SECURITIES PURCHASE AGREEMENT
This
SECURITIES
PURCHASE AGREEMENT
(the
“Agreement”),
dated
as of April 23, 2007, by and among PokerTek, Inc., a North Carolina corporation
with headquarters located at 0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxxx, Xxxxx Xxxxxxxx
00000 (the “Company”),
and
the investors listed on the Schedule of Buyers attached hereto (individually,
a
“Buyer”
and
collectively, the “Buyers”).
RECITALS
A. The
Company and each Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the
Securities Act of 1933, as amended (the “1933
Act”),
and
Rule 506 of Regulation D (“Regulation D”)
as
promulgated by the United States Securities and Exchange Commission (the
“SEC”)
under
the 1933 Act.
B. Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) that aggregate number of shares of
the
common stock, no par value, of the Company (the “Common
Stock”),
set
forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers together shall be 1,444,444 shares of Common
Stock and shall collectively be referred to herein as the “Common
Shares”)
and
(ii) a warrant to acquire up to that number of additional shares of Common
Stock
set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers
(the “Warrants”),
in
substantially the form attached hereto as Exhibit
A
(as
exercised, collectively, the “Warrant
Shares”).
C. At
the
Closing, the parties hereto shall execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit
B
(the
“Registration
Rights Agreement”),
pursuant to which the Company has agreed to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement), under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
D. The
Common Shares, the Warrants and the Warrant Shares are collectively referred
to
herein as the “Securities.”
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:
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1.
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PURCHASE
AND SALE OF COMMON SHARES AND
WARRANTS.
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(a)
Common
Shares and Warrants.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections
6
and
7
below,
the Company shall issue and sell to each Buyer, and each Buyer severally,
but
not jointly, agrees to purchase from the Company on the
Closing
Date
(as
defined below), the number of Common Shares, as is set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers, along
with the Warrants to acquire that number of Warrant Shares as is set forth
opposite such Buyer’s name in column (4), on the Schedule of
Buyers.
(b) Closing.
The
closing (the “Closing”)
of the
purchase of the Common Shares and the Warrants by the Buyers shall occur at
the
offices of Xxxxxxxxx Xxxxxxx, LLP, 00 X. Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000. The date and time of the Closing (the “Closing
Date”)
shall
be 10:00 a.m., New York City Time, on the first (1st)
Business Day on which the conditions to the Closing set forth in Sections
6
and
7
below
are satisfied or waived (or such later date as is mutually agreed to by the
Company and each Buyer). As used herein “Business
Day”
means
any day other than a Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(c) Purchase
Price.
The
aggregate purchase price for the Common Shares and the Warrants to be purchased
by each Buyer at the Closing (the “Purchase
Price”)
shall
be the amount set forth opposite such Buyer’s name in column (5) on the Schedule
of Buyers. Each Buyer shall pay $9.00 for each Common Share and related Warrants
to be purchased by such Buyer at the Closing.
(d) Form
of
Payment.
On the
Closing Date, (i) each Buyer shall pay its respective Purchase Price to the
Company for the Common Shares and the Warrants to be issued and sold to such
Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions and (ii) the
Company shall deliver to each Buyer (A) one or more stock certificates, free
and
clear of all restrictive and other legends (except as expressly provided in
Section 5(c)
hereof),
evidencing the number of Common Shares such Buyer is purchasing as is set forth
opposite such Buyer’s name in column (3) of the Schedule of Buyers and (B) a
Warrant pursuant to which such Buyer shall have the right to acquire such number
of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of
the Schedule of Buyers, in all cases duly executed on behalf of the Company
and
registered in the name of such Buyer or its designee.
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2.
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BUYER’S
REPRESENTATIONS AND
WARRANTIES.
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Each
Buyer represents and warrants with respect to only itself that:
(a) Organization;
Authority.
Such
Buyer is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite power and
authority to enter into and to consummate the transactions contemplated by
the
Transaction Documents (as defined below) to which it is a party and otherwise
to
carry out its obligations hereunder and thereunder.
(b) No
Public
Sale or Distribution.
Such
Buyer is (i) acquiring the Common Shares and the Warrants and (iii) upon
exercise of the Warrants will acquire the Warrant Shares issuable upon exercise
thereof, in each case, for its own account and not with a view towards, or
for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however,
that by
making the
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representations
herein, such Buyer does not agree, or make any representation or warranty
(except as set forth in Section 4(n)),
to
hold any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act. Such
Buyer is not a broker-dealer registered, or required to be registered, with
the
SEC under the Securities and Exchange Act of 1934, as amended (the “1934
Act”).
Such
Buyer is acquiring the Securities hereunder in the ordinary course of its
business. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the
Securities.
(c) Accredited
Investor Status.
At the
time such Buyer was offered the Securities, it was, as of the date hereof it
is,
and as of the Closing, it will be, an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D.
(d) Reliance
on Exemptions.
Such
Buyer understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in
part
upon the truth and accuracy of, and such Buyer’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the
Securities.
(e) Information.
Such
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities which have been requested by such Buyer.
Such Buyer and its advisors, if any, have been afforded the opportunity to
ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer’s right to rely on the
Company’s representations and warranties contained herein or any representations
and warranties contained in any other Transaction Document. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to
its
acquisition of the Securities. Such Buyer has independently evaluated the merits
of its decision to purchase Securities pursuant to the Transaction Documents,
and such Buyer confirms that it has not relied on the advice of any other
Buyer’s business and/or legal counsel in making such decision. Such Buyer has
not relied on the business or legal advice of Xxxx Capital Partners, LLC or
any
of its agents, counsel or affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Buyer in connection with the transactions contemplated
by
the Transaction Documents.
(f) No
Governmental Review.
Such
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
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(g) Transfer
or Resale.
Such
Buyer understands that except as provided in the Registration Rights Agreement
and Section 4(g)
hereof:
(i) the Securities have not been and are not being registered under the 1933
Act
or any state securities laws, and may not be offered for sale, sold, assigned
or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company an opinion of counsel to such Buyer, in a form
reasonably acceptable to the Company, to the effect that such Securities to
be
sold, assigned or transferred may be sold, assigned or transferred pursuant
to
an exemption from such registration, or (C) such Buyer provides the Company
with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor
rule thereto) (collectively, “Rule
144”);
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s))
through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the 0000 Xxx) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC promulgated thereunder;
and
(iii) neither the Company nor any other Person is under any obligation to
register the Securities under the 1933 Act or any state securities laws or
to
comply with the terms and conditions of any exemption thereunder.
(h) Validity;
Enforcement.
This
Agreement and the Registration Rights Agreement have been duly and validly
authorized by all necessary action on the part of such Buyer, and when executed
and delivered on behalf of such Buyer shall constitute the legal, valid and
binding obligations of such Buyer enforceable against such Buyer in accordance
with their respective terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
(i) No
Conflicts.
The
execution, delivery and performance by such Buyer of this Agreement and the
Registration Rights Agreement and the consummation by such Buyer of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the organizational documents of such Buyer or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Buyer is a party, or (iii) result in a violation of
any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to such Buyer, except in the case of clauses (ii)
and (iii) above, for such conflicts, defaults, rights or violations which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.
(j) Residency.
Such
Buyer is a resident of that jurisdiction specified below its address on the
Schedule of Buyers.
(k) Certain
Trading Activities.
Such
Buyer has not directly or indirectly, nor has any Person acting on behalf of
or
pursuant to any understanding with such Buyer, engaged in any transactions
in
the securities of the Company (including without limitation, any Short Sales
involving the Company’s securities) since the time that such Buyer and the
Company first
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communicated
regarding an investment in the Company or such Buyer was first contacted by
Xxxx
Capital Partners, LLC regarding an investment in the Company (as the case may
be). “Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act (“Regulation
SHO”)
and
all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, swaps and similar arrangements (including on a total return basis),
and sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers. Such Buyer
does not as of the date hereof, and will not immediately following the Closing,
own 10% or more of the Company’s issued and outstanding shares of Common Stock
(calculated based on the assumption that all Equivalents owned by such Buyer,
whether or not presently exercisable or convertible, have been fully
exercised or converted (as the case may be) without regard to any
limitations on exercise or conversion (including “blockers”) contained
therein).
(l) General
Solicitation.
No
Buyer is purchasing the Securities as a result of any advertisement, article,
notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar.
