EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of April
27, 2004 by and between Cosi, Inc., a Delaware corporation (the "Company"), and
each purchaser 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
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, certain
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 each of 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:
"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 promulgated under the Securities Act.
"Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
"Closing" means the closing of the purchase and sale of the Shares
pursuant to Section 2.1.
"Closing Date" means the date of the 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 any other national
securities exchange, the 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
closing bid 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 closing 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.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value
$0.01 per share.
"Common Stock Equivalents" means, collectively, Options and
Convertible Securities.
"Company Counsel" means Cadwalader, Xxxxxxxxxx & Xxxx LLP, counsel
to the Company.
"Convertible Securities" means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock.
"Effective Date" means the date that the Registration Statement is
first declared effective by the Commission.
"Eligible Market" means any of the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq Small
Cap Market.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Stock" means the issuance of Common Stock (A) upon
exercise or conversion of any rights, warrants, options or other
securities or pursuant to any rights held by existing stockholders, (B) in
connection with any grant of options or stock to employees, officers,
directors or consultants of the Company pursuant to a stock incentive plan
duly adopted by the Company's board of directors or in respect of the
issuance of Common Stock upon exercise of any such options, (C) pursuant
to a bona fide firm commitment underwritten public offering with a
nationally recognized underwriter (excluding any equity line) in an
aggregate offering amount greater than $25,000,000, (D) in connection with
any collaboration or joint venture approved by the Company's board of
directors and not for the principal purpose of raising cash or (E)
pursuant to the Company's bona fide acquisition of another corporation, or
all or a portion of its assets, by merger, purchase of assets or stock or
other corporate reorganization in each case, as approved by the Company's
board of directors and not for the principal purpose of raising capital.
"Filing Date" means the 30th day following the Closing Date.
"Lien" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"Losses" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including, without limitation, costs of
preparation and reasonable attorneys' fees.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Per Share Purchase Price" means $5.65.
"Person" means any 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 any court or other federal, state, local or other
governmental authority or other entity of any kind.
"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.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Purchaser Counsel" has the meaning set forth in Section 6.2(a).
"Registrable Securities" means any Common Stock issued or issuable
pursuant to the Transaction Documents, together with any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing. Shares of
Common Stock shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such shares of Common
Stock shall have become effective under the Securities Act and such shares
of Common Stock shall have been disposed of pursuant to such registration
statement, (ii) such shares of Common Stock shall have been sold or
otherwise distributed pursuant to Rule 144 (or any successor provision)
and Rule 145 (or any successor provision) under the Securities Act, (iii)
such securities are eligible for sale or other distribution under Rule
144(k) (or any successor provision) and (iv) such shares of Common Stock
shall have ceased to be outstanding.
"Registration Statement" means the initial registration statement
required to be filed under Article VI, including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"Required Effectiveness Date" means the 90th day after the Closing
Date.
"Rule 144," "Rule 415," and "Rule 424" means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities" means the Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means an aggregate of 3,550,000 shares of Common Stock,
which are being issued and sold to the Purchasers at the Closing.
"Subsidiary" means any Person in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest.
"Trading Day" means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market, then
a day on which trading occurs on the NASDAQ National Market (or any
successor thereto), or (c) if trading does not occur on the NASDAQ
National Market (or any successor thereto), any Business Day.
"Trading Market" means the NASDAQ National Market or any other
Eligible Market on which the Common Stock is then listed or quoted.
"Transaction Documents" means this Agreement and any other documents
or agreements executed in connection with the transactions contemplated
hereunder.
