STANDBY EQUITY DISTRIBUTION AGREEMENT
Exhibit 10.1
THIS AGREEMENT
dated as of March 26, 2010 (this “Agreement”) between
YA GLOBAL MASTER SPV
LTD., a Cayman Islands company (the “Investor”), and
SUPERTEL HOSPITALITY, INC., a corporation organized and existing under the laws
of the State of Virginia (the “Company”).
WHEREAS, the parties desire that,
upon the terms and subject to the conditions contained herein, the Company shall
issue and sell to the Investor, from time to time as provided herein, and the
Investor shall purchase from the Company up to the amount of the Company’s
common stock, par value $0.01 per share (the “Common Stock”) which
the Company may sell under its registration statement on Form S-3 (File No.
333-147310) but not to exceed $10,000,000 except as otherwise provided herein;
and
WHEREAS, the offer and sale of the
shares of Common Stock issuable hereunder has been registered on the Company’s
registration statement on Form S-3 (File No. 333-147310) under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
(the “Securities
Act”).
NOW, THEREFORE, the parties
hereto agree as follows:
Article I. Certain
Definitions
Section 1.01 “Additional Shares”
shall have the meaning set forth in Section 2.02(e).
Section 1.02 “Advance” shall mean
the portion of the Commitment Amount requested by the Company in the Advance
Notice.
Section 1.03 “Advance Notice” shall
mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the Investor.
Section 1.04 “Advance Notice Date”
shall mean each date the Company delivers (in accordance with Section 2.02(b) of
this Agreement) to the Investor an Advance Notice requiring the Investor to
advance funds to the Company, subject to the terms of this Agreement. No
Advance Notice Date shall be less than 5 Trading Days after the prior Advance
Notice Date.
Section 1.05 “Base Prospectus”
shall mean the Company’s prospectus accompanying the Registration
Statement.
Section 1.06 “Closing” shall mean
one of the closings of a purchase and sale of Common Stock pursuant to Section
2.03.
Section 1.07 “Commitment Amount”
shall mean the aggregate amount of up to $10,000,000, subject to adjustment in
accordance with Section 2.05; provided that, the Company shall not effect any
sales under this Agreement and the Investor shall not have the obligation to
purchase shares of Common Stock under this Agreement to the extent that after
giving effect to such purchase and sale the aggregate number of shares of Common
Stock issued under this Agreement would exceed 4,400,464 shares of Common Stock
(which is less than 20% of the 22,002,322 outstanding shares of Common Stock as
of the date of this Agreement) except that such limitation shall not apply
in the event that the Company (i) obtains the approval of its stockholders as
required by the applicable rules of the Principal Market for the Common Stock
for issuances of Common Stock in excess of such amount or (ii) obtains a written
opinion from outside counsel to the Company that such approval is not required,
which opinion shall be reasonably satisfactory to the Investor.
Section 1.08 “Commitment Period”
shall mean the period commencing on the Effective Date, and expiring upon the
termination of this Agreement in accordance with Section 10.02.
Section 1.09 “Common Stock” shall
have the meaning set forth in the recitals of the Agreement.
Section 1.10 “Condition Satisfaction
Date” shall have the meaning set forth in Section 7.01.
Section 1.11 “Consolidation Event”
shall have the meaning set forth in Section 6.06.
Section 1.12 “Damages” shall mean
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorney’s fees and disbursements and costs and expenses
of expert witnesses and investigation).
Section 1.13 “Effective Date” shall
mean the date hereof.
Section 1.14 “Environmental Laws”
shall have the meaning set forth in Section 4.12.
Section 1.15 “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
Section 1.16 “Excluded Day” shall
have the meaning set forth in Section 2.02(e).
Section 1.17 “Initial Disclosure”
shall have the meaning set forth in Section 6.10.
Section 1.18 “Market Price” shall
mean the lowest daily VWAP of the Common Stock during the relevant Pricing
Period that is greater than or equal to the Minimum Market Price.
Section 1.19 “Material Adverse
Effect” shall mean any condition, circumstance, or situation that may
result in, or reasonably be expected to result in (i) a material adverse effect
on the legality, validity or enforceability of this Agreement or the
transactions contemplated herein, (ii) a material adverse effect on the results
of operations, assets, business or condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under this Agreement.
Section 1.20 “Maximum Advance
Amount” shall be $500,000 or such other amount as may be agreed upon by
the mutual consent of the parties.
Section 1.21 “Minimum Acceptable
Price” shall mean, with respect to each Advance, a price equal to the
greater of (i) a price chosen by the Company and set out in the Advance Notice,
(ii) a price equal to fifty percent (50%) of the VWAP on the Trading Day
immediately preceding the date of such Advance Notice, or (iii) a price equal to
the then current par value of the Common Stock.
Section 1.22 “Minimum Market Price”
shall mean the product obtained by multiplying the Minimum Acceptable Price by
1.042.
Section 1.23 “Net Advance Amount”
shall mean the final amount of an Advance (in each case as reduced, if
necessary, pursuant to Section 2.02 and as increased, if necessary, by the
purchase price paid for any Additional Shares purchased on Excluded Days
pursuant to Section 2.02(e)).
Section 1.24 “Ownership Limitation”
shall have the meaning set forth in Section 2.02(a).
Section 1.25 “Person” shall mean an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
Section 1.26 “Preferred Stock”
shall have the meaning set forth in Section 4.05.
Section 1.27 “Pricing Period” shall
mean the 5 consecutive Trading Days after the Advance Notice Date.
Section 1.28 “Principal Market”
shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market, the NYSE Euronext, or the New York Stock Exchange, whichever is
at the time the principal trading exchange or market for the Common
Stock.
Section 1.29 “Prospectus” shall
mean the Base Prospectus, as supplemented by any Prospectus
Supplement.
Section 1.30 “Prospectus
Supplement” shall mean any prospectus supplement to the Base Prospectus
filed with the SEC pursuant to Rule 424(b) under the Securities
Act.