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3.
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REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY.
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The
Company represents and warrants to each of the Buyers that:
(a) Organization
and Qualification.
The
Company is a corporation duly organized and validly existing and in good
standing under the laws of the State of North Carolina, and has the requisite
power and authorization to own its properties and to carry on its business
as
now being conducted and as presently proposed to be conducted. The Company
is
duly qualified as a foreign entity to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not
have
a Material Adverse Effect. As used in this Agreement, “Material
Adverse Effect”
means
any material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company, (ii) the transactions contemplated
hereby or in the other Transaction Documents or (iii) the authority or ability
of the Company to perform its obligations under the Transaction Documents (as
defined below). The Company does not, directly or indirectly, own capital stock
or hold an equity or similar interest in any Person.
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Warrants, the Registration
Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in
Section 5(b)),
and
each of the other agreements and instruments entered into and/or executed by
the
parties hereto in connection with the transactions contemplated hereby and
thereby (collectively, the “Transaction
Documents”)
and to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents
by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the Common
Shares, the issuance of the Warrants and the reservation for issuance and
issuance of
-5-
the
Warrant Shares issuable upon exercise of the Warrants, have been duly authorized
by the Company’s Board of Directors and (other than the filing with the SEC of
one or more Registration Statements in accordance with the requirements of
the
Registration Rights Agreement and any other filings as may be required by any
state securities agencies) no further filing, consent or authorization is
required by the Company, its Board of Directors or its stockholders. This
Agreement and the other Transaction Documents have been duly executed and
delivered by the Company, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally,
the
enforcement of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law.
(c) Issuance
of Securities.
The
issuance of the Common Shares and the Warrants are duly authorized and upon
issuance in accordance with the terms of the Transaction Documents shall be
validly issued, fully paid and non-assessable and free from all taxes, liens,
charges and other encumbrances with respect to the issue thereof. As of the
Closing, the Company shall have reserved from its duly authorized capital stock
not less than the number of shares of Common Stock issuable upon exercise of
the
Warrants (without regard to any limitations on the exercise of the Warrants
set
forth therein). Upon exercise in accordance with the Warrants the Warrant Shares
will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens, charges and other encumbrances
with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of the Buyers in this Agreement, the offer and
issuance by the Company of the Securities is exempt from registration under
the
1933 Act.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Common Shares,
the
Warrants and Warrant Shares and the reservation for issuance of the Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation
(as
defined in Section 3(r))
of the
Company, any capital stock of the Company or Bylaws (as defined in Section
3(r)),
(ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights
of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, except to the extent
such conflict, default or termination 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 or decree (including federal and state securities
laws and regulations and the rules and regulations of The
Nasdaq Global Market
(the
“Principal
Market”)
applicable to the Company or by which any property or asset of the Company
is
bound or affected except, in the case of clause (ii) or (iii) above, to the
extent such violations that could not reasonably be expected to have a Material
Adverse Effect.
(e) Consents.
The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by
the
Transaction Documents (other than
-6-
filings
and orders contemplated by the Registration Rights Agreement and the Shareholder
Approval (as defined below)), in each case, in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence
(other than filings and orders contemplated by the Registration Rights
Agreement) have been obtained or effected on or prior to the Closing Date,
and
the Company is unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence. The Company is not in violation
of
the listing requirements of the Principal Market and has no knowledge of any
facts or circumstances which could reasonably lead to delisting or suspension
of
the Common Stock in the foreseeable future.
(f) Acknowledgment
Regarding Buyer’s Purchase of Securities.
The
Company acknowledges and agrees that each Buyer 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 and that no Buyer is (i) an officer
or director of the Company, (ii) an “affiliate” of the Company (as defined in
Rule 144) or (iii) to its knowledge, a “beneficial owner” of more than 10% of
the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934
Act. The Company further acknowledges that no Buyer is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect
to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the
Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
(g) No
General Solicitation; Placement Agent’s Fees.
Neither
the Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of
the
Securities. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. Other than Xxxx Capital Partners,
LLC, the Company has not engaged any placement agent or other agent in
connection with the sale of the Securities.
(h) No
Integrated Offering.
None of
the Company, any of its affiliates, and any Person acting on the Company’s
behalf has, directly or indirectly, made any offers or sales of any security
by
the Company or solicited any offers to buy any security from the Company, under
circumstances that would require registration of any of the Securities under
the
1933 Act or cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated. None of the Company,
its
affiliates and any Person acting on its behalf will take any action or steps
referred to in the preceding sentence that would require registration of any
of
the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with other offerings.
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(i) Dilutive
Effect.
The
Company understands and acknowledges that the number of Warrant Shares will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement.
The
Company and its board of directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Articles of Incorporation
or
the laws of the jurisdiction of its incorporation or otherwise which is or
could
become applicable to any Buyer as a result of the transactions contemplated
by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. Except as set forth on
Schedule 3(j),
the
Company has not adopted a stockholder rights plan or any other plan relating
to
accumulations of beneficial ownership of Common Stock or a change in control
of
the Company.
(k) SEC
Documents; Financial Statements.
Except
as set forth on Schedule 3(k),
during
the two (2) years prior to the date hereof, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
“SEC
Documents”).
The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of each of the SEC Documents not available on the
XXXXX system. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
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. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year-end audit adjustments). The information
provided by or on behalf of the Company to the Buyers which is not included
in
the SEC Documents, including, without limitation, information referred to in
Section 2(e)
of this
Agreement, considered collectively and taken together with the SEC Documents,
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of
the circumstance under which they are or were made, not
misleading.
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(l) Absence
of Certain Changes.
Since
the date of the Company’s most recent audited or reviewed financial statements
contained in a Form 10-K, there has been no material adverse change and no
material adverse development in the business, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company. Since
the date of the Company’s most recent audited financial statements contained in
a Form 10-K, the Company has not (i) declared or paid any dividends, (ii) sold
any material assets, individually or in the aggregate, outside of the ordinary
course of business or (iii) made any material capital expenditures, individually
or in the aggregate. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably lead
a
creditor to do so. The Company is not as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will
not
be Insolvent (as defined below). For purposes of this Section 3(l),
“Insolvent”
means
(i) the present fair saleable value of the Company’ assets is less than the
amount required to pay the Company’s total indebtedness, (ii) the Company is
unable to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (iii) the Company
intends to incur or believes that it will incur debts that would be beyond
its
ability to pay as such debts mature. The Company has not engaged, and is not
about to engage, in business or in any transaction, for which the Company’s
remaining assets constitute unreasonably small capital.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances.
No
event, liability, development or circumstance has occurred or exists, or is
reasonably foreseeable to exist or occur with respect to the Company or its
business, properties, liabilities, prospects, operations (including results
thereof) or condition (financial or otherwise), that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by
the
Company of its Common Stock and which has not been publicly announced that
could
reasonably be expected to have a Material Adverse Effect.
(n) Conduct
of Business; Regulatory Permits.
The
Company is not in violation of any term of or in default under its Articles
of
Incorporation or Bylaws. The Company is not in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation applicable to the
Company, except for possible violations which would not, individually or in
the
aggregate, have a Material Adverse Effect. Without limiting the generality
of
the foregoing, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or
circumstances that could reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. Since January
1,
2006, (i) the Common Stock has been designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC
or
the Principal Market and (iii) the Company has received no communication,
written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company
possesses all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct its business where currently
conducted, except where the failure to possess such certificates, authorizations
or permits would not have, individually or in the aggregate, a Material Adverse
Effect, and the Company has not received any notice of
-9-
proceedings
relating to the revocation or modification of any such certificate,
authorization or permit.
(o) Foreign
Corrupt Practices.
Neither
the Company nor, to its knowledge, any director, officer, agent, employee or
other Person acting on behalf of the Company has, in the course of its actions
for, or on behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
(p) Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance with all applicable requirements of the Xxxxxxxx-Xxxxx
Act of 2002 that are effective as of the date hereof, and all applicable rules
and regulations promulgated by the SEC thereunder that are effective as of
the
date hereof, except where such noncompliance would not have, individually or
in
the aggregate, a Material Adverse Effect.
(q) Transactions
With Affiliates.