"Transfer Agent" means American Stock Transfer & Trust Co., or any
other transfer agent selected by the Company.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares, each as indicated below such Purchaser's name on the
signature page of this Agreement, for an aggregate purchase price for such
Purchaser as indicated below such Purchaser's name on the signature page of this
Agreement. The Closing shall take place at the offices of Company Counsel on
Friday, April 30, 2004, or at such other location or time as the parties may
agree.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing the number of Shares indicated
below such Purchaser's name on the signature page of this Agreement,
registered in the name of such Purchaser; and
(ii) a legal opinion of Company Counsel, in the form of
Exhibit A, executed by such counsel and delivered to the Purchasers.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company an amount equal to product of (i) the number of
Shares indicated below such Purchaser's name on the signature page of this
Agreement, and (ii) the Per Share 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as specifically
disclosed in Schedule 3.1(a), the Company owns, directly or indirectly,
all of the capital stock or comparable equity interests of each Subsidiary
free and clear of any Lien, and all the issued and outstanding shares of
capital stock or comparable equity interests 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
Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite corporate 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 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 Subsidiaries is duly qualified to
do business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, reasonably be expected to (i)
materially and 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, 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 in connection therewith. 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,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws of general
application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability
of specific performance and other equitable remedies.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of
time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) to which the
Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, except to the extent
that such conflict, default, termination, amendment, acceleration or
cancellation right would not reasonably be expected to have a Material
Adverse Effect, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Subsidiary
is subject (including federal and state securities laws and regulations
and the rules and regulations of any self-regulatory organization to which
the Company or its securities are subject), or by which any property or
asset of the Company or a Subsidiary is bound or affected, except to the
extent that such violation would not reasonably be expected to have a
Material Adverse Effect.
(e) Issuance of the Securities. The Securities are duly authorized
and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens and shall not be subject to preemptive rights
or similar rights of stockholders.
(f) Capitalization. As of the date hereof, and except as may vary as
a result of the exercise of employee stock options since April 12, 2004,
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) is set forth in Schedule 3.1(f). All such
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 specifically disclosed in Schedule
3.1(f), 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 exercisable
or exchangeable for, or 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 or
exchangeable into shares of Common Stock. Except as specifically disclosed
in Schedule 3.1(f) and except for customary adjustments as a result of
stock dividends, stock splits, combinations of shares, reorganizations,
recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security
holders) and the issue and sale of the Securities 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. Except as set forth on Schedule 3.1(f),
to the knowledge of the Company, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange
Act) 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.
(g) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since
the Company's initial public offering (the foregoing materials being
collectively referred to herein as the "SEC Reports" and, together with
this Agreement and the Schedules to this Agreement, the "Disclosure
Materials") on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. The Company has delivered to the Purchasers a copy
of all SEC Reports filed after April 24, 2004. As of their respective
dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the
extent that information contained in any SEC Report has been revised or
superceded by a later filed SEC Report. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments. 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 are included as part of or specifically
identified in the SEC Reports.
(h) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically
disclosed in Schedule 3.1(h): (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that would
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 consistent with past practice and (B)
liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made
with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (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, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock based plans.
(i) Absence of Litigation. Except as specifically disclosed in
Schedule 3.1(i), there is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Schedule 3.1(i) contains a
complete list and summary description of any pending or, to the knowledge
of the Company, threatened proceeding against or affecting the Company or
any of its Subsidiaries that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(j) Compliance. Neither the Company nor any Subsidiary, except in
each case as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect, (i) is in default
under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would reasonably be
expected to 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
applicable order of any court, arbitrator or governmental body, or (iii)
is in violation of any applicable 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.
(k) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for (i) Liens securing the Company's equipment
loan credit facility and (ii) other Liens as do not materially affect the
value of such property and do not materially interfere with the use made
of such property by the Company and the Subsidiaries. Except as
specifically disclosed in Schedule 3.1(k), any real property and
facilities held under lease by the Company and the Subsidiaries are held
by them under valid, subsisting and enforceable leases of which the
Company and the Subsidiaries are in compliance.
(l) Certain Fees. Except for the fees to Banc of America Securities
LLC as placement agent, and except as specifically disclosed in Schedule
3.1(l), no brokerage or finder's fees or commissions are or will be
payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by this Agreement, and the
Company has not taken any action that could cause any Purchaser to be
liable for any such fees or commissions.
(m) Private Placement. Neither the Company nor any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to
buy the Securities that are being sold hereunder 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 the exemption
from registration under Regulation D 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 stockholder 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.
