EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of February 24,
1999, by and among Intelect Communications, Inc., a Delaware corporation, with
headquarters located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000 (the
"COMPANY"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("REGULATION D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 ACT");
B. The Company has authorized the following new series of its preferred
stock, par value $.01 per share: the Company's Series E Convertible Preferred
Stock (the "PREFERRED STOCK"), which shall be convertible into shares of the
Company's Common Stock, par value $.01 per share (the "COMMON STOCK") (as
converted, the "CONVERSION SHARES"), in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of Series E
Convertible Preferred Stock, substantially in the form attached hereto as
EXHIBIT A (the "CERTIFICATE OF DESIGNATIONS");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 3,000 shares of Preferred Stock (the
"INITIAL PREFERRED SHARES") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers and warrants, in substantially the form
attached hereto as Exhibit E (the "WARRANTS"), to acquire 100 shares of Common
Stock for each Preferred Share purchased (as exercised, collectively, the
"WARRANT SHARES");
D. Subject to the terms and conditions set forth in this Agreement, the
Buyers will be required to buy and the Company will be required to sell an
aggregate of an additional 3,000 shares of Preferred Stock in the respective
amounts set forth opposite each Buyer's name on the Schedule of Buyers (the
"MANDATORY PREFERRED SHARES") and the related Warrants;
E. Subject to the terms and conditions set forth in this Agreement, each
Buyer shall have the right to purchase a number of additional shares of
Preferred Stock (along with the related Warrants thereto) equal to up to the
product of (A) 3/5 multiplied by (B) the sum of (i) the number of Initial
Preferred Shares purchased by such Buyer and (ii) the number of Mandatory
Preferred Shares purchased by such Buyer (the "ADDITIONAL PREFERRED SHARES")
(the Initial Preferred Shares, the Mandatory Preferred Shares and the Additional
Preferred Shares collectively are referred to in this Agreement as the
"PREFERRED SHARES");
F. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form
attached hereto as EXHIBIT B (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company has agreed to provide certain registration rights under the
1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. PURCHASE OF PREFERRED SHARES. Subject to satisfaction (or waiver)
of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall
issue and sell to the Buyers and the Buyers severally shall purchase from the
Company an aggregate of 3,000 Initial Preferred Shares, in the respective
amounts set forth opposite each Buyer's name on the Schedule of Buyers, along
with Warrants to acquire 100 Warrant Shares for each Initial Preferred Share
purchased (the "INITIAL CLOSING"). Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 1(c), 6(b) and 7(b) below, the Buyers shall
buy and the Company shall sell an aggregate of 3,000 Mandatory Preferred Shares,
in the respective amounts set forth opposite each Buyer's name on the Schedule
of Buyers, along with Warrants to acquire 100 Warrant Shares for each Mandatory
Preferred Share purchased (the "MANDATORY CLOSING"). Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 1(d), 6(c) and 7(c) below,
at the option of each Buyer, the Company shall issue and sell to each such Buyer
and each such Buyer may purchase from the Company at multiple closings, if
applicable, an aggregate of up to that number of Additional Preferred Shares
(along with the related Warrants thereto) equal to the product of (A) 3/5
multiplied by (B) the sum of (i) the number of Initial Preferred Shares
purchased by such Buyer and (ii) the number of Mandatory Preferred Shares
purchased by such Buyer (the "ADDITIONAL CLOSINGS") (the Initial Closing, the
Mandatory Closing and the Additional Closings collectively are referred to in
this Agreement as the "CLOSINGS"). The purchase price (the "PURCHASE PRICE") of
each Preferred Share at each of the Closings shall be $1,000.
b. THE INITIAL CLOSING DATE. The date and time of the Initial
Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time, on March
5, 1999 subject to the satisfaction (or waiver) of the conditions to the Initial
Closing set forth in Section 6(a) and 7(a) below (or such later date as is
mutually agreed to by the Company and the Buyers). The Initial Closing shall
occur on the Initial Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000
Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
c. THE MANDATORY CLOSING DATE. The date and time of the Mandatory
Closing (the "MANDATORY CLOSING DATE") shall be 10:00 a.m. Central Time, on the
third business day following the date of the receipt by each Buyer of the
Mandatory Share Notice (as defined below), subject to satisfaction (or waiver)
of the conditions to the Mandatory Closing set forth in Sections 6(b) and 7(b)
and the conditions set forth in this Section 1(c) (or such later date as is
mutually agreed to by the Company and the Buyers). The Company shall deliver
written notice (the "MANDATORY SHARE NOTICE") to each Buyer on a date (the
"MANDATORY SHARE NOTICE DATE") as soon as practicable, but in no event later
than the second business day, following the date that the Registration Statement
(as defined in the Registration Rights Agreement) registering the Registrable
Securities (as defined in the Registration Rights Agreement) has been declared
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effective in accordance with the terms of the Registration Rights Agreement.