Except
as disclosed in the SEC Documents, none of the officers, directors or employees
of the Company is presently a party to any transaction with the Company (other
than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(r) Equity
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of (i)
100,000,000 shares of Common Stock, of which as of the date hereof, 9,472,020
shares are issued and outstanding, 1,602,650 shares were subject to outstanding
options granted pursuant to the Company’s stock incentive plans, 509,600 shares
are reserved for issuance pursuant to the Company’s stock incentive plans and
200,000 shares are reserved for issuance pursuant to securities (other than
the
Common Shares and the Warrants) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (ii) 5,000,000 shares of preferred stock,
none
of which, as of the date hereof, are issued and outstanding. All of such
outstanding shares are duly authorized and have been, or upon issuance will
be,
validly issued, fully paid and nonassessable. 6,200,883 shares of the Company’s
issued and outstanding shares of Common Stock on the date hereof are as of
the
date hereof owned by Persons who are “affiliates” (as defined in Rule 405
promulgated under the 1933 Act and calculated based on the assumption that
only
officers, directors and known holders of at least 10% of
the
Company’s issued and outstanding shares of Common Stock
are
“affiliates” without conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Company. To
the
Company’s knowledge, as of the date hereof no Person (other than the three
Persons who have been previously identified to the Buyers) owns 10% or more
of
the Company’s issued and outstanding shares of Common Stock (calculated based on
the assumption that all Equivalents, whether or not presently exercisable or
convertible, have been fully exercised or
converted (as
-10-
the
case
may be) without regard to any limitations on exercise or conversion (including
“blockers”) contained therein without conceding that such identified Person is a
10% stockholder for purposes of federal securities laws).
Except
as disclosed in the SEC Documents or on Schedule 3(r):
(i)
none of the Company’s capital stock is subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, or exercisable or exchangeable for,
any
capital stock of the Company, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company
is or
may become bound; (iv) there are no financing statements securing obligations
in
any material amounts, either individually or in the aggregate, filed in
connection with the Company; (v) there are no agreements or arrangements under
which the Company is obligated to register the sale of any of its securities
under the 1933 Act (except pursuant to the Registration Rights Agreement);
(vi)
there are no outstanding securities or instruments of the Company which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to
redeem a security of the Company; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement. The Company has furnished to the Buyers true, correct and complete
copies of the Company’s Articles of Incorporation, as amended and as in effect
on the date hereof (the “Articles of
Incorporation”),
and
the Company’s bylaws, as amended and as in effect on the date hereof (the
“Bylaws”),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto.
(s) Indebtedness
and Other Contracts.
Except
as disclosed on Schedule 3(s),
the
Company (i) has no outstanding indebtedness, (ii) is not a party to any
contract, agreement or instrument, the violation of which, or default under
which, by the other party(ies) to such contract, agreement or instrument could
reasonably be expected to result in a Material Adverse Effect, (iii) is not
in
violation of any term of or in default under any contract, agreement or
instrument relating to any indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is not a party to any contract, agreement or instrument
relating to any indebtedness, the performance of which, in the judgment of
the
Company’s officers, has or is expected to have a Material Adverse Effect.
Schedule 3(s)
provides
a detailed description of the material terms of any such outstanding
indebtedness which is not disclosed in the SEC Documents. For purposes of this
Agreement, “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(t) Absence
of Litigation.
Except
as set forth on Schedule 3(t),
there
is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public
-11-
board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Common Stock or any of the Company’s officers or directors in their capacities
as such, which is outside of the ordinary course of business or that could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(u) Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes
to be prudent and customary in the businesses in which the Company is engaged
and the Company has no reason to believe that it will be unable 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 at a cost that would not have a Material Adverse Effect.
(v) Employee
Relations.
The
Company is not a party to any collective bargaining agreement or employs any
member of a union. The Company believes that its relations with its employees
are good. No executive officer (as defined in Rule 501(f) promulgated under
the
0000 Xxx) or other key employee of the Company has notified the Company that
such officer intends to leave the Company or otherwise terminate such officer’s
employment with the Company. To the knowledge of the Company, no executive
officer or other key employee of the Company is, or is now expected to be,
in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement,
or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer or other key employee (as the case
may
be) does not subject the Company to any liability with respect to any of the
foregoing matters. The Company is in compliance with all federal, state, local
and foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or
in
the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(w) Title.
The
Company has good and marketable title to all personal property owned by it
which
is material to the business of the Company, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value
of
such property and do not interfere with the use made and proposed to be made
of
such property by the Company. Any real property and facilities held under lease
by the Company is held by it under valid, subsisting and enforceable leases
with
such exceptions as are not material and do not interfere with the use made
and
proposed to be made of such property and buildings by the Company. The Company
does not, directly or indirectly, own any real property.
(x) Intellectual
Property Rights.
The
Company owns or possesses adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
(“Intellectual
Property Rights”)
necessary to conduct its business as now conducted and as presently proposed
to
be conducted, except where the failure to so own or possess rights would not
reasonably be expected to result in a Material Adverse Effect. Except for
licenses which are immaterial to the Company’s business, none of the Company’s
Intellectual Property Rights have expired, terminated or been abandoned, or
are
expected to expire, terminate or be abandoned, within three
-12-
years
from the date of this Agreement. The Company does not have any knowledge of
any
infringement by the Company of Intellectual Property Rights of others. Except
as
set forth on Schedule 3(x),
there
is no claim, action or proceeding being made or brought, or to the knowledge
of
the Company, being threatened, against the Company regarding its Intellectual
Property Rights. The Company is unaware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company has taken reasonable security measures to protect
the
secrecy, confidentiality and value of all of its Intellectual Property
Rights.
(y) Environmental
Laws.
The
Company (i) is in compliance with all Environmental Laws (as hereinafter
defined), (ii) has received all permits, licenses or other approvals required
of
it under applicable Environmental Laws to conduct its business and (iii) is
in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
so
comply could be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect. The term “Environmental
Laws”
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous
Materials”)
into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(z) Tax
Status.
The
Company (i) has timely made or filed all foreign, federal and state income
and
all other tax returns, reports and declarations required by any jurisdiction
to
which it is subject, (ii) has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to
be
due on such returns, reports and declarations, except those being contested
in
good faith and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such
claim.
(aa) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or
that
otherwise could be reasonably likely to have a Material Adverse
Effect.
(bb) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Securities will not
be,
an “investment company,” an affiliate of an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.
-13-
(cc) Acknowledgement
Regarding Buyers’ Trading Activity.
It is
understood and acknowledged by the Company (i) that, other than as contemplated
by Section 2(k)
and
Section 4(n),
following the public disclosure of the transactions contemplated by the
Transaction Documents, in accordance with the terms thereof, none of the Buyers
have been asked by the Company to agree, nor has any Buyer agreed with the
Company, to desist from purchasing or selling, long and/or short, securities
of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any specified term; (ii) that each Buyer
shall not be deemed to have any affiliation with or control over any arm’s
length counter party in any “derivative” transaction. The Company further
understands and acknowledges that, except as set forth in Section 4(n),
following the public disclosure of the transactions contemplated by the
Transaction Documents pursuant to the Press Release one or more Buyers may
engage in hedging and/or trading activities at various times during the period
that the Securities are outstanding, and (b) such hedging and/or trading
activities, if any, can reduce the value of the existing stockholders’ equity
interest in the Company both at and after the time the hedging and/or trading
activities are being conducted. Subject to the provisions of Section
2(b)
and
Section 4(n),
the
Company acknowledges that such aforementioned hedging and/or trading activities
do not constitute a breach of this Agreement or any other Transaction Document
or any of the documents executed in connection herewith or
therewith.
(dd) Manipulation
of Price.
The
Company has not, and to its knowledge no Person acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, other than Xxxx Capital Partners, LLC, or (iii) paid or agreed
to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(ee) U.S.
Real
Property Holding Corporation.
The
Company is not, and has never been, a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Buyer’s request.
(ff) Disclosure.
All
written disclosure provided to the Buyers regarding the Company, its businesses
and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Company is true and correct and
does
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. The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Sections 2
and
4(n).
|
4.
|
COVENANTS.
|
(a) Best
Efforts.
Each
party shall use its reasonable best efforts timely to satisfy each of the
conditions to be satisfied by it as provided in Sections 6
and
7
of this
Agreement.
(b) Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities as required
under
Regulation D and to provide a copy thereof to each Buyer
promptly
-14-
after
such filing. The Company shall, on or before the Closing Date, take such action
as the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to, qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of any
such
action so taken to the Buyers on or prior to the Closing Date. The Company
shall
make all filings and reports relating to the offer and sale of the Securities
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.