(n) Form S-3 Eligibility. The Company is eligible to register its
Common Stock for resale by the Purchasers using Form S-3 promulgated under
the Securities Act.
(o) Listing and Maintenance Requirements. Except as specifically
disclosed in Schedule 3.1(o), 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 material listing and maintenance
requirements.
(p) Registration Rights. Except as set forth in Schedule 3.1(p), the
Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority
that have not been satisfied.
(q) Application of Takeover Protections. Except as set forth in
Schedule 3.1(q), there is no control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company's
charter documents or the laws of its state of incorporation that is or
would become applicable to any of the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without
limitation, as a result of the Company's issuance of the Securities and
the Purchasers' ownership of the Securities.
(r) 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, at the time of the Closing,
constitutes or might constitute material, nonpublic information, except
for such information as will be disclosed in the 8-K Filing (defined
below). The Company understands and confirms that each of the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on
behalf of the Company are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading
at the time of the Closing. No event or circumstance has occurred or
information exists at the time of the Closing with respect to the Company
or any of its Subsidiaries or its or their business, properties,
operations or financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed (assuming for this
purpose that the Company's reports filed under the Exchange Act are being
incorporated into an effective registration statement filed by the Company
under the Securities Act). The Company acknowledges and agrees that no
Purchaser makes or has made (i) any representations or warranties with
respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 or (ii) any statement, commitment or
promise to the Company or, to its knowledge, any of its representatives
which is or was an inducement to the Company to enter into this Agreement
or otherwise or (iii) any oral statement, commitment or promise to the
Company or, to its knowledge, any of its representatives which is or was
an inducement to the Company to enter into this Agreement or otherwise.
(s) 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 the
Transaction Documents and the transactions contemplated hereby and
thereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company or any other Purchaser (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by any
Purchaser or any of their respective representatives or agents in
connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Purchaser's
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 transactions
contemplated hereby by the Company and its representatives.
(t) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses
and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC
Reports and which the failure to so have would reasonably be expected to
have a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Except as specifically disclosed in Schedule 3.1(t), neither the
Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary
currently violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are
enforceable and, except as specifically disclosed in Schedule 3.1(t),
there is no existing infringement by another Person of any of the
Intellectual Property Rights.
(u) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
(v) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits would not, individually
or in the aggregate, reasonably be expected 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.
(w) Transactions With Affiliates and Employees. Except as set forth
in Schedule 3.1(w), none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors or the grant
of stock options, restricted stock or stock pursuant to the stock based
plans described in the SEC Reports in connection with such service),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company,
any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(x) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(y) Solvency. After taking into account the proceeds from this
transaction, based on the financial condition of the Company as of the
Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital requirements
and capital availability thereof; and (iii) the current cash flow of the
Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect
of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt).
(z) Xxxxxxxx-Xxxxx Act. The Company is in compliance with applicable
requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules and
regulations promulgated by the Commission thereunder in effect and which
require compliance as of the date hereof as of the date of this Agreement,
except where such noncompliance would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
(aa) Press Releases. Each press release disseminated by the Company
since the closing of its initial public offering on November 25, 2002 and
preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit 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.
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 hereunder and thereunder. The purchase by such
Purchaser of the Shares hereunder has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement has been
duly executed and delivered by such Purchaser and constitutes the valid
and binding obligation of such Purchaser, enforceable against it in
accordance with its terms.
(b) Purchase Intent. Such Purchaser is acquiring the Securities 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, 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. Such
Purchaser understands that Purchaser must bear the economic risk of this
investment indefinitely, unless the Securities are registered pursuant to
the Securities Act and any applicable state securities or blue sky laws or
an exemption from such registration is available, and that the Company has
no present intention of registering the resale of any such Securities
other than as contemplated by the registration rights contained herein.
Nothing contained herein shall be deemed a representation or warranty by
such Purchaser to hold Securities for any period of time.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Such Purchaser is not a
member of the National Association of Securities Dealers, Inc.