Section 1.31 “Purchase Price” shall
be set at 96% of the Market Price during the Pricing Period.
Section 1.32 “Registration
Statement” shall mean the Company’s shelf registration statement filed by
the Company with the SEC under the Securities Act on Form S-3 (Registration
Number 333-147310), with respect to Common Stock, Preferred Stock and warrants
to be offered and sold by the Company, as such Registration Statement may be
amended and supplemented from time to time and including any information deemed
to be a part thereof pursuant to Rule 430B under the Securities Act or another
registration statement on a form promulgated by the SEC for which the Company
then qualifies and which form shall be available for the registration of the
offer and sale of the Shares to the Investor and any successor shelf
registration statement filed by the Company with the SEC under the Securities
Act on a form promulgated by the SEC for which the Company then qualifies and
which form shall be available for the registration of the sale of Shares to the
Investor.
Section 1.33 “SEC” shall have the
meaning set forth in the recitals of this Agreement.
Section 1.34 “SEC Documents” shall
have the meaning set forth in Section 4.07.
Section 1.35 “Securities Act” shall
have the meaning set forth in the recitals of this Agreement.
Section 1.36 “Settlement Document”
shall have the meaning set forth in Section 2.03(a).
Section 1.37 “Shares” shall mean
the shares of Common Stock to be issued from time to time hereunder pursuant to
Advances.
Section 1.38 “Share Issuance Date”
shall mean the second (2nd) Trading Day after
receipt by the Company of the Settlement Document with respect to each
Advance.
Section 1.39 “Trading Day” shall
mean any day during which the Principal Market shall be open for
business.
Section 1.40 “VWAP” means, for any
date, the daily volume weighted average price of the Common Stock for such date
on the Principal Market as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City
time)).
Article II.
Advances
(a) Advance Notice.
At any time during the Commitment Period, the Company may require the Investor
to purchase shares of Common Stock by delivering an Advance Notice to the
Investor, subject to the conditions set forth in Article VII; provided, however,
that (i) the amount for each Advance as designated by the Company in the
applicable Advance Notice shall not be more than the Maximum Advance Amount,
(ii) the aggregate amount of the Advances pursuant to this Agreement shall not
exceed the Commitment Amount, (iii) in no event shall
the number of shares of Common Stock issuable to the Investor pursuant to an
Advance cause the aggregate number of shares of Common Stock beneficially owned
(as calculated pursuant to Section 13(d) of the Exchange Act) by the Investor
and its affiliates to exceed 4.99% of the then outstanding Common Stock (the
“Ownership
Limitation”) (as of the date of this Agreement, Investor and its
affiliates held 0% of the outstanding Common Stock), and (iv) under no
circumstances shall the aggregate offering price or number of Shares, as the
case may be, exceed the aggregate offering price or number of Shares available
for issuance under the Registration Statement (the “Registration
Limitation”). There shall be a minimum of 5 Trading Days between
each Advance Notice Date. Notwithstanding any other provision in this
Agreement, the Company acknowledges and agrees that upon receipt of an Advance
Notice, the Investor may sell shares that it is unconditionally obligated to
purchase under such Advance Notice prior to taking possession of such
shares.
(b) Date of Delivery of Advance
Notice. Advance Notices shall be delivered in accordance with the
instructions set forth on the bottom of Exhibit A or such other instructions
that the Investor may provide to the Company. An Advance Notice shall be
deemed delivered on (i) the Trading Day it is received by the Investor if such
notice is received prior to 5:00 pm Eastern Time, or (ii) the immediately
succeeding Trading Day if it is received after 5:00 pm Eastern Time on a Trading
Day or at any time on a day which is not a Trading Day. No Advance Notice
may be deemed delivered on a day that is not a Trading Day. The Company acknowledges and agrees that the Investor shall be entitled
to treat any email it receives from officers whose email addresses are
identified by the Company purporting to be an Advance Notice as a duly executed
and authorized Advance Notice from the Company.
(c) Ownership
Limitation. In connection with each Advance Notice delivered by the
Company, any portion of an Advance that would cause the Investor to exceed the
Ownership Limitation shall automatically be withdrawn with no further action
required by the Company.
(d) Registration
Limitation. In connection with each Advance Notice, any portion of
an Advance that would exceed the Registration Limitation shall automatically be
deemed to be withdrawn by the Company with no further action required by the
Company.
(a) Within 1 Trading Day after the end of the applicable
Pricing Period, the Investor shall deliver to the Company a written document
(each a “Settlement
Document”) setting forth (i) the amount of the Advance (taking into
account any adjustments pursuant to Section 2.01(c), Section 2.01(d) or Section
2.01(e), (ii) the Net Advance Amount, (iii) the Minimum Acceptable Price (if
any) for the Advance, (iv) the number of Excluded Days (if any) taken into
account in determining the Pricing Period, (v) the Purchase Price for the
Shares, (vi) the Market Price for the Advance (as supported by a report by
Bloomberg, LP indicating the VWAP for each of the Trading Days during the
Pricing Period), (vii) the number of Additional Shares, if any, to be purchased
and (viii) the amount payable to the Company, in each case, taking into account
the terms and conditions of this Agreement. The Settlement Document shall
be substantially in the form attached hereto as Exhibit B and shall
be delivered in accordance with the instructions set forth on the top of Exhibit
B or such other instructions that the Company may provide to the Investor in
writing.
(c) On each Share Issuance Date the Company will, or will
cause its transfer agent to, electronically transfer such number of shares of
Common Stock registered in the name of the Investor as shall equal (x) the
amount of the Advance specified in such Advance Notice (as may be reduced
according to the terms of this Agreement), divided by the Purchase Price and (y)
the Additional Shares, if any, by crediting the Investor’s account or its
designee’s account at the Depository Trust Company through its Deposit
Withdrawal Agent Commission System or by such other means of delivery as may be
mutually agreed upon by the parties hereto (which in all cases shall be freely
tradable, registered shares in good deliverable form) against payment by the
Investor of the Net Advance Amount in same day funds to an account designated by
the Company. No fractional shares shall be issued, and any fractional
amounts shall be rounded to the next higher whole number of shares. Any
certificates evidencing shares of Common Stock delivered pursuant hereto shall
be free of restrictive legends except for legends customary for REIT ownership
limitations.