(c) Reporting
Status.
Until
the date on which the Buyers shall have sold all of the Securities (the
“Reporting
Period”),
the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such
termination.
(d) Use
of
Proceeds.
The
Company will use the proceeds from the sale of the Securities solely as set
forth on Schedule 4(d).
(e) Listing.
The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock
is
then listed (subject to official notice of issuance). The Company shall use
its
reasonable best efforts to maintain the Common Stock’s authorization for
quotation on the Principal Market, the New York Stock Exchange or the Nasdaq
Global Select Market (each being an “Eligible
Market”)
during
the Reporting Period. During the Reporting Period, the Company shall not take
any action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market or an Eligible Market
if
the Common Stock is not then listed on the Principal Market. The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 4(e).
(f) Fees.
At the
Closing, the Company shall reimburse Magnetar Capital Master Fund, Ltd. or
its
designee(s) (in addition to any other expense amounts paid to any Buyer prior
to
the date of this Agreement) for all its reasonable expenses incurred in
connection with this Agreement and the other Transaction Documents (including,
without limitation, all reasonable legal fees and disbursements in connection
therewith) up to a maximum of $85,000, which amount shall be withheld by
Magnetar Capital Master Fund, Ltd. from its Purchase Price at the Closing or
paid by the Company upon termination of this Agreement so long as such
termination did not occur as a result of a material breach by Magnetar Capital
Master Fund, Ltd. of any of its obligations hereunder (as the case may be).
The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or broker’s commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees payable to Xxxx Capital
Partners, LLC, the Company’s sole placement agent in connection with the
transactions contemplated by this Agreement. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in
connection with any claim relating to any such payment.
-15-
(g) Pledge
of
Securities.
Notwithstanding anything to the contrary contained in Section 2(g),
the
Company acknowledges and agrees that the Securities may be pledged by a Buyer
in
connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities, if done in compliance with the
1933 Act. The pledge of Securities shall not be deemed to be a transfer, sale
or
assignment of the Securities hereunder, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof
or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document; provided that a Buyer and its pledge shall comply
with the provisions of the 1933 Act in effecting any sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by a
Buyer.
(h) Disclosure
of Transactions and Other Material Information.
The
Company shall, on or before 5:30 p.m., New York City Time, on the third
(3rd)
Business Day after the date of this Agreement, issue a press release (the
“Press
Release”)
reasonably acceptable to the Buyers disclosing all the material terms of the
transactions contemplated by the Transaction Documents. On
or
before 5:30 p.m., New York Time, on the third (3rd)
Business Day following the date of this Agreement, the Company shall file a
Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934
Act
and including as exhibits thereto, all the material Transaction Documents
(including, without limitation, this Agreement, and the form of Warrants and
the
Registration Rights Agreement) (including all exhibits, the “8-K
Filing”).
The
Company shall publicly disclose all information that constitutes or could
reasonably be expected to constitute material, nonpublic information which
has
been provided to any of the Buyers prior to the date hereof no later than the
Filing Deadline (as defined in the Registration Rights Agreement). From and
after the date hereof, the Company shall not, and shall cause each of its
subsidiaries and each of its and their respective officers, directors, employees
and agents, not to, provide any Buyer with any material, nonpublic information
regarding the Company or any of its subsidiaries from and after the issuance
of
the Press Release without the express prior written consent of such Buyer,
except as expressly contemplated by Section 4(o)(vii).
If a
Buyer has, or believes it has, received any material, nonpublic information
regarding the Company or any of its subsidiaries in breach of the immediately
preceding sentence, such Buyer shall provide the Company with written notice
thereof in which case the Company shall, within two (2) Trading Days of the
receipt of such notice, make a public disclosure of all such material, nonpublic
information so provided. In the event of a breach of any of the foregoing
covenants by the Company, any of its subsidiaries, or any of its or their
respective officers, directors, employees and agents (as determined in the
reasonable good faith judgment of such Buyer after consultation with such
Buyer’s legal counsel), in addition to any other remedy provided herein or in
the Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the
Company, any of its subsidiaries or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, any of 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, any of its subsidiaries, nor any Buyer
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
-16-
approval
of any Buyer, to make any press release or other public disclosure with respect
to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided
that in
the case of clause (i) each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to
its
release). Without the prior written consent of any applicable Buyer, the Company
shall not disclose the name of such Buyer in any filing, announcement, release
or otherwise.
(i) Additional
Registration Statements.
Until
after the Effective Date (as defined in the Registration Rights Agreement)
of
the initial Registration Statement required to be filed by the Company pursuant
to Section 2(a) of the Registration Rights Agreement which covers all of the
securities required to be covered thereunder, the Company shall not file a
registration statement under the 1933 Act (other than on Form S-4 or Form S-8)
relating to securities that are not the Registrable Securities.
(j)
Additional
Issuance of Securities.
The
Company agrees that for the period commencing on the date hereof and ending
on
the earlier of (i) one hundred sixty five (165) days after the Closing Date
or
(ii) sixty (60) days after the Effective Date of the initial Registration
Statement required to be filed by the Company pursuant to Section 2(a) of the
Registration Rights Agreement which covers all of the securities required to
be
covered thereunder (the “Restricted Period”),
the
Company shall not directly or indirectly issue, offer, sell, grant any option
to
purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant
or any option to purchase or other disposition of) any of their respective
equity or equity equivalent securities, including, without limitation, any
debt,
preferred stock, rights, options, warrants or other instrument that is at any
time and under any circumstances convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, capital stock and other
securities of the Company (including, without limitation, any securities of
the
Company or any of its subsidiaries which entitle the holder thereof to acquire
Common Stock at any time, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock) (collectively with such capital stock
or
other securities of the Company, “Equivalents”)
(any
such issuance, offer, sale, grant, disposition or announcement being referred
to
as a “Subsequent
Placement”).
Notwithstanding the foregoing, this Section 4(j)
shall
not apply in respect of the issuance of (A) Common Stock or standard options
to
purchase Common Stock issued to directors, officers, employees or consultants
of
the Company in connection with their service as directors or officers of the
Company, their employment by the Company or their retention as consultants
by
the Company pursuant to an equity compensation program or other contract or
arrangement approved by the Board of Directors of the Company (or the
compensation committee of the Board of Directors of the Company), provided
that
all such issuances after the date hereof pursuant to this clause (A) do not,
in
the aggregate, exceed more than 10% of the Common Stock issued and outstanding
immediately prior to the date hereof, (B) Common Stock or standard warrants
(including so-called xxxxx warrants) to purchase Common Stock in connection
with
strategic alliances, acquisitions, mergers, strategic partnerships, joint
ventures, vendor and supplier arrangements and as equity kickers in lease and
financing transactions, the primary purpose of which is not to raise capital,
and which are approved in good faith by the Company’s Board of Directors,
provided that all such issuances
-17-
after
the
date hereof pursuant to this clause (B) do not, in the aggregate, exceed more
than 10% of the Common Stock issued and outstanding immediately prior to the
date hereof, (C) shares issued upon the conversion or exercise of Equivalents
issued prior to the date hereof, provided that such Equivalents have not been
amended since the date of this Agreement to increase the number of shares
issuable thereunder or to lower the exercise or conversion price thereof or
otherwise materially change the terms or conditions thereof in any manner that
adversely affects any of the Buyers, (D) shares issued or issuable by reason
of
a dividend, stock split or other distribution on Common Stock or (E) the Warrant
Shares (each of the foregoing in clauses (A) through (E), collectively the
“Excluded
Securities”).
(k) Reservation
of Shares.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than the number of shares of
Common Stock issuable upon exercise of the Warrants (without regard to any
limitations on the exercise of the Warrants set forth therein).
(l) Conduct
of Business.
The
business of the Company shall not be conducted in violation of any law,
ordinance or regulation of any governmental entity, except where such violations
would not result, either individually or in the aggregate, in a Material Adverse
Effect.
(m) Variable
Rate Transaction. From the date hereof until 18 months after the Effective
Date
of the initial Registration Statement required to be filed by the Company
pursuant to Section 2(a) of the Registration Rights Agreement which covers
all
of the securities required to be covered thereunder, the Company shall be
prohibited from effecting or entering into an agreement to effect any Subsequent
Placement involving a “Variable
Rate Transaction.”