(d) Reliance on Exemptions. Such Purchaser understands that the
Shares are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and such Purchaser's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Purchaser set forth herein in order to determine
the availability of such exemptions and the eligibility of such Purchaser
to acquire the Securities.
(e) 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.
(f) Access to Information. Such Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make,
decisions with respect to investments in securities representing an
investment decision like that involved in the purchase of the Securities.
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, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any
other investigation conducted by or on behalf of such Purchaser or its
representatives or counsel 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. To the extent that any of the information such
Purchaser has received from the Company is material non public
information, such Purchaser has consented (subject to the Company's
obligation to include such information in the 8-K Filing pursuant to
Section 4.6) to the receipt of such material non public information. Such
Purchaser understands that such Purchaser's investment in the Securities
involves a high degree of risk.
(g) Illegal Transactions. Purchaser will not, prior to the Effective
Date, enter into any transaction that is in violation of the Securities
Act.
(h) No Legal, Tax or Investment Advice. Each Purchaser understands
that nothing in this Agreement or any other materials presented by or on
behalf of the Company to the Purchaser in connection with the purchase of
the Securities constitutes legal, tax or investment advice. Each Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities. Such Purchaser understands that the Agent has
acted solely as the agent of the Company in this placement of the
Securities, and that the Agent makes no representation or warranty with
regard to the merits of this transaction or as to the accuracy of any
information such Purchaser may have received in connection therewith. Such
Purchaser acknowledges that he has not relied on any information or advice
furnished by or on behalf of the Agent.
(i) Residency. If the Purchaser is located or domiciled outside the
United States, it agrees to comply with all applicable laws and
regulations in each foreign jurisdiction in which it purchases, offers,
sells or delivers Shares or has in its possession or distributes any
offering material, in all cases at its own expense.
(j) Prospectus Delivery Requirements. Each Purchaser covenants and
agrees to comply with the prospectus delivery requirements under the
Securities Act with respect to all sales of Common Stock made pursuant to
a registration statement.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Each Purchaser covenants and agrees that Securities will 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,
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; provided, however, that
after Company receives a satisfactory opinion of counsel to the effect
that the Securities may be resold under Rule 144(k), no further legal
opinions shall be required for subsequent resales under Rule 144(k).
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 provides such other certifications as
the Company may reasonably request.
(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, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
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, promptly, following the
delivery by a Purchaser to the Company or the Transfer Agent of a legended
certificate representing such Securities, deliver or cause to be delivered to
such Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. 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.
In the event the above legend is removed from any Security and thereafter the
effectiveness of a registration statement covering such Security is suspended or
the Company determines that a supplement or amendment thereto is required by
applicable securities laws, then the Company may immediately place a
stop-transfer order against the certificates with respect to the sale of any
Security pursuant to such registration statement, and upon reasonable advance
notice to such Purchaser, the Company may require that the above legend be
placed on any such Security that cannot then be sold pursuant to an effective
registration statement or under Rule 144 and such Purchaser shall cooperate in
the replacement of such legend. Such legend shall thereafter be removed when
such Security may again be sold pursuant to an effective registration statement
or under Rule 144.
(c) The Company acknowledges and agrees that a Purchaser may from
time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other loan
or financing arrangement secured by the Securities and, if required under
the terms of such agreement, loan or 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. 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. Notwithstanding the
foregoing, each Purchaser agrees that no such pledge or transfer shall be
made in violation of the Securities Act.
4.2 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.
4.3 Integration. The Company shall not, and shall use its commercially
reasonable 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.
4.4 Reservation of Securities. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.
4.5 Subsequent Placements.
(a) From the date hereof until 30 Trading Days following the
Effective Date (the "Blockout Period"), 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 exchangeable or
exercisable for Common Stock or Common Stock Equivalents (any such offer,
sale, grant, disposition or announcement being referred to as a
"Subsequent Placement"); provided that this paragraph shall not restrict
the Company from, directly or indirectly, offering, selling, granting any
option to purchase, or otherwise disposing of (or announcing any offer,
sale, grant or any option to purchase or other disposition of) any of its
Excluded Stock.
