
4.4 Integration........................................................ 20
4.5 Reservation and Listing of Securities.............................. 20
4.6 Conversion and Exercise Procedures................................. 22
4.7 Subsequent Placements.............................................. 22
4.8 Securities Laws Disclosure; Publicity.............................. 24
4.9 Repurchase Upon Occurrence of a Bankruptcy Event................... 25
4.10 Reimbursement...................................................... 25
4.11 Default Interest................................................... 26
4.12 Rights of Shareholders............................................. 26
4.13 Shareholders Rights Plan........................................... 26
4.14 Certain Trading Limitations........................................ 26
ARTICLE V CONDITIONS........................................................... 27
5.1 Conditions Precedent to the Obligations of the Purchasers.......... 27
5.2 Conditions Precedent to the Obligations of the Company............. 28
ARTICLE VI MISCELLANEOUS....................................................... 28
6.1 Termination........................................................ 28
6.2 Fees and Expenses.................................................. 28
6.3 Entire Agreement................................................... 28
6.4 Notices............................................................ 29
6.5 Amendments; Waivers................................................ 29
6.6 Construction....................................................... 29
6.7 Successors and Assigns............................................. 29
6.8 No Third-Party Beneficiaries....................................... 30
6.9 Governing Law; Venue; Waiver Of Jury Trial......................... 30
6.10 Survival........................................................... 30
6.11 Execution.......................................................... 30
6.12 Severability....................................................... 31
6.13 Rescission and Withdrawal Right.................................... 31
6.14 Replacement of Securities.......................................... 31
6.15 Remedies........................................................... 31
6.16 Payment Set Aside.................................................. 31
6.17 Usury.............................................................. 32
6.18 Independent Nature of Purchasers................................... 32
6.19 Adjustments in Share Numbers and Prices............................ 33
Exhibits:
A Form of Certificate of Designations
B Registration Rights Agreement
C-1 Form of Warrant for First Closing
C-2 Form of Warrant for Second Closing
D Opinion of Company Counsel for First Closing
E Opinion of Company Counsel for Second Closing
Schedules:
3.1(a) Subsidiaries
3.1(g) Capitalization
3.1(o) Broker Fees
3.1(s) Registration Rights
Schedule A
PURCHASERS
FIRST CLOSING
NAME AND ADDRESS OF INITIAL PURCHASE SUBSEQUENT SECOND CLOSING
PURCHASERS SHARES PRICE SHARES PURCHASE PRICE
-------------------------------------------------------------------------------------------
Pine Ridge Financial Inc.
c/x Xxxxxxx Capital Corp. 15,000 $15,000,000 10,000 $10,000,000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Smithfield Fiduciary LLC 9,000 $ 9,000,000 6,000 $ 6,000,000
c/o Highbridge Capital
Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Perseverance LLC 6,000 $ 6,000,000 4,000 $ 4,000,000
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
TOTAL $30,000,000 $20,000,000*
=========== ===========
* Subject to reduction pursuant to Section 2.3(d) of this Agreement.