(d) On or prior to each Share Issuance Date, each of the
Company and the Investor shall deliver to the other all documents, instruments
and writings required to be delivered by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated
herein.
Section 2.04 Hardship. In
the event the Investor sells shares of the Company’s Common Stock after receipt
of an Advance Notice and the Company fails to perform its obligations as
mandated in Section 2.03, the Company agrees that in addition to and in no way
limiting the rights and obligations set forth in Article V hereto and in
addition to any other remedy to which the Investor is entitled at law or in
equity, including, without limitation, specific performance, it will hold the
Investor harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and acknowledges that irreparable
damage would occur in the event of any such default. It is accordingly
agreed that the Investor shall be entitled to an injunction or injunctions to
prevent such breaches of this Agreement and to specifically enforce, without the
posting of a bond or other security, the terms and provisions of this
Agreement.
Section
2.05 Increase in Commitment
Amount. At any time prior to the one year anniversary of the
Effective Date (the “Commitment Increase
Date”) the Company may notify the Investor in writing that it wishes to
increase the Commitment Amount to $20,000,000 (provided that the Company has the
ability to register the additional Commitment Amount on the Registration
Statement) effective upon the Commitment Increase Date and the Commitment Amount
shall automatically be deemed increased.
Section 2.06 Promissory
Notes. After the completion of the first Advance under this
Agreement and thereafter during the Commitment Period, the Company may at any
time and from time to time request the Investor to purchase promissory notes
(each, a “Note”) issued by the
Company with a principal amount of up to $2,000,000. The Investor shall
consider each request in good faith and may decide in its sole discretion
whether or not to purchase such Notes. Any such Notes purchased by the
Investor will be on terms mutually acceptable to both the Company and the
Investor and will be subject to certain conditions precedent, including without
limitation, the completion of due diligence by the Investor to its
satisfaction.
Article III.
Representations and Warranties of Investor
Investor hereby represents and warrants to, and agrees with, the Company
that the following are true and correct as of the date hereof and as of each
Share Issuance Date:
Section 3.01 Organization and
Authorization. The Investor is duly incorporated or organized and
validly existing in the jurisdiction of its incorporation or organization and
has all requisite power and authority to purchase and hold the securities
issuable hereunder. The decision to invest and the execution and delivery
of this Agreement by such Investor, the performance by such Investor of its
obligations hereunder and the consummation by such Investor of the transactions
contemplated hereby have been duly authorized and requires no other proceedings
on the part of the Investor. The undersigned has the right, power and
authority to execute and deliver this Agreement and all other instruments on
behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.
Section 3.02 Evaluation of
Risks. The Investor has such knowledge and experience in financial,
tax and business matters as to be capable of evaluating the merits and risks of,
and bearing the economic risks entailed by, an investment in the Company and of
protecting its interests in connection with this transaction. It
recognizes that its investment in the Company involves a high degree of
risk.
Section 3.03 No Legal Advice From the
Company. The Investor acknowledges that it had the opportunity to
review this Agreement and the transactions contemplated by this Agreement with
his or its own legal counsel and investment and tax advisors. The Investor
is relying solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
Section 3.04 Investment Purpose.
The securities are being purchased by the Investor for its own account, and for
investment purposes. The Investor agrees not to assign or in any way
transfer the Investor’s rights to the securities or any interest therein and
acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable Federal and state securities
laws. No other Person has or will have a direct or indirect beneficial
interest in the securities. The Investor agrees not to sell, hypothecate
or otherwise transfer the Investor’s securities unless the securities are
registered under Federal and applicable state securities laws or unless, in the
opinion of counsel satisfactory to the Company, an exemption from such laws is
available.
Section 3.05 Accredited
Investor. The Investor is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D of the Securities
Act.
Section 3.06 Information.
The Investor and its advisors (and its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information it deemed material to making an informed investment
decision. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its management. Neither
such inquiries nor any other due diligence investigations conducted by such
Investor or its advisors, if any, or its representatives shall modify, amend or
affect the Investor’s right to rely on the Company’s representations and
warranties contained in this Agreement. The Investor understands that its
investment involves a high degree of risk. The Investor is in a position
regarding the Company, which, based upon employment, family relationship or
economic bargaining power, enabled and enables such Investor to obtain
information from the Company in order to evaluate the merits and risks of this
investment. The Investor has sought such accounting, legal and tax advice,
as it has considered necessary to make an informed investment decision with
respect to this transaction.
Section 3.07 Receipt of Documents.
The Investor and its counsel have received and read in their entirety: (i) this
Agreement and the Exhibits annexed hereto; (ii) all due diligence and other
information request by them to verify the accuracy and completeness of such
representations, warranties and covenants; (iii) the Company’s Form 10-K for the
year ended December 31, 2009; and (iv) answers to all questions the
Investor submitted to the Company regarding an investment in the Company; and
the Investor has relied on the information contained therein and has not been
furnished any other documents, literature, memorandum or
prospectus.
Section
3.09 Trading
Activities. The Investor’s trading activities with respect to the
Company’s Common Stock shall be in compliance with all applicable federal and
state securities laws, rules and regulations and the rules and regulations of
the Principal Market on which the Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock, the Investor agrees that it shall not, and that it will cause its
affiliates not to, (a) engage in any short sales of the Common Stock or (b)
beneficially own or purchase during the Commitment Period any Common Stock
except for Common Stock purchased pursuant to this Agreement; provided that the
Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor has the right to sell the shares to be purchased by the Investor
pursuant to the Advance Notice prior to taking possession of such
Shares.