The
term “Variable
Rate Transaction”
shall
mean a transaction in which the Company (i) issues or sells any Equivalents
either (A) at a conversion, exercise or exchange rate or other price that is
based upon and/or varies with the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such Equivalents,
or
(B) with a conversion, exercise or exchange price that is subject to being
reset
at some future date after the initial issuance of such Equivalents or upon
the
occurrence of specified or contingent events directly or indirectly related
to
the business of the Company or the market for the Common Stock, other than
pursuant to a customary “weighted average” or “full ratchet” anti-dilution
provision or (ii) enters into any agreement (including, but not limited to,
an
equity line of credit) whereby the Company may sell securities at a future
determined price (other than standard and customary “preemptive” or
“participation” rights). Each Buyer shall be entitled to obtain injunctive
relief against the Company to preclude any such issuance, which remedy shall
be
in addition to any right to collect damages.
(n) Trading
Restrictions. Each Buyer represents and warrants to, and covenants with, the
Company that it will not (and its affiliates acting on its behalf or pursuant
to
any understanding with it will not) engage in or effect, directly or indirectly,
any transactions in any securities of the Company (including, without
limitation, any Short Sales, “locking-up” borrow or hedging activities involving
the Company’s securities) during the period commencing on the date hereof and
ending on the earlier to occur of (i) one (1) year after the Effective Date
(as
defined in the Registration Rights Agreement) of the initial Registration
Statement covering the Registrable Securities to be filed by the Company
pursuant to Section 2(a) of the Registration Rights Agreement, (ii) two years
from the Closing Date and (iii) the date this Agreement is
-18-
terminated
pursuant to Section 8.
In
furtherance (and without limitation) of the foregoing, during such restricted
period, neither such Buyer nor any of such affiliates, (a) will directly or
indirectly, sell, agree to sell, grant any call option or purchase any put
option with respect to, pledge, borrow or otherwise dispose of any securities
of
the Company, or (b) will establish or increase any “put equivalent position” or
liquidate or decrease any “call equivalent position” with respect to any such
securities (in each case within the meaning of Section 16 of the 1934 Act and
the rules and regulations promulgated thereunder), or otherwise enter into
any
swap, derivative or other transaction or arrangement that transfers to another,
in whole or in part, any economic consequence of ownership of any such
securities, whether or not such transaction is to be settled by delivery of
any
such securities, other securities, cash or other consideration. Notwithstanding
the foregoing, it is understood and agreed that nothing contained in this
Section 4(n)
shall
prohibit such Buyer (or such affiliates) from (1) purchasing or agreeing to
purchase unrestricted securities of the Company or securities which are covered
by an effective registration statement and the prospectus included therein
is
available for use on the date of such purchase (including through block trades
or privately negotiated transactions), (2) purchasing or agreeing to purchase
securities of the Company pursuant to Section 4(n)
or
otherwise from the Company, (3) exercising any or all Warrants to acquire
Warrant Shares or otherwise acting under or enforcing, or receiving any right
or
benefit or adjustment under, the Warrants, (4) selling or agreeing to sell
“long” securities of the Company (because such Buyer or such Affiliate is
“deemed to own such securities” pursuant to paragraph (b) of Rule 200 under
Regulation SHO), including, without limitation, (I) any Common Shares, Warrants
or Warrant Shares acquired hereunder or pursuant to the transactions
contemplated hereby or any of the Transaction Documents or (II) securities
acquired after the date hereof in accordance with this paragraph, (5) pledging
or hypothecating any securities of the Company in connection with leverage
arrangements engaged in by such Buyer (or such affiliates) without the purpose
of transferring economic risk relating to such securities or (6) from
transferring any of the Securities to any Affiliate who agrees in writing to
be
bound by this Section 4(n),
in each
case, provided such sale is in compliance with all applicable securities laws
and following the public announcement of the transaction contemplated hereby
pursuant to Section 4(h).
(o) Participation
Right. From the date hereof until the two year anniversary of the Closing Date,
the Company shall not, directly or indirectly, effect any Subsequent Placement
unless the Company shall have first complied with this Section 4(o).
The
Company acknowledges and agrees that the right set forth in this Section
4(o)
is a
right granted by the Company, separately, to each Buyer.
(i) The
Company shall deliver to each Buyer a written notice (the “Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the “Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the
Offered Securities, (x) describe the price and other terms upon which they
are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the Persons (if known)
to which or with which the Offered Securities are to be offered, issued, sold
or
exchanged and (z) offer to issue and sell to or exchange with such Buyer in
accordance with the terms of the Offer at least 50% of the Offered Securities,
provided
that the
number of Offered Securities which such Buyer shall have the right to subscribe
for under this Section 4(o)
shall be
(a) based on such Buyer’s pro rata portion of the
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aggregate
number of Common Shares purchased hereunder by all Buyers (the “Basic
Amount”),
and
(b) with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription
Amount”).
(ii) To
accept
an Offer, in whole or in part, such Buyer must deliver a written notice to
the
Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer
Period”),
setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to
purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice
of Acceptance”).
If
the Basic Amounts subscribed for by all Buyers are less than the total of all
of
the Basic Amounts, then such Buyer who has set forth an Undersubscription Amount
in its Notice of Acceptance shall be entitled to purchase, in addition to the
Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
“Available
Undersubscription Amount”),
such
Buyer who has subscribed for any Undersubscription Amount shall be entitled
to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that
have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary. Notwithstanding the
foregoing, if the Company desires to modify or amend the terms and conditions
of
the Offer in any material respect prior to the expiration of the Offer Period,
the Company may deliver to each Buyer a new Offer Notice and the Offer Period
shall expire on the fifth (5th)
Business Day after such Buyer’s receipt of such new Offer Notice.
(iii) The
Company shall have ten (10) Business Days from the expiration of the Offer
Period above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by a Buyer
(the
“Refused
Securities”)
pursuant to a definitive agreement(s) (the “Subsequent
Placement Agreement”),
but
only to the offerees described in the Offer Notice (if so described therein)
and
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not materially more favorable to the acquiring Person
or Persons or materially less favorable to the Company than those set forth
in
the Offer Notice.
(iv) In
the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section
4(o)(iii)
above),
then such Buyer may, at its sole option and in its sole discretion, reduce
the
number or amount of the Offered Securities specified in its Notice of Acceptance
to an amount that shall be not less than the number or amount of the Offered
Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii)
above
multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities
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the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to this Section 4(o)
prior to
such reduction) and (ii) the denominator of which shall be the original amount
of the Offered Securities. In the event that any Buyer so elects to reduce
the
number or amount of Offered Securities specified in its Notice of Acceptance,
the Company may not issue, sell or exchange more than the reduced number or
amount of the Offered Securities unless and until such securities have again
been offered to the Buyers in accordance with Section 4(o)(i)
above.
(v) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, such Buyer shall acquire from the Company, and the Company shall
issue to such Buyer, the number or amount of Offered Securities specified in
the
Notices of Acceptance.
(vi) Any
Offered Securities not acquired by a Buyer or other Persons in accordance with
this Section 4(o)
may not
be issued, sold or exchanged until they are again offered to such Buyer under
the procedures specified in this Agreement.
(vii) Notwithstanding
anything to the contrary in this Section 4(o)
and
unless otherwise agreed to by such Buyer, the Company shall either confirm
in
writing to such Buyer that the transaction with respect to the Subsequent
Placement has been abandoned or shall publicly disclose its intention to issue
the Offered Securities, in either case, in such a manner such that such Buyer
will not be in possession of any material, non-public information regarding
such
transaction, by the tenth (10th)
Business Day following delivery of the Offer Notice. If by such tenth
(10th)
Business Day, no public disclosure regarding a transaction with respect to
the
Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by such Buyer, such transaction shall be
deemed to have been abandoned and such Buyer shall not be deemed to be in
possession of any material, non-public information regarding such transaction.
Should the Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide such Buyer with another Offer Notice
and
such Buyer will again have the right of participation set forth in this Section
4(o).
The
Company shall not be permitted to deliver more than one such Offer Notice to
such Buyer in any sixty (60) day period.
(viii) The
restrictions contained in this Section 4(o)
shall
not apply in connection with the issuance of any Excluded Securities. The
Company shall not circumvent the provisions of this Section 4(o)
by
providing terms or conditions to one Buyer that are not provided to
all.