(b) The Blockout Period set forth in the preceding paragraph (a)
shall be extended for the number of Trading Days during such period in
which (i) trading in the Common Stock is suspended by any Trading Market,
(ii) the Registration Statement is not effective, or (iii) the prospectus
included in the Registration Statement may not be used by the Purchasers
for the resale of Registrable Securities thereunder.
4.6 Securities Laws Disclosure; Publicity. The Company shall, on or before
8:30 a.m., Eastern Standard Time, on the first Trading Day following the date of
this Agreement, issue a press release (the "Press Release") acceptable to
Xxxxxxx Xxxxxx L.L.P. (the "Lead Purchaser Counsel") disclosing (i) all material
terms of the transactions contemplated hereby and (ii) disclosing any material
nonpublic information regarding the Company or any of its Subsidiaries that had
been disclosed to any Purchaser. On or before 8:30 a.m., Eastern Standard Time,
on the first Trading Day following the Closing Date, the Company also shall file
a Current Report on Form 8-K with the Commission (the "8-K Filing") (i)
describing the terms of the transactions contemplated by the Transaction
Documents and including as exhibits to such Current Report on Form 8-K this
Agreement and the exhibits to this Agreement in the form required by the
Exchange Act and (ii) disclosing any material nonpublic information regarding
the Company or any of its Subsidiaries that had been disclosed to any Purchaser.
Thereafter, the Company shall timely file any filings and notices required by
the Commission or applicable law with respect to the transactions contemplated
hereby. Except with respect to the Press Release (a copy of which will be
provided to Lead Purchaser Counsel for its review as early as practicable prior
to its issuance) and the 8-K Filing (a copy of which will be provided to the
Purchasers for their review as early as practicable prior to its filing), the
Company shall, to the extent practicable, at least one Trading Day 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, except if such disclosure is required by law or
Eligible Market regulation, in which case the disclosing party shall promptly
provide the other party, to the extent practicable, 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. 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 any Purchaser with any material nonpublic information regarding the
Company or any of its Subsidiaries from and after the 8-K Filing without the
express agreement of such Purchaser. No Purchaser shall 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 any Purchaser shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the Press Release and the 8-K Filing (ii) as is required by
applicable law and Eligible Market regulations.
4.7 Use of Proceeds. The Company intends to use the net proceeds from the
sale of the Securities for general corporate purposes. Pending these uses, the
Company intends to invest the net proceeds from this offering in short-term,
interest-bearing, investment-grade securities, or as otherwise pursuant to the
Company's customary investment policies.
4.8 Rights Plan. The Company will not amend its existing shareholder
rights plan, or adopt a new shareholder rights plan, so as to cause any
Purchaser to become an "Acquiring Person" under such amended or newly adopted
plan solely as a result of such Purchaser's beneficial ownership of the Shares
issued to such Purchaser pursuant to the Transaction Documents. For the
avoidance of doubt, any shares beneficially owned by a Purchaser or acquired
after the date of this Agreement (other than the Shares issued pursuant to the
Transaction Documents) shall be considered in determining whether any Purchaser
is an Acquiring Person under the Company's existing or any amended or newly
adopted shareholder rights plan.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing as
though made on and as of such date; and
(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
Closing.
5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell Securities at the Closing is subject to the satisfaction
or waiver by the Company, at or before the Closing, of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing Date
as though made on and as of such date; and
(b) Performance. 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 Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Shelf Registration
(a) As promptly as possible, and in any event on or prior to each
Filing Date, the Company shall prepare and file with the Commission a
"Shelf" Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith as the Purchasers may
consent) and shall contain the "Plan of Distribution" attached hereto as
Exhibit B.