Section
3.10 Standstill
Agreement. The Investor agrees that for a period of one year from
the expiration of the Commitment Period, it will not, provided the Company has
delivered to the Investor all Shares relating to prior Advance and has not
defaulted on any other obligations it has to the Investor and unless (x)
specifically consented to in advance in writing by the Board of Directors of the
Company or (y) required in order to fulfill its obligations to purchase and sell
the Shares as set forth in Article II of this Agreement, directly or indirectly,
in any manner:
(a) make, or in any way participate in, directly or
indirectly, alone or in concert with others, any “solicitation” of “proxies” to
vote (as such terms are used in the proxy rules promulgated pursuant to Section
14 of the Exchange Act), whether subject to or exempt from the proxy rules, or
seek to advise or influence in any manner whatsoever any person or entity with
respect to the voting of any equity securities of the Company;
(b) form, join or in any way intentionally participate in a
“group” within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any voting equity securities of the Company, other than a group comprised
solely of the Investor and any of its controlling persons;
(c) acquire, offer to acquire or agree to acquire, alone or
in concert with others, by purchase, exchange or otherwise, (i) any of the
assets, tangible and intangible, of the Company or any of its subsidiaries or
(ii) direct or indirect rights, warrants or options to acquire any assets of the
Company or any of its subsidiaries, in each case except for such assets as are
then being offered for sale by the Company or any of its subsidiaries or
otherwise are not material to the operations of the Company or any of its
subsidiaries, either individually or in the aggregate;
(d) otherwise act, alone or in concert with others, to seek
to propose to the Company, any of its subsidiaries or any of their respective
shareholders any merger, business combination, restructuring, recapitalization
or other transaction involving the Company or any of its subsidiaries or
otherwise seek, alone or in concert with others, to control, change or influence
the management, the Board or the policies of the Company or any of its
subsidiaries or nominate any person as a director who is not nominated by the
then incumbent directors, or propose any matter to be voted upon by the
shareholders of the Company or any of its subsidiaries; or
(e) publicly announce an intention to do, or enter into any
arrangement or understanding with others to do, any of the actions restricted or
prohibited under this Section 3.10.
Article IV.
Representations and Warranties of the Company
Except as stated below, on the disclosure schedules attached hereto or in
the SEC Documents (as defined herein), the Company hereby represents and
warrants to, and covenants with, the Investor that the following are true and
correct as of the date hereof and shall be true and correct as of each Share
Issuance Date:
Section 4.01 Registration Statement and
Prospectus.
(a) The Company meets the
requirements for use of Form S-3 under the Securities Act for the offering of
the Shares, including, but not limited, to the transactions requirements for an
offering made by the issuer set forth in Instruction I.B.6 to From
S-3.
(b) The Registration Statement,
including the Base Prospectus contained therein, was prepared by the Company in
conformity with the requirements of the Securities Act and all applicable U.S.
federal securities laws rules and regulations. Any amendment or supplement
to the Registration Statement or Prospectus required by this Agreement will be
so prepared and filed by the Company and, as applicable, the Company will use
its reasonable best efforts to cause it to become effective as soon as
reasonably practicable. No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
SEC. Any reference herein to the Registration Statement, the Prospectus,
or any amendment or supplement thereto shall be deemed to refer to and include
the documents incorporated (or deemed to be incorporated) by reference therein
pursuant to Item 12 of Form S‑3 under the Securities Act, and any reference
herein to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement or Prospectus shall be deemed to refer to and include the
filing after the execution hereof of any document with the SEC deemed to be
incorporated by reference therein.
(c) The Company has not
distributed and, prior to the completion of the distribution of the Shares,
shall not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Base Prospectus as
supplemented by any Prospectus Supplement or such other materials, if any,
permitted by the Securities Act.
Section 4.02 No Misstatement or
Omission. Each part of the Registration Statement, when such part
became or becomes effective, and the Prospectus, on the date of filing thereof
with the SEC and at each Advance Notice Date and Closing Date, conformed or will
conform in all material respects with the requirements of the Securities Act and
the rules and regulations promulgated thereunder; each part of the Registration
Statement, when such part became or becomes effective, did not or will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and the Prospectus, on the date of filing thereof with the SEC and
at each Advance Notice Date and Share Issuance Date, did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; except that the foregoing shall not apply
to statements or omissions in any such document made in reliance on information
furnished in writing to the Company by the Investor expressly stating that such
information is intended for use in the Registration Statement, the Prospectus,
or any amendment or supplement thereto.
Section 4.04 Authorization, Enforcement,
Compliance with Other Instruments. (i) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and any related agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement and any related agreements by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement and any related
agreements have been duly executed and delivered by the Company, (iv) this
Agreement and assuming the execution and delivery thereof and acceptance by the
Investor, any related agreements, constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their 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 creditors’
rights and remedies.
Section 4.06 No Conflict.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Articles of Incorporation, any certificate of
designations of any outstanding series of Preferred Stock of the Company or
By-laws 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
material agreement, indenture or instrument to which the Company is a party, or
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 Principal Market on which the Common Stock is quoted)
applicable to the Company or by which any material property or asset of the
Company is bound or affected and which would cause a Material Adverse
Effect. Except as disclosed in the SEC Documents, neither the Company nor
its subsidiaries is in violation of any term of or in default under its Articles
of Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of
the Company is not being conducted in violation of any material law, ordinance,
regulation of any governmental entity. Except as specifically contemplated
by this Agreement and as required under the Securities Act and any applicable
state securities laws, and as required by the rules of the Principle Market, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof or thereof
except as such consent, authorization or order has been obtained prior to the
date hereof. The Company is unaware of any fact or circumstance which
might give rise to any of the foregoing.
Section 4.08 No Default.