(p) Shareholder
Approval.
The
Company shall provide each shareholder entitled to vote at a special or annual
meeting of shareholders of the Company (the “Shareholder
Meeting”),
which
shall be held no later than the Company’s annual meeting in 2008 (which shall be
held no later than May 30, 2008) (the “Shareholder
Meeting Deadline”),
a
proxy statement, substantially in the form which has been previously reviewed
by
the Buyers and each of their counsel at the expense of the Company, soliciting
each such shareholder’s affirmative vote at the Shareholder Meeting for approval
of resolutions (the “Resolutions”)
authorizing an increase in
-21-
the
aggregate number of Warrant Shares to 505,555 and an upward adjustment to the
number of Warrant Shares as a result of any adjustment to the Exercise Price
(as
defined in the Warrants) pursuant to Section 2(b) thereof, in each case, in
a
manner that complies with the rules and regulations of the Principal Market
(such affirmative approval being referred to herein as the “Shareholder
Approval”
and
the
date such approval is obtained, the “Shareholder
Approval Date”),
and
the Company shall use its best efforts to solicit its shareholders’ approval of
the Resolutions and to cause the Board to recommend to the shareholders that
they approve the Resolutions. The Company shall be obligated to seek to obtain
the Shareholder Approval by the Shareholder Meeting Deadline. The Company shall
not directly or indirectly take any action which would result in a Dilutive
Issuance prior to the Shareholder Approval Date. The Company agrees that any
such action and resulting Dilutive Issuance (as defined in the Warrants) shall
be null and void.
|
5.
|
REGISTER;
TRANSFER AGENT INSTRUCTIONS;
LEGEND.
|
(a) Register.
The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Warrants in which the Company shall record
the
name and address of the Person in whose name the Warrants have been issued
(including the name and address of each permitted transferee), and the number
of
Warrant Shares issuable upon exercise of the Warrants held by such Person.
The
Company shall keep the register open and available at all times during business
hours for inspection of any Buyer or its legal representatives, upon reasonable
notice from such Buyer.
(b) Transfer
Agent Instructions.
The
Company shall issue irrevocable instructions to its transfer agent in form
and
substance reasonably acceptable to the Buyers (the “Irrevocable
Transfer Agent Instructions”),
and
any subsequent transfer agent, to issue certificates or credit shares to the
applicable balance accounts at The Depository Trust Company (“DTC”),
registered in the name of each Buyer or
its
respective nominee(s),
for the
Common Shares and the Warrant Shares in such amounts as specified from time
to
time by each Buyer to the Company upon delivery of the Common Shares or the
exercise of the Warrants. The Company represents and warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred
to
in this Section 5(b),
and
stop transfer instructions to give effect to Section 2(g)
hereof,
will be given by the Company to its transfer agent with respect to the
Securities, and that the Securities shall otherwise be freely transferable
on
the books and records of the Company, as applicable, to the extent provided
in
this Agreement and the other Transaction Documents. If a Buyer effects a sale,
assignment or transfer of the Securities in accordance with Section 2(g),
the
Company shall permit the transfer and shall promptly instruct its transfer
agent
to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event that such sale,
assignment or transfer involves Common Shares or Warrant Shares sold, assigned
or transferred pursuant to an effective registration statement or in compliance
with Rule 144, the transfer agent shall issue such shares to the Buyer, assignee
or transferee (as the case may be) without any restrictive legend in accordance
with Section 5(d)
below.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to a Buyer. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section
5(b)
will be
inadequate and agrees, in the event of a breach or
-22-
threatened
breach by the Company of the provisions of this Section 5(b),
that a
Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required. Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the issuance of
such
opinion or the removal of any legends on any of the Securities shall be borne
by
the Company.
(c) Legends.
Each
Buyer understands that the certificates or other instruments representing the
Common Shares and the Warrants and, until such time as the resale of the Common
Shares and the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Common Shares and the Warrant Shares, except as set forth
below, shall bear any legend as required by the “blue sky” laws of any state and
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER,
IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
(d)
Removal
of Legends.
Certificates evidencing Securities shall not be required to contain the
legend
set forth in Section 5(c)
above or
any other legend (i) while a registration statement (including the Registration
Statement) covering the resale of such Securities is effective under the
Securities Act, (ii) following any sale of such Securities pursuant to
Rule 144
(assuming the transferor is not an affiliate of the Company), (iii) if
such
Securities are eligible to be sold, assigned or transferred under Rule
144(k)
(provided
that a
Buyer provides the Company with reasonable assurances that such Securities
are
eligible for sale, assignment or transfer under Rule 144(k)), (iv) in connection
with a sale, assignment or other transfer (other than under Rule 144)
provided
such
Buyer provides the Company with an opinion of counsel to such Buyer, in
a
generally acceptable form, to the effect that such sale, assignment or
transfer
of the Securities may be made without registration under the applicable
requirements of the 1933 Act or (v) if such legend is not required under
applicable requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC).
If
a
-23-
legend
is
not required pursuant to the foregoing, the Company shall no later than five
(5)
Trading Days following the delivery by a Buyer to the Company or the transfer
agent (with notice to the Company) of a legended certificate representing such
Securities (endorsed or with stock powers attached, signatures guaranteed,
and
otherwise in form necessary to effect the reissuance and/or transfer, if
applicable), together with any other deliveries from such Buyer as may be
required above in this Section 5(d),
as
directed by such Buyer, either: (A) deliver (or cause to be delivered to) such
Buyer a certificate representing such Securities that is free from all
restrictive and other legends or (B) credit the balance account of such Buyer’s
or such Buyer’s nominee with DTC with a number of shares of Common Stock equal
to the number of Common Shares or Warrant Shares (as the case may be)
represented by the certificate so delivered by such Buyer, provided that such
five (5) Trading Day period shall be reduced to three (3) Trading Days if such
Buyer indicates to the Company that any of the shares represented by such
certificate have been sold (the date by which such certificate is required
to be
delivered to such Buyer or such shares are required to be so credited pursuant
to the foregoing is referred to herein as the “Required
Delivery Date”).
(e) Buy-In.
If the
Company fails to (i) issue and deliver (or cause to be delivered) to a Buyer
by
the Required Delivery Date a certificate representing the Securities so
delivered to the Company by such Buyer that is free from all restrictive and
other legends or (ii) credit the balance account of such Buyer’s or such Buyer’s
nominee with DTC for such number of shares of Common Shares or Warrant Shares
so
delivered to the Company, and if on or after the Required Delivery Date such
Buyer purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by such Buyer of shares of Common
Stock that such Buyer anticipated receiving from the Company without any
restrictive legend (a “Buy-In”),
then,
in addition to all other remedies available to such Buyer, the Company shall,
within three (3) trading days after such Buyer’s request and in such Buyer’s
sole discretion, either (i) pay cash to such Buyer in an amount equal to such
Buyer’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate or credit such
Buyer’s balance account shall terminate and such shares shall be cancelled, or
(ii) promptly honor its obligation to deliver to such Buyer a certificate or
certificates or credit such Buyer’s DTC account representing such number of
shares of Common Stock that would have been issued if the Company timely
complied with its obligations hereunder and pay cash to such Buyer in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of shares of Common Shares or Warrant Shares (as the case may be) that
the Company was required to deliver to such Buyer by the Required Delivery
Date
times (B) the VWAP of the Common Stock for the five (5) Trading Day period
immediately preceding the Required Delivery Date.
For
purposes of this Section 5(e),
“VWAP” means,
for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market (or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded) during
the period beginning at 9:30:01 a.m., New York City Time, and ending at 4:00:00
p.m., New York City Time, as reported by Bloomberg through its “Volume at Price”
function or, if the foregoing does not apply, the dollar volume-weighted average
price of such security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01 a.m., New York
City Time, and ending at 4:00:00 p.m., New York City Time, as reported
by
-24-
Bloomberg,
or, if no dollar volume-weighted average price is reported for such security
by
Bloomberg for such hours, the average of the highest closing bid price and
the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If VWAP cannot be calculated for such security on
such
date on any of the foregoing bases, the VWAP of such security on such date
shall
be the fair market value as mutually determined by the Company and the Buyer.