(b) The Company shall use its commercially reasonably efforts to
cause the Registration Statement to be declared effective by the
Commission as promptly as possible after the filing thereof, but in any
event prior to the Required Effectiveness Date, and shall use its best
efforts to keep the Registration Statement continuously effective under
the Securities Act until the earliest to occur of (i) the fifth
anniversary of the Effective Date; (ii) such earlier date when all
Registrable Securities covered by such Registration Statement have been
sold; or (iii) such earlier date as when the Shares cease to constitute
Registrable Securities (the "Effectiveness Period").
(c) The Company shall notify Purchaser Counsel in writing promptly
(and in any event within one Trading Day) after receiving notification
from the Commission that the Registration Statement has been declared
effective.
(d) Upon the occurrence of any Event (as defined below) and on every
monthly anniversary thereof until the applicable Event is cured, as sole
relief for the damages suffered therefrom by the Purchasers, the Company
shall pay to each Purchaser an amount in cash, as liquidated damages and
not as a penalty, equal to 1.0% of the Market Value, upon the occurrence
of the Event, and 1.5% of the Market Value, upon each monthly anniversary
thereafter. The payments to which a Purchaser shall be entitled pursuant
to this Section 6.1(d) are referred to herein as "Event Payments". For
purposes of this paragraph, "Market Value" means, as of any Trading Day,
the product of (x) the Closing Price on such Trading Day and (y) the
number of Shares held by such Purchaser on such Trading Day. In the event
the Company fails to make Event Payments in a timely manner, such Event
Payments shall bear interest at the rate of 1.5% per month (prorated for
partial months) until paid in full. Notwithstanding the foregoing, in no
event shall the Company be required to make more than one Event Payment
for the same period, even if more than one Event shall have occurred.
For such purposes, each of the following shall constitute an "Event":
(i) the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;
(ii) except as provided in Section 6.1(e), after the Effective
Date, a Purchaser is not permitted to sell Registrable Securities
under the Registration Statement (or a subsequent Registration
Statement filed in replacement thereof) for any reason for five or
more Trading Days (whether or not consecutive);
(iii) after the Effective Date, any Registrable Securities
covered by such Registration Statement are not listed on an Eligible
Market;
(iv) the Common Stock is not listed or quoted, or is suspended
from trading, on an Eligible Market for a period of three Trading
Days (which need not be consecutive Trading Days);
(v) the Company fails for any reason to deliver a certificate
evidencing any Securities to a Purchaser within three Trading Days
after delivery of such certificate is required pursuant to any
Transaction Document; or
(vi) at any time following the Effective Date, any Shares are
not listed on an Eligible Market.
(e) Notwithstanding anything in this Agreement to the contrary, the
Company may, by written notice to the Purchasers, suspend sales under a
Registration Statement and/or require that the Purchasers immediately
cease the sale of shares of Common Stock pursuant thereto and/or defer the
filing of any subsequent Registration Statement if the Board of Directors
determines in good faith, by appropriate resolutions, that, as a result of
such activity, (A) it would be materially detrimental to the Company
(other than as relating solely to the price of the Common Stock) to
maintain a Registration Statement at such time and (B) it is in the best
interests of the Company to defer proceeding with such registration at
such time and (C) an event has occurred which makes untrue any statement
of a material fact made in such registration statement or any related
prospectus or which requires the making of a change in such registration
statement or any related prospectus in order that the same will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Upon receipt of such notice, each
Purchaser shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Purchaser has received
copies of a supplemented or amended Prospectus or until such Purchaser is
advised in writing by the Company that the then-current Prospectus may be
used and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in such
Prospectus. In no event, however, shall this right be exercised to suspend
sales beyond the period during which (in the good faith determination of
the Company's Board of Directors) the failure to require such suspension
would be materially detrimental to the Company. The Company's rights under
this Section 6.1(e) may be exercised for a period of no more than 30 days
at a time and not more than two times in any twelve-month period, without
such suspension being considered as part of an Event Payment
determination. Immediately after the end of any suspension period under
this Section 6.1(e), the Company shall take all actions that may be
reasonably necessary (including filing any required supplemental
prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Purchasers to publicly resell their
Registrable Securities pursuant to such effective Registration Statement.