Except as disclosed in the SEC Documents, the Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it is or its property
is bound and neither the execution, nor the delivery by the Company, nor the
performance by the Company of its obligations under this Agreement or any of the
exhibits or attachments hereto will conflict with or result in the breach or
violation of any of the terms or provisions of, or constitute a default or
result in the creation or imposition of any lien or charge on any assets or
properties of the Company under its Articles of Incorporation, By-Laws, any
material indenture, mortgage, deed of trust or other material agreement
applicable to the Company or instrument to which the Company is a party or by
which it is bound, or any statute, or any decree, judgment, order, rules or
regulation of any court or governmental agency or body having jurisdiction over
the Company or its properties, in each case which default, lien or charge is
likely to cause a Material Adverse Effect.
Section 4.09 Absence of Events of
Default. Except for matters described in the SEC Documents and/or
this Agreement, no Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a Material Adverse
Effect.
Section 4.10 Intellectual Property
Rights. The Company owns or possess adequate rights or licenses to
use all material trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and rights
necessary to conduct their respective businesses as now conducted. The
Company does not have any knowledge of any infringement by the Company of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade secret
or other similar rights of others, and, to the knowledge of the Company, there
is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against, the Company regarding trademark,
trade name, patents, patent rights, invention, copyright, license, service
names, service marks, service xxxx registrations, trade secret or other
infringement; and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing.
Section 4.11 Employee
Relations. The Company is not involved in any labor dispute nor, to
the knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s employees is a member of a union and the
Company believes that its relations with its employees are good.
Section 4.13 Title. Except
as set forth in the SEC Documents, the Company has good and marketable title to
its properties and material assets owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company. Any real property
and facilities held under lease by the Company held 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.
Section 4.14 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. The Company has not been refused any insurance coverage sought or
applied for and the Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse
Effect.
Section 4.15 Regulatory
Permits. The Company possesses all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its businesses and has not received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit in each case except where such
noncompliance or nonreceipt would not, individually or in the aggregate, have a
Material Adverse Effect.
Section 4.16 Internal Accounting
Controls. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Section 4.17 No Material Adverse
Breaches, etc. Except as set forth in the SEC Documents, the
Company is not subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect.
Section 4.18 Absence of
Litigation. Except as set forth in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, or the Common Stock, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect.
Section 4.19 Subsidiaries.
Except as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
Section 4.20 Tax Status.
Except as disclosed in the SEC Documents, the Company has made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject and (unless and only to the
extent that the Company has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) has 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 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.
Section 4.21 Certain
Transactions. Except as set forth 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 services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
Section 4.22 The Shares. The
Shares have been duly authorized and, when issued, delivered and paid for
pursuant to this Agreement, will be validly issued and fully paid and
non-assessable, free and clear of all encumbrances and will be issued in
compliance with all applicable United States federal and state securities laws;
the capital stock of the Company, including the Common Stock, conforms in all
material respects to the description thereof contained in the Registration
Statement (No. 333-147310) filed on Form S-3 and the Common Stock, including the
Shares, will conform to the description thereof contained in the Prospectus as
amended or supplemented. Neither the stockholders of the Company, nor any
other Person have any preemptive rights or rights of first refusal with respect
to the Shares or other rights to purchase or receive any of the Shares or any
other securities or assets of the Company, and no Person has the right,
contractual or otherwise, to cause the Company to issue to it, or register
pursuant to the Securities Act, any shares of capital stock or other securities
or assets of the Company upon the issuance or sale of the Shares. The
Company is not obligated to offer the Shares on a right of first refusal basis
or otherwise to any third parties including, but not limited to, current or
former shareholders of the Company, underwriters, brokers, agents or other third
parties.
Section 4.23 Use of
Proceeds. The Company shall use the net proceeds from this offering
as disclosed in the Prospectus.
Section 4.24 Dilution. The
Company is aware and acknowledges that issuance of shares of the Company’s
Common Stock could cause dilution to existing shareholders and could
significantly increase the outstanding number of shares of Common
Stock.
Section 4.25 Acknowledgment Regarding
Investor’s Purchase of Shares. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of an arm’s length investor with
respect to this Agreement and the transactions contemplated hereunder. The
Company further acknowledges that the Investor is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereunder and any advice given
by the Investor or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereunder is merely incidental to
the Investor’s purchase of the Common Stock hereunder. The Company is
aware and acknowledges that it may not be able to request Advances under this
Agreement if there is not an effective Registration Statement or if any
issuances of Common Stock pursuant to any Advances would violate any rules of
the Principal Market.
Article V.
Indemnification
Section 5.01 Indemnification by the
Company. The Company agrees to indemnify and hold harmless the
Investor and the Investor’s affiliates, directors, officers, employees and
agents and each person who controls the Investor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any
and all losses, claims, damages, expenses or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Shares as originally filed or
in any amendment thereof, or in the Prospectus, or in any Prospectus Supplement,
or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating,
defending or settling any such loss, claim, damage, liability, expense or
action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Investor specifically for inclusion
therein.
Section
5.02 Indemnification by the
Investor. The Investor agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity to the Investor, but only with reference to
written information relating to such Investor furnished to the Company by or on
behalf of the Investor specifically for inclusion in the documents referred to
in the foregoing indemnity.
Section 5.05 Remedies. The
remedies provided for in this Article V are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified
person at law or in equity. The obligations of the parties to indemnify or
make contribution under this Article V shall survive termination.
Article VI.
Covenants of the Company
Covenants of the Company
Section 6.01 Effective Registration
Statement. During the
Commitment Period, the Company shall notify the Investor promptly if (i) the
Registration Statement shall cease
to be effective under the
Securities Act, (ii) the Common Stock shall cease to be
authorized for listing on the Principal Market, (iii) the Common Stock ceases to
be registered under Section 12(g) of the Exchange Act or (iv) the Company fails
to file in a timely manner all reports and other documents required of it as a
reporting company under the Exchange Act.
Section 6.02 Corporate
Existence. The Company will take all steps necessary to preserve
and continue the corporate existence of the Company.