Notwithstanding the foregoing, no Buyer shall be required to purchase the
Mandatory Preferred Shares unless each of the following conditions is satisfied:
(i) the Registration Statement shall have been declared effective and shall
remain effective at all times during the period beginning on the Mandatory Share
Notice Date and ending on and including the Mandatory Closing Date; (ii) the
registration statements registering the shares of Common Stock issuable upon
conversion of the Series C and the Series D Convertible Preferred Stock shall
have been effective at all times during the period beginning on the Initial
Issuance Date and ending on the Mandatory Closing Date; (iii) during the period
beginning on the date of this Agreement and ending on and including the
Mandatory Closing Date, there shall not have occurred either (A) the
consummation of a Major Transaction (as defined in Section 3(c) of the
Certificate of Designations) or a public announcement of a pending Major
Transaction which has not been abandoned or terminated or (B) a Triggering Event
(as defined in Section 3(d) of the Certificate of Designations); (iv) at all
times during the period beginning on the date of this Agreement and ending on
and including the Mandatory Closing Date, the Common Stock shall have been
designated for quotation on the Nasdaq National Market, The New York Stock
Exchange, Inc. ("NYSE") or The American Stock Exchange, Inc. ("AMEX") and shall
not have been suspended from trading on such exchanges (excluding suspensions of
not more than one day resulting from business announcements by the Company), nor
shall delisting or suspension by such exchange have been threatened either (A)
in writing by such exchange or (B) by falling below the minimum listing
maintenance requirements of such exchange, unless such failure to maintain the
minimum listing requirements shall have been cured for a period of at least 20
trading days prior to and including the Mandatory Closing Date; (v) during the
period beginning on the Initial Closing Date and ending on and including the
Mandatory Closing Date, the Company shall have delivered Conversion Shares upon
conversion of the Preferred Shares and shares of Common Stock upon conversion of
the Series C and Series D Convertible Preferred Stock on a timely basis as set
forth in Section 2(e)(ii) of the Certificate of Designations or the Certificate
of Designations, Preferences and Rights of the Series C or the Series D
Convertible Preferred Stock, as applicable, and otherwise shall have been in
compliance with and shall not have breached any provision of the Transaction
Documents (as defined below) and the Certificate of Designations; and (vi) the
Company shall not have previously delivered a Mandatory Share Notice. The
Mandatory Closing shall occur on the Mandatory Closing Date at the offices of
Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000.
d. THE ADDITIONAL CLOSING DATE. The date and time of each of the
Additional Closings (the "ADDITIONAL CLOSING DATES") shall be 10:00 a.m. Central
Time, on the fifth business day after delivery by any Buyer to the Company of an
Additional Share Notice (as defined below), subject to satisfaction (or waiver)
of the conditions to the Additional Closing set forth in Sections 6(c) and 7(c)
and the conditions set forth in this paragraph (or such later date as is
mutually agreed to by the Company and such Buyer). During the period beginning
on and including the date which is 180 days after the Initial Closing Date and
ending on and including the date which is 546 days after the Initial Closing
Date (the "ADDITIONAL NOTICE PERIOD"), but subject to the requirements of
Sections 6(c) and 7(c), each Buyer may purchase on multiple occasions Additional
Preferred Shares by delivering written notice to the Company (an "ADDITIONAL
SHARE NOTICE") on any date during the Additional Notice Period (an "ADDITIONAL
SHARE NOTICE DATE"). Each Additional Share Notice shall set forth (i) the number
of Additional Preferred Shares to be purchased by such Buyer
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at such Additional Closing and (ii) the aggregate Purchase Price for such
Additional Preferred Shares. Notwithstanding the foregoing, no Buyer shall be
entitled to deliver an Additional Share Notice unless (x) on the Additional
Share Notice Date the Closing Bid Price (as defined in the Certificate of
Designations) of the Common Stock is greater than the Fixed Conversion Price of
the Initial Preferred Shares on the Additional Share Notice Date and (y) such
Buyer has purchased Additional Preferred Shares at not more than three previous
Additional Closing. Each Additional Closing shall occur on the Additional
Closing Date at the offices of Xxxxxx Xxxxxx & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000. The Initial Closing Date, the
Mandatory Closing Date and the Additional Closing Dates collectively are
referred to in this Agreement as the "CLOSING DATES."
e. FORM OF PAYMENT. On each of the Closing Dates, (i) each Buyer
shall pay the Purchase Price to the Company for the Preferred Shares and
Warrants to be issued and sold to such Buyer at the respective 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, stock
certificates (in the denominations as such Buyer shall request) (the "STOCK
CERTIFICATES") representing such number of the Preferred Shares which such Buyer
is then purchasing (which, for the Initial Closing, shall be as indicated
opposite such Buyer's name on the Schedule of Buyers) along with the Warrants
such Buyer is purchasing (as indicated opposite such Buyer's name on the
Schedule of Buyers), duly executed on behalf of the Company and registered in
the name of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Preferred
Shares and the Warrants, (ii) upon conversion of the Preferred Shares, will
acquire the Conversion Shares then issuable and (iii) upon exercise of the
Warrants, will acquire the Warrant Shares issuable upon exercise thereof (the
Preferred Shares, the Conversion Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the "SECURITIES"), for its own account
for investment only 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
representations herein, such Buyer does not agree 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.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated
under the 1933 Act.
c. 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,
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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.
d. 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, including
the Company's management. 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 in Sections 3 and 9(m) below.