If
the Company and the Buyer are unable to agree upon the fair market value of
such
security, then they shall agree in good faith on a reputable investment bank
to
make such determination of fair market value, whose determination shall be
final
and binding and whose fees and expenses shall be borne by the Company. All
such
determinations shall be appropriately adjusted for any share dividend, share
split or other similar transaction during such period.
|
6.
|
CONDITIONS
TO THE COMPANY’S OBLIGATION TO
SELL.
|
(a) The
obligation of the Company hereunder to issue and sell the Common
Shares and
the
related Warrants to each Buyer at the Closing is subject to the satisfaction,
at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:
(i) Such
Buyer shall have executed each of the Transaction Documents to which it is
a
party and delivered the same to the Company.
(ii) Such
Buyer and each other Buyer shall have delivered to the Company the Purchase
Price (less, in the case of Magnetar Capital Master Fund, Ltd., the amount
withheld pursuant to Section 4(f))
for the
Common Shares and the related Warrants being
purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.
(iii) The
representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
originally made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such date),
and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such Buyer at or prior
to the Closing Date.
(iv) The
aggregate Purchase Price paid to the Company for the Securities by the Buyers
at
the Closing shall not be less than $12 million.
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| 7. |
CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.
|
(a) The
obligation of each Buyer hereunder to purchase the Common Shares and
the
related Warrants at the Closing is subject to the satisfaction, at or before
the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer’s sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(i) The
Company shall have duly executed and delivered to such Buyer (A) each of
the Transaction Documents and (B) the Common Shares (in such numbers as is
set
forth across from such Buyer’s name in column (3) of the Schedule of
Buyers and
the
related Warrants (in such numbers as is set forth across from such Buyer’s name
in column (4) of the Schedule of Buyers) being purchased by such Buyer at the
Closing pursuant to this Agreement.
(ii) Such
Buyer shall have received the opinion of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx
PLLC, the Company’s outside counsel, dated as of the Closing Date, in form and
substance reasonably to such Buyer.
(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, which instructions shall have been delivered to and
acknowledged in writing by the Company’s transfer agent.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing the
formation and existence of the Company issued by the Secretary of State of
North
Carolina as of a date within ten (10) days of the Closing Date.
(v) The
Company shall have delivered to such Buyer a certificate evidencing the
Company’s qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the
Company conducts business and is required to so qualify, as of a date within
ten
(10) days of the Closing Date.
(vi) The
Company shall have delivered to such Buyer a certified copy of the Articles
of
Incorporation as certified by the Secretary of State of the State of North
Carolina within ten (10) days of the Closing Date.
(vii) The
Company shall have delivered to such Buyer a certificate, executed by the
Secretary of the Company and dated as of the Closing Date, as to (i) the
resolutions consistent with Section 3(b)
as
adopted by the Company’s board of directors in a form reasonably acceptable to
such Buyer, (ii) the Articles of Incorporation and (iii) the Bylaws, each as
in
effect at the Closing, in form and substance reasonably acceptable to such
Buyer.
(viii) Each
and
every representation and warranty of the Company shall be true and correct
as of
the date when made and shall be true and correct in all material respects as
of
the Closing Date as though originally made at that time (except that any
representation and warranty qualified by materiality or Material Adverse Effect
shall be true and correct in all respects) and the Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, executed by the Chief Executive Officer
of
the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in form and
substance reasonably acceptable to such Buyer.
-26-
(ix) The
Company shall have delivered to such Buyer a letter from the Company’s transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five days of the Closing Date.
(x) The
Common Stock (I) shall be designated for quotation or listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
SEC or the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
by
falling below the minimum maintenance requirements of the Principal
Market.
(xi) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities, including
without limitation, those required by the Principal Market.
(xii) No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents.
(xiii) Since
the
date of execution of this Agreement, no event or series of events shall have
occurred that reasonably would have or result in a Material Adverse
Effect.
(xiv) The
Company shall have obtained approval of the Principal Market to list the Common
Shares and the Warrant Shares.
(xv) The
aggregate Purchase Price paid to the Company for the Securities by the Buyers
at
the Closing shall not be less than $12 million.
(xvi) The
Company shall have delivered to such Buyer such other documents relating to
the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.
|
8.
|
TERMINATION.
|
In
the
event that the Closing shall not have occurred with respect to a Buyer on or
before five (5) days from the date hereof due to the Company’s or such Buyer’s
failure to satisfy the conditions set forth in Sections 6
and
7
above
(and a non-breaching party’s failure to waive such unsatisfied condition(s)),
any such non-breaching party shall have the right to terminate its obligations
under this Agreement with respect to such breaching party on or after the close
of business on such date without liability of such non-breaching party to any
other party; provided,
however,
that
the abandonment of the sale and purchase of the Common Shares and the Warrants
shall be applicable only to such non-breaching party providing such written
notice; provided further, notwithstanding any such termination the Company
shall
remain obligated to reimburse Magnetar Capital Master Fund, Ltd. for the
expenses described in Section 4(f)
above.
Nothing contained in this Section 8
shall be
deemed to release any party from any liability for any breach by such party
of
the terms and provisions of this Agreement or the other Transaction Documents
or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents.
-27-
|
9.
|
MISCELLANEOUS.
|
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains an electronic file of an executed signature page, such
signature page 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 or electronic file signature page (as the case
may be) were an original thereof.
(c) Headings;
Gender.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include
the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,”
“includes,”
“include”
and
words of like import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,”
“hereunder,”
“hereof”
and
words of like import refer to this entire Agreement instead of just the
provision in which they are found.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
-28-
(e) Entire
Agreement; Amendments.
This
Agreement, the other Transaction Documents and the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
supersede all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with respect to
the
matters contained herein, and this Agreement, the other Transaction Documents,
the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to
such
matters. No provision of this Agreement may be amended or waived other than
by
an instrument in writing signed by the Company and the holders of at least
a
majority of the Common Shares issued and issuable hereunder, and any amendment
or to, or waiver of any provision of, this Agreement made in conformity with
the
provisions of this Section 9(e)
shall be
binding on all Buyers and holders of Securities, as applicable, provided
that any
Buyer may give a waiver in writing as to itself. No such amendment or waiver
(unless given pursuant to the foregoing proviso) shall be effective to the
extent that it applies to less than all of the holders of the Common Shares
then
outstanding. No consideration shall be offered or paid to any Person to amend
or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties
to
the Transaction Documents, holders of Common Shares or holders of the Warrants
(as the case may be). The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth
in
the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment
or
promise or has any other obligation to provide any financing to the Company
or
otherwise.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) Business Day after deposit with an overnight courier service
with next day delivery specified, in each case, properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:
-29-
If
to the
Company:
PokerTek,
Inc.
0000
Xxxxx Xxxx, Xxxxx X
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Chief Executive Officer
With
a
copy (for informational purposes only) to:
Xxxxxx
Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
000
Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000-0000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxx, Esq.
If
to the
Transfer Agent:
American
Stock Transfer & Trust
0000
00xx
Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Operations Center
If
to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
with copies to such Buyer’s representatives as set forth on the Schedule of
Buyers,
with
a
copy (for informational purposes only) to:
Xxxxxxxxx
Xxxxxxx, LLP
00
X.
Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxx
X.
Xxxxx, Esq.
or
to
such other address and/or facsimile number and/or to the attention of such
other
Person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change provided,
that
Xxxxxxxxx Xxxxxxx, LLP shall only be provided copies of notices sent to Magnetar
Capital Master Fund, Ltd. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt
from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
-30-
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of any of
the
Securities. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders of at
least a majority of the aggregate number of Registrable Securities issued and
issuable under the Transaction Documents, including, without limitation, by
way
of a Fundamental Transaction (as defined in the Warrants) (unless the Company
is
in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants). A Buyer may assign some or all of its rights
hereunder in connection with transfer of any of its Securities without the
consent of the Company, in which event such assignee shall be deemed to be
a
Buyer hereunder with respect to such assigned rights.
(h) No
Third
Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, other than the Indemnitees
referred to in Section 9(k).
(i) Survival.
Unless
this Agreement is terminated under Section 8
in
accordance with the terms thereof, the representations, warranties, agreements
and covenants shall survive the Closing. Each Buyer shall be responsible only
for its own representations, warranties, agreements and covenants
hereunder.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
In
consideration of each Buyer’s execution and delivery of the Transaction
Documents and acquiring the Securities thereunder and in addition to all of
the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each affiliate
of a
Buyer that holds any Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect investors and
any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the “Indemnitees”)
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified
Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach of any representation or warranty made by the
Company in any of the Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in any of the Transaction
Documents or (c) any cause of action, suit or claim brought or made against
such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting from (i)
the
execution, delivery, performance or enforcement of any of the Transaction
Documents, (ii) any disclosure properly made by such Buyer pursuant to Section
4(h)
or (iii)
the status of such Buyer or holder of the Securities as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents;
provided,
that no
Buyer shall be entitled to indemnification to the extent any of the foregoing
is
caused by its gross negligence or willful misconduct. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 9(k)
shall be
the same as those set forth in Section 6 of the Registration Rights
Agreement.
-31-
(l) No
Strict
Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
Each
Buyer and each affiliate of a Buyer that holds any Securities shall have all
rights and remedies set forth in the Transaction Documents and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any Person having any rights under any provision of this Agreement shall
be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek specific performance
and/or temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages and without posting a bond or other
security.
(n) Payment
Set Aside.
To the
extent that the Company makes a payment or payments to the Buyers hereunder
or
pursuant to any of the other Transaction Documents or the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or payments
or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any
law
(including, without limitation, any bankruptcy law, foreign, 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.
(o) Independent
Nature of Buyers’ Obligations and Rights.
The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under
any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall
be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of group or entity, or create a presumption that
the
Buyers are in any way acting in concert or as a group or entity with respect
to
such obligations or the transactions contemplated by the Transaction Documents
or any matters, and the Company acknowledges that the Buyers are not acting
in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Buyer to
purchase Securities pursuant to the Transaction Documents has been made by
such
Buyer independently of any other Buyer. Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer Purchaser in connection with such Buyer
making its investment hereunder and that no other Buyer will be acting as agent
of such Buyer in connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents. The Company
and each Buyer confirms that each Buyer has independently participated with
the
Company in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation,
the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose. The use of a single agreement to
effectuate the purchase and sale of the Securities contemplated hereby was
solely in the control of the Company, not the action or decision of any Buyer,
and was done solely for the convenience of the Company and not because it was
required or requested to do so by any Buyer. It is expressly understood and
agreed that each provision contained in this Agreement and in each other
Transaction Document is between the Company and a Buyer, solely, and not between
the Company and the Buyers collectively and not between and among the
Buyers.
-32-
(p)
Delivery
of Securities.
Notwithstanding anything contained in this Agreement or any other Transaction
Document to the contrary, unless otherwise directed in writing by the applicable
Buyer, the Company shall, and shall cause its agents and representatives
to,
deliver all of such Buyer’s Securities purchased pursuant to this Agreement (and
all securities which are issuable to such Buyer pursuant to the terms of
this
Agreement or any other Transaction Document) to the address for delivery
of
Securities set forth on such Buyer’s signature page to this Agreement, and
copies of the certificates representing such Securities shall be sent to
such
Buyer to the address of such Buyer as set forth on such Buyer’s signature page
to this Agreement.
[signature
pages follow]
-33-
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
COMPANY:
|
|
POKERTEK,
INC.
By:
/s/ Gehrig
White
Name:
Gehrig
White
Title:
C.E.O.
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
|
MAGNETAR
CAPITAL MASTER FUND, LTD.
By: Magnetar
Financial LLC
Its: Investment
Manager
/s/
Xxxx
Xxxxxxxx
By: Xxxx
Xxxxxxxx
Its: Counsel
|
ADDRESS
FOR DELIVERY OF SECURITIES:
Credit
Suisse Securities
00
Xxxxxxx Xxx., 0xx Xxxxx
XX,
XX
00000
Attention:
Xxx Xxxxx
(000)
000-0000
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.
|
BUYERS:
|
|
|
SRB
Greenway Capital, L.P.
|
|
|
By:
SRB Management, L.P., General Partner
|
|
|
By:
BC Advisors, L.L.C., General Partner
|
|
|
By:
/s/ Xxxxxx X.
Xxxxxx
|
|
|
Xxxxxx
X. Xxxxxx, Member
|
|
|
SRB
Greenway Capital (QP), L.P.
|
|
|
By:
SRB Management, L.P., General Partner
|
|
|
By:
BC Advisors, L.L.C., General Partner
|
|
|
By:
/s/ Xxxxxx X.
Xxxxxx
|
|
|
Xxxxxx
X. Xxxxxx, Member
|
|
|
SRB
Greenway Offshore Operating Fund, L.P.
|
|
|
By:
SRB Management, L.P., General Partner
|
|
|
By:
BC Advisors, LLC, General Partner
|
|
|
By:
/s/ Xxxxx
Xxxxxx
|
|
|
Xxxxx Xxxxxx,
Member
|
IN
WITNESS WHEREOF,
each
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first
written
above.
|
JANUS
CAPITAL MANAGEMENT LLC
|
|
|
(“Janus”)
on behalf of each of the following
|
|
|
funds
and portfolios advised by Janus:
|
|
|
JANUS
VENTURE FUND (a series of Janus
|
|
|
Investment
Fund), and
|
|
|
JANUS
US VENTURE FUND (a series of Janus
|
|
|
Capital
Funds Plc), and
|
|
|
SMALL
CAP GROWTH PORTFOLIO (a series
|
|
|
of
Ohio National Fund Inc.),
|
|
|
By:
/s/ Xxxxxxx
Xxxxx
|
|
|
Name:
Xxxxxxx Xxxxx
|
|
|
Title:
Portfolio Manager and authorized
|
|
|
signatory
as investment adviser to each of the
|
|
|
aforementioned
funds and portfolios
|
Address
for Notice:
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and Associate Counsel
Tel:
000
000 0000
Fax:
000
000 0000
SCHEDULE
OF BUYERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|
Buyer
|
Address
and Facsimile Number
|
Aggregate
Number of Common Shares
|
Aggregate
Number of Warrants
|
Purchase
Price
|
Legal
Representative’s
Address
and Facsimile Number
|
|
Magnetar
Capital Master Fund, Ltd..
|
0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxx
Xxxx
Xxxxxxx
Facsimile:
(000) 000-0000
|
533,815
|
162,439
|
$4,804,335
|
Xxxxxxxxx
Traurig, LLP
00
X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx
Xxxx
X. Xxxxx
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Janus
Venture Fund (a series of Janus Investment Fund)
|
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
|
482,833
|
146,926
|
$4,345,497
|
Janus
Venture Fund
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Janus
US Venture Fund (a series of Janus Capital Funds
Plc)
|
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
|
43,843
|
13,341
|
$394,587
|
Janus
US Venture Fund
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
Small
Cap Growth Portfolio (a series of Ohio National Fund
Inc.)
|
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
|
7,139
|
2,172
|
$64,251
|
Small
Cap Growth Portfolio
000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xxxxx Xxxx, AVP and
Associate
Counsel
Facsimile:
(000) 000-0000
Telephone:
(000) 000-0000
|
|
SRB
Greenway Capital (QP), L.P.
|
000
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attn:
Xxxxxx Xxx
Facsimile:
(000) 000-0000
|
325,400
|
99,018
|
$2,928,600
|
N/A
|
|
SRB
Greenway Capital, L.P.
|
000
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attn:
Xxxxxx Xxx
Facsimile:
(000) 000-0000
|
37,514
|
11,415
|
$337,626
|
N/A
|
|
SRB
Greenway Offshore Operating Fund, L.P.
|
000
Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx,
Xxxxx 00000
Attn:
Xxxxxx Xxx
Facsimile:
(000) 000-0000
|
13,900
|
4,230
|
$125,100
|
N/A
|
EXHIBITS
|
Exhibit
A
|
Form
of Warrant
|
|
|
Exhibit
B
|
Form
of Registration Rights Agreement
|
|
|
Schedule
3(d)
|
Conflicts
|
|
|
Schedule
3(j)
|
Rights
Agreement
|
|
|
Schedule
3(k)
|
SEC
Documents
|
|
|
Schedule
3(r)
|
Capitalization
|
|
|
Schedule
3(s)
|
Indebtedness
and Other Contracts
|
|
|
Schedule
3(t)
|
Litigation
|
|
|
Schedule
3(x)
|
Intellectual
Property
|
|
|
Schedule
4(d)
|
Use
of Proceeds
|