(f) Except as specifically disclosed in Schedule 6.1(f) and subject
in all respects to Section 4.5, the Company shall not, prior to the
Effective Date of the Registration Statement, prepare and file with the
Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its
equity securities.
6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall (i)
furnish to the Lead Purchaser Counsel and any other counsel designated by
any Purchaser (each, including Lead Purchaser Counsel, a "Purchaser
Counsel") copies of all such documents proposed to be filed in connection
with the Registrable Securities, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to
the review of each such Purchaser Counsel, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of each
Purchaser Counsel, to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto
to which Purchasers holding a majority of the Registrable Securities shall
reasonably object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep
the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file
with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible, and in any event within 15 days, to any comments
received from the Commission with respect to the Registration Statement or
any amendment thereto and as promptly as reasonably possible provide
Purchaser Counsel true and complete copies of all correspondence from and
to the Commission relating to the Registration Statement; and (iv) comply
in all material respects with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Purchasers
thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Purchaser Counsel as promptly as reasonably possible,
and (if requested) confirm such notice in writing no later than one
Trading Day thereafter, of any of the following events: (i) the Commission
notifies the Company whether there will be a "review" of any Registration
Statement; (ii) the Commission comments in writing on any Registration
Statement (in which case the Company shall deliver to Purchaser Counsel a
copy of such comments and of all written responses thereto); (iii) any
Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state governmental
authority requests any amendment or supplement to any Registration
Statement or Prospectus or requests additional information related
thereto; (v) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings
for that purpose; (vi) the Company receives notice of any suspension of
the qualification or exemption from qualification of any Registrable
Securities for sale in any jurisdiction, or the initiation or threat of
any Proceeding for such purpose; or (vii) the financial statements
included in any Registration Statement become ineligible for inclusion
therein or any statement made in any Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a
Registration Statement, Prospectus or other document is required so that
it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, at the earliest practicable moment.
(e) Upon request, furnish to each Purchaser and Purchaser Counsel,
without charge, at least one conformed copy of each Registration Statement
and each amendment thereto, including financial statements and schedules,
all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Purchaser and each Purchaser Counsel,
without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request. The Company hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Purchasers in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.
(g) (i) In the time and manner required by each Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all
steps necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii)
provide to the Purchaser Counsel evidence of such listing; and (iv) use
best efforts to maintain the listing of such Registrable Securities on
each such Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities, use
commercially reasonably efforts to register or qualify or cooperate with
the selling Purchasers and each Purchaser Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States
as any Purchaser requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement.
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
this Agreement and applicable law, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and
registered in such names as any such Purchasers may request.
(j) Upon the occurrence of any event described in Section
6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) Cooperate with any due diligence investigation undertaken by the
Purchasers in connection with the sale of Registrable Securities; provided
that the Company will not deliver or make available to any Purchaser
material, nonpublic information unless such Purchaser specifically
requests in advance to receive material, nonpublic information in writing.
(l) If Holders of a majority of the Registrable Securities being
offered pursuant to a Registration Statement select underwriters for the
offering, the Company shall enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, by providing customary legal opinions, comfort letters and
indemnification and contribution obligations.
6.3 Obligations of the Purchasers. (a) In connection with the registration
of the Registrable Securities, it shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Purchaser
(or to make any payments or other damages to such Purchaser pursuant to Section
6.1) that such Purchaser shall furnish to the Company the Selling Stockholder
Questionnaire set forth on Exhibit C hereto within five (5) Trading Days after
receipt of the Company's written request. Each Purchaser, by such Purchaser's
acceptance of the Registrable Securities, agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of the Registration Statement hereunder, unless such Purchaser has
notified the Company in writing of such Purchaser's election to exclude all of
such Purchaser's Registrable Securities from such Registration Statement.
(b) Each Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 6.1(e),
such Purchaser will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Purchaser's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6.1(e) and, if so directed by the
Company, such Purchaser shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Purchaser's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
6.4 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $25,000 in the aggregate for
the Purchaser Counsel, (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated
by this Agreement, and (f) all listing fees to be paid by the Company to the
Trading Market. The Purchasers shall be responsible for paying the underwriters'
commission or brokerage fees and taxes of any kind (including, without
limitation, transfer taxes) applicable to any disposition, sale or transfer of
Registrable Securities.
6.5 Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Purchaser, the officers, directors, partners, members,
agents, investment advisors, and employees of each of them, each Person
who controls any such Purchaser (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, partners, members, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law,
from and against any and all Losses, as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except to the extent, but only to
the extent, that such Losses arise out of (i) untrue statements, alleged
untrue statements, omissions or alleged omissions that are based solely
upon information regarding such Purchaser furnished in writing to the
Company by such Purchaser expressly for use therein, or to the extent that
such information relates to such Purchaser or such Purchaser's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (ii) the use by such Purchaser of
an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and
prior to the receipt by such Purchaser of the Advice contemplated in
Section 6.6, or (iii) any material breach of any representation or
warranty by such Purchaser contained in this Agreement or the failure of
such Purchaser to comply with its material covenants and agreements
contained in this Agreement. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Purchasers. Each Purchaser shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising
solely (i) out of any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto, or arising out of any omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they
were made) not misleading to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished
in writing by such Purchaser to the Company specifically for inclusion in
such Registration Statement or such Prospectus or to the extent that such
untrue statements or omissions are based solely upon information regarding
such Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information relates
to such Purchaser or such Purchaser's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such Purchaser expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (ii) reference the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Purchaser of the Advice contemplated in Section 6.6. In no
event shall the liability of any selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by such
Purchaser upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in
writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, and such counsel shall be at the expense of
the Indemnifying Party). It being understood, however, that the Indemnifying
Party shall not, in connection with any one such Proceeding be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be appointed by a majority of the
Indemnified Parties; provided, however, that in the case a single firm of
attorneys would be inappropriate due to actual or potential differing interests
of conflicts between such Indemnified Parties and any other party represented by
such counsel in such Proceeding or otherwise, then the Indemnifying Party shall
be liable for the fees and expenses of one additional firm of attorneys with
respect to such Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
6.5(a) or (b) is unavailable to an Indemnified Party (by reasons other
than the specified exclusions to indemnification), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
Losses, in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as
any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in Section 6.5(c),
any reasonable attorneys' or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.5(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6.6 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within five days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third Trading Day following the date of this Agreement;
provided that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
7.2 Fees and Expenses. At the Closing, the Company shall pay the Lead
Purchaser Counsel the sum of $16,000 and shall pay each of the other Purchaser
Counsel the sum of $2,000 each for their legal fees and expenses incurred in
connection with the preparation and negotiation of the Transaction Documents. In
lieu of the foregoing payment, the Purchasers may retain such amount at the
Closing. 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
the Securities.
7.3 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 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.
7.4 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 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
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 and facsimile numbers for such notices and communications are
those set forth on the signature pages hereof, or such other address or
facsimile number as may be designated in writing hereafter, in the same manner,
by such Person.
7.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly affect the rights of other Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.
7.6 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.
7.7 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 assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the "Purchasers." Notwithstanding anything to the contrary herein,
Securities may be assigned by any Purchaser to any Person in connection with a
bona fide margin account or other loan or financing arrangement secured by such
Securities.
7.8 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 Indemnified Party is an intended third
party beneficiary of Section 6.5 and (in each case) may enforce the provisions
of such Sections directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver Of Jury Trial. ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE
BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION HEREWITH OR
WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH
RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS). 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 AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and/or exercise of
the Securities, as applicable.
7.11 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.
7.12 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.
7.13 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.
7.14 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.
7.15 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.
7.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or any Purchaser enforces or exercises its
rights hereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
7.17 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.18 Independent Nature of Purchasers' Obligations and Rights. 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 acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser represents that it has been represented by its own separate legal
counsel in its review and negotiations of this Agreement and the Transaction
Documents.
[Signature pages to follow]