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.
In addition to the foregoing, each Buyer, severally and not jointly
acknowledge that
(i) it has access to copies of (and acknowledges that the
Company has offered to provide, upon its request, copies of) the SEC
Documents (as defined in Section 3(f) hereof) of the Company and the
Registration Statement of the Company on Form S-3 as filed with the
SEC on April 3, 1998 (collectively, the "Public Documents");
(ii) it has not been furnished with any oral representation or
warranty in connection with the offering of the Preferred Shares and
the Warrants by the Company or any officer, employee, agent,
Affiliate or Subsidiary, which is not contained in or contemplated
by the Transaction Documents (as defined below) or the Certificate
of Designation;
(iii) understands that the purchase of the Preferred Shares
and the Warrants entails various risks including, but not limited
to, those outlined in the Public Documents and in this Agreement,
and has determined that the Preferred Shares and the Warrants are a
suitable investment and that at this time it could bear a complete
loss of its investment; and
(iv) any information which such Buyers has heretofore
represented or furnished to the Company with respect to its
financial position and business experience is correct and complete
as of the date of this Agreement.
e. 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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f. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (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, in a generally acceptable form, to the effect
that the 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 promulgated under the 1933 Act, as
amended (or a successor rule thereto)("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 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 thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder. Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin account.
g. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Preferred Shares and the Warrants and, until such
time as the sale of the Conversion Shares and the Warrant Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for sale under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of counsel,
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in a generally acceptable form, to the effect that a public sale, assignment or
transfer of such Securities may be made without registration under the 1933 Act,
or (iii) such holder provides the Company with reasonable assurances that such
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold.
h. VALIDITY; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and is a valid and
binding agreement of such Buyers enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and 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. RESIDENCY. Such Buyer is a resident of that country or
jurisdiction specified in the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest, a complete list of which is set forth in SCHEDULE 3(A), except
for non-operating Subsidiaries or Subsidiaries in dissolution or winding up,
each as described in SCHEDULE 3(A), which do not have any material assets or
liabilities ("NONMATERIAL SUBSIDIARIES")), are corporations duly organized and
validly existing in good standing under the laws of the jurisdiction in which
they are incorporated, and have the requisite corporate power and authorization
to own their properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations or
financial condition or prospects of the Company and its Subsidiaries, if any,
taken as a whole, or on the transactions contemplated hereby or by the
agreements and instruments to be entered into in connection herewith, or on the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined below) or the Certificate of Designations.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Registration Rights Agreement, the Irrevocable
Transfer Agent Instructions (as defined in Section 5), the Warrants and each of
the other agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS") and to issue the Securities in accordance with the terms hereof and
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thereof, subject to the satisfaction of the condition set forth in Section
6(a)(v); (ii) the execution and delivery of the Transaction Documents and the
Certificate of Designations by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Preferred Shares and the Warrants and the reservation for
issuance and the issuance of the Conversion Shares and the Warrant Shares
issuable upon conversion or exercise thereof), 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, subject to the
satisfaction of the condition set forth in Section 6(a)(v); (iii) this Agreement
has been, and on or prior to the Initial Closing, the other Transaction
Documents shall have been duly executed and delivered by the Company; (iv) this
Agreement constitutes, and upon execution and delivery of the other Transaction
Documents they shall 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, subject to the satisfaction of the condition set forth in
Section 6(a)(v); and (v) prior to the Initial Closing Date, the Certificate of
Designations will have been filed with the Secretary of State of the State of
Delaware and, on each Closing Date, will be in full force and effect, without
any amendment or modification thereto from the form of Certificate of
Designations in effect on the Initial Closing Date, enforceable against the
Company in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which
as of the date hereof, 34,586,331 shares were issued and outstanding, 4,931,876
shares were issuable and reserved for issuance pursuant to the Company's stock
option plans and 12,344,707 were issuable and reserved for issuance pursuant to
securities (other than the Preferred Shares, shares reserved for issuance
pursuant to the Company's stock option plans, or shares required to be reserved
for issuance upon conversion of the Series C and D Convertible Preferred Stock)
exercisable or exchangeable for, or convertible into, shares of Common Stock and
(ii) 50,000,000 shares of the preferred stock, par value $0.01 per share of
which, as of the date hereof, 4,219,409 shares have been designated Series A
Convertible Preferred Stock, of which 3,719,409 are issued and outstanding,
914,268 shares have been designated Series B Convertible Preferred Stock, of
which 0 are issued and outstanding, 10,000 shares have been designated Series C
Convertible Preferