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