Section 6.05 Listing of
Shares. The Company will use commercially reasonable efforts to
cause the Shares to be listed on the Principal Market and to qualify the Shares
for sale under the securities laws of such jurisdictions as the Investor
designates; provided that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction.
Section
6.06 Consolidation;
Merger. If an Advance Notice has been delivered to the Investor and
the transaction contemplated in such Advance Notice has not yet been closed in
accordance with Section 2.03 hereof, then the Company shall not effect any
merger or consolidation of the Company with or into, or a transfer of all or
substantially all the assets of the Company to another entity (a “Consolidation
Event”) unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the Investor such shares of stock and/or securities as
the Investor is entitled to receive pursuant to such Advance
Notice.
Section 6.07 Issuance of the Company’s
Common Stock. The sale of the shares of Common Stock shall be made
in accordance with the provisions and requirements of the Securities Act and any
applicable state securities law.
Section 6.08 Expenses. The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all expenses incident to the
performance of its obligations hereunder, including but not limited to
(i) the preparation, printing and filing of the Registration Statement and
each amendment and supplement thereto, of each Prospectus and of each amendment
and supplement thereto; (ii) the preparation, issuance and delivery of any
Shares issued pursuant to this Agreement, (iii) all fees and disbursements
of the Company’s counsel, accountants and other advisors, (iv) the
qualification of the Shares under securities laws in accordance with the
provisions of this Agreement, including filing fees in connection therewith,
(v) the printing and delivery of copies of the Prospectus and any
amendments or supplements thereto, (vi) the fees and expenses incurred in
connection with the listing or qualification of the Shares for trading on the
Principal Market, or (vii) filing fees of the SEC and the Financial
Industry Regulatory Authority, Inc.
Section 6.09 Market
Activities. The
Company will not, directly or indirectly, take any action designed to cause or
result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company
under applicable laws and regulations to facilitate the sale or resale of the
Common Stock.
Section
6.10 Comfort
Letters. At the reasonable request of the Investor the Company will
request that its independent accountants furnish to the Investor a letter, in
form and substance reasonably satisfactory to the Investor, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements of
the Company dated the date of and provided within a reasonable period of time
after (i) the date hereof, (ii) the date the Registration Statement or the
Prospectus shall be amended (other than (1) in connection with the filing
of a prospectus supplement that contains solely the information required
pursuant to Section 6.04 hereof, (2) in connection with the filing of any
report or other document under Section 13, 14 or 15(d) of the Exchange Act
by the Company or (3) by a prospectus supplement relating to the offering
of other securities (including, without limitation, other shares of Common
Stock)) and (iii) the date of filing or amending each Annual Report on Form
10-K and Quarterly Report on Form 10-Q for a period in which an Advance was
delivered pursuant to this Agreement and which are incorporated by reference in
the Registration Statement.
Section 6.11 Opinion of Counsel at
Closing. Investor shall receive an opinion letter from counsel to
the Company on the date hereof in the form attached hereto as Exhibit
C.
Section 6.12 Current Report.
Promptly after the date hereof (and prior to the Company delivering an Advance
Notice to the Investor hereunder), the Company shall file with the SEC a report
on Form 8-K or such other appropriate form as determined by counsel to the
Company, relating to the transactions contemplated by this Agreement and prior
to the Company delivering an Advance Notice to the Investor the Company shall
file a preliminary Prospectus Supplement pursuant to Rule 424(b) of the
Securities Act disclosing all information relating to the transaction
contemplated hereby required to be disclosed therein (collectively, the “Initial Disclosure”)
and shall provide the Investor with 24 hours to review the Initial Disclosure
prior to filing.
Section 6.13 Black-out
Periods. Notwithstanding any other provision of this Agreement, the
Company shall not deliver an Advance Notice during the period beginning on the
last day of each fiscal quarter of the Company and ending at the close of
business 2 Trading Days after the Company files its Current Report of Form 8-K
releasing the Company’s earnings report for such fiscal quarter or during any
other period in which the Company is, or could be deemed to be, in possession of
material non-public information.
Article VII.
Conditions for Advance and Conditions to Closing
Conditions for Advance and Conditions to Closing
(b) Registration of the Common
Stock with the SEC. The Registration Statement is effective and the
Company is not aware of any of the events set forth in Section 6.03
hereof. The Initial Disclosure shall have been filed with the SEC, all
Prospectus Supplements shall have been filed with the SEC, as required pursuant
to Section 6.04 hereof and an electronic copy of such Prospectus Supplement
together with the Base Prospectus shall have been delivered or made available to
the Investor. The Company shall have filed with the SEC in a timely manner
all reports, notices and other documents required of a “reporting company” under
the Exchange Act and applicable SEC regulations.
(c) Authority. The
Company shall have obtained all permits and qualifications required by any
applicable state for the offer and sale of the shares of Common Stock, or shall
have the availability of exemptions therefrom. The sale and issuance of
the shares of Common Stock shall be legally permitted by all laws and
regulations to which the Company is subject.
(d) No Material Notices.
None of the following events shall have occurred and be continuing: (i)
receipt by the Company of any request for additional information from the SEC or
any other federal or state governmental, administrative or self regulatory
authority during the period of effectiveness of the Registration Statement, the
response to which would require any amendments or supplements to the
Registration Statement or Prospectus; (ii) the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the occurrence of any event that makes any
statement made in the Registration Statement or the Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company’s reasonable determination that a post-effective
amendment to the Registration Statement would be required. There shall not exist
any fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post-effective amendment to
the Registration Statement.
(e) Performance by the
Company. The Company shall have performed, satisfied and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.
(f) No Injunction.
No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction that prohibits or directly and
adversely affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have a Material Adverse
Effect.
(g) No Suspension of Trading in
or Delisting of Common Stock. The Common Stock is trading on a
Principal Market and all of the shares issuable pursuant to such Advance Notice
will be listed or quoted for trading on such Principal Market and the Company
believes, in good faith, that trading of the Common Stock on a Principal Market
will continue uninterrupted for the foreseeable future. The issuance of
shares of Common Stock with respect to the applicable Advance Notice will not
violate the shareholder approval requirements of the Principal Market. The
Company shall not have received any notice threatening the continued listing of
the Common Stock on the Principal Market (unless the concerns of the Principal
Market have been addressed and the Investor is reasonably satisfied that the
Principal Market no longer is considering or intends to take such
action).
(h) Maximum Advance
Amount. The amount of an Advance requested by the Company shall not
exceed the Maximum Advance Amount.
(i) Authorized.
There shall be a sufficient number of authorized but unissued and otherwise
unreserved shares of Common Stock for the issuance of all of the shares issuable
pursuant to such Advance Notice.
(j) Executed Advance
Notice. The Investor shall have received the Advance Notice
executed by an officer of the Company and the representations contained in such
Advance Notice shall be true and correct as of each Condition Satisfaction
Date.
Article VIII.
Non-Disclosure of Non-Public Information
Non-Disclosure of Non-Public Information
Nothing herein shall require the Company to disclose non-public
information to the Investor or its advisors or representatives, provided,
however, that notwithstanding anything herein to the contrary, during any period
from and including the delivery of an Advance Notice through and including the
occurrence of the related Share Issuance Date, the Company will immediately
notify the Investor or its advisors or representatives of any event or the
existence of any circumstance (without any obligation to disclose the specific
event or circumstance) of which it becomes aware, constituting non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading.
Article IX.
Choice of Law/Jurisdiction
Choice of Law/Jurisdiction
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York without regard to the principles of conflict
of laws.
Article X. Assignment;
Termination
Section 10.01 Assignment.
Neither this Agreement nor any rights or obligations of either party hereunder
may be assigned to any other Person.
(a) Unless earlier terminated as provided hereunder, this
Agreement shall terminate automatically on the earliest of (i) the first
day of the month next following the 24-month anniversary of the date hereof, or
(ii) the date on which the Investor shall have made payment of Advances pursuant
to this Agreement in the aggregate amount of the Commitment Amount.
(b) The Company may terminate this Agreement at any time upon
prior written notice to the Investor; provided that (i) there are no Advances
outstanding, and (ii) the Company has paid all amounts owed to the Investor
pursuant to this Agreement. This Agreement may be terminated at any time
by the mutual written consent of the parties, effective as of the date of such
mutual written consent unless otherwise provided in such written consent.
In the event of any termination of this Agreement by the Company hereunder, so
long as the Investor owns any shares of Common Stock issued hereunder, the
Company shall not for 20 Trading Days from the date of such termination
voluntarily delist the Common Stock from the Principal Markets .
(c) The obligation of the Investor to make an Advance to the
Company pursuant to this Agreement shall terminate permanently in the event that
(i) there shall occur any stop order or suspension of the effectiveness of the
Registration Statement for an aggregate of fifty (50) Trading Days, other than
due to the acts of the Investor, during the Commitment Period, or (ii) the
Company shall at any time fail materially to comply with the requirements of
Article VI and such failure is not cured within 30 days after receipt of written
notice from the Investor, provided, however, that this
termination provision shall not apply to any period commencing upon the filing
of a post-effective amendment to such Registration Statement and ending upon the
date on which such post effective amendment is declared effective by the
SEC.
(d) Nothing in this Section 10.02 shall be deemed to release
the Company or the Investor from any liability for any breach under this
Agreement, or to impair the rights of the Company and the Investor to compel
specific performance by the other party of its obligations under this
Agreement. The indemnification provisions contained in Article V shall
survive termination hereunder.
Article XI.
Notices
Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered(i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications, except for Advance Notices which shall be delivered in
accordance with Section 2.02(b) hereof, shall be:
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If to the Company,
to:
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Supertel Hospitality,
Inc.
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000 Xxxxx 0xx
Xxxxxx
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Xxxxxxx, Xxxxxxxx
00000
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Attention: Xxxxx
Xxxxxxx
President and Chief Executive Officer |
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Telephone: (000)
000-0000
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Facsimile:
(000) 000-0000
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With a copy to:
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XxXxxxx Xxxxx Xxxxxx &
Xxxxx, XX XXX
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Xxxxx 0000 First National
Tower
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0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000 |
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Attention:
Xxx Xxxxxx
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Telephone: (000)
000-0000
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Facsimile:
(000) 000-0000
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If to the
Investor(s):
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YA Global Master SPV
Ltd.
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000 Xxxxxx Xxxxxx –Suite
3700
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Xxxxxx Xxxx, XX
00000
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Attention:
Xxxx Xxxxxx
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Portfolio
Manager
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Telephone: (000)
000-0000
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Facsimile:
(000) 000-0000
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With a Copy to:
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Xxxxx Xxxxxxxx,
Esq.
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Yorkville Advisors,
LLC
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000 Xxxxxx Xxxxxx – Xxxxx
0000
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Xxxxxx Xxxx, XX
00000
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Telephone: (000)
000-0000
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Facsimile:
(000) 000-0000
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Each party shall provide written notice to the other party of any change
in address or facsimile number.
Article XII.
Miscellaneous
Section 12.01 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 any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause 4 additional
original executed signature pages to be physically delivered to the other party
within 5 days of the execution and delivery hereof, though failure to deliver
such copies shall not affect the validity of this Agreement.
Section 12.02 Reporting Entity for the
Common Stock. The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on any
given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or
any successor thereto. The written mutual consent of the Investor and the
Company shall be required to employ any other reporting entity.
Section 12.03 Fees and
Expenses. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby, except that the Company shall pay (a) a
structuring fee of $25,000 to Yorkville Advisors, LLC, of which $10,000 has been
paid and the remaining $15,000 shall be paid on the date hereof, and (b) a fee
of $15,000 to Yorkville Advisors, LLC which has been paid to cover
expenses.
Section 12.04 Brokerage. Each
of the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee or
commission from the other party. The Company on the one hand, and the
Investor, on the other hand, agree to indemnify the other against and hold the
other harmless from any and all liabilities to any Person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.
Section 12.05 Integration.
This Agreement, along with any exhibits or amendments hereto, encompasses the
entire agreement of the parties and supersedes all previous understandings and
agreements between the parties, whether oral or written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS
WHEREOF, the
parties hereto have caused this Standby Equity Distribution Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
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COMPANY:
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Supertel
Hospitality, Inc.
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By: /s/ Xxxxx
X. Xxxxxxx
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Name: Xxxxx X.
Xxxxxxx
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Title: President &
CEO
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INVESTOR:
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YA Global Master
SPV Ltd.
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By: Yorkville Advisors,
LLC
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Its: Investment
Manager
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By: /s/ Xxxx
Xxxxxx
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Name: Xxxx
Xxxxxx
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Title: Portfolio
Manager
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EXHIBIT A - ADVANCE
NOTICE
SUPERTEL HOSPITALITY, INC.
SUPERTEL HOSPITALITY, INC.
The undersigned, _______________________ hereby certifies, with respect
to the sale of shares of Common Stock of SUPERTEL HOSPITALITY, INC. (the “Company”) issuable in
connection with this Advance Notice, delivered pursuant to the Standby Equity
Distribution Agreement (the “Agreement”), as
follows:
1. The undersigned is the
duly elected ______________ of the Company.
2. There are no
fundamental changes to the information set forth in the Registration Statement
which would require the Company to file a post effective amendment to the
Registration Statement.
3. The Company has performed
in all material respects all covenants and agreements to be performed by the
Company and has complied in all material respects with all obligations and
conditions contained in this Agreement on or prior to the Advance Notice Date,
and shall continue to perform in all material respects all covenants and
agreements to be performed by the Company through the applicable Share Issuance
Date. All conditions to the delivery of this Advance Notice are satisfied
as of the date hereof.
4. The undersigned hereby
represents, warrants and covenants that it has made all filings (“SEC Filings”)
required to be made by it pursuant to applicable securities laws (including,
without limitation, all filings required under the Securities Exchange Act of
1934, which include Forms 10-Q or 10-QSB, 00-X xx 00-XXX, 0-X, xxx.). No
SEC Filings or other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the “Public
Disclosures”) contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
5. The Advance requested
is _____________________.
6. The Minimum Acceptable
Price is ________________.
7. 4.99% of the
outstanding Common Stock of the Company as of the date hereof is
_____________.
The undersigned has executed this Certificate this ____ day of
_________________.
Supertel Hospitality,
Inc.
By:
EXHIBIT
B
FORM
OF SETTLEMENT DOCUMENT
VIA
EMAIL
Supertel Hospitality, Inc.
Attn:
Email:
|
1.
|
Below please find
the settlement information with respect to the Advance Notice
dated:
|
|
|
(a) Amount of
Advance
|
$
|
|
|
(b) Amount of
Advance after adjusting for Ownership Limitation, Registration Limitation
and Minimum Acceptable Price, if applicable:
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$
|
|
|
(c) Additional
Aggregate Purchase Price Paid for Shares on Excluded Days pursuant to
Section 2.01(e) at the Minimum Acceptable Price, if 6 below
applies:
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$
|
|
|
(d) Net Advance
Amount:
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$
|
|
|
|
|
|
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2.
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Market
Price:
|
$
|
|
|
|
|
|
3.
|
Purchase
Price (Market Price X 96%) per share:
|
$
|
|
4.
|
Minimum
Acceptable Price:
|
$
|
|
|
|
|
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5.
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Number of
Shares due to Investor computed by dividing 1(b) above by 3
above:
|
|
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6.
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Additional
Shares to be Purchased Pursuant to Excluded Days pursuant to Section
2.01(d) at the Minimum Acceptable Price:
|
|
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7.
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Aggregate
Number of Shares due to Investor:
|
|
Please issue the number of Shares due to the Investor to the account of the Investor as follows:
[to come]
The Investor shall disburse the total amount of the Advance as
follows:
[to come]
[to come]
|
Approved By
Supertel Hospitality, Inc.:
__________________________________
Name:
|
Sincerely,
YA GLOBAL MASTER SPV,
LTD.
|
EXHIBIT
C
FORM OF
OPINION
1. The Company is a
corporation validly existing and in good standing under the laws of the State of
Virginia, with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Company’s latest Form
10-K or 10-Q filed by the Company under the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”) and
the rules and regulations of the Commission thereunder (the “Public Filings”) and
to enter into and perform its obligations under the Standby Equity Distribution
Agreement.
2. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under the Standby Equity Distribution Agreement and to issue the
Common Shares in accordance with their terms. The execution and delivery
of the Standby Equity Distribution Agreement by the Company and the consummation
by it of the transactions contemplated thereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of the
Standby Equity Distribution Agreement has been duly executed and delivered, and
each of the Standby Equity Distribution Agreement constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except as my 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 creditors’
rights and remedies.
3. The Common Shares are
duly authorized and, upon issuance in accordance with the terms of the Standby
Equity Distribution Agreement, will be duly and validly issued, fully paid and
nonassessable, free of any liens, encumbrances and preemptive or similar rights
contained, to our knowledge, in any agreement filed by the Company as an exhibit
to the Company’s Public Filings.
4. The execution,
delivery and performance of the Standby Equity Distribution Agreement by the
Company (other than performance by the Company of its obligations under the
indemnification sections of such agreements, as to which no opinion need be
rendered) will not (i) result in a violation of the Company’s Articles of
Incorporation or By-Laws; (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or, indenture filed by the Company as an exhibit
to the Company’s Public Filings; or (iii) to our knowledge, result in a
violation of any federal or Virginia law, rule or regulation, order, judgment or
decree applicable to the Company.
5. To our knowledge
without independent investigation and other then as set forth in the Public
Filings, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property or assets of the Company is subject
which is required to be disclosed in any Public Filings.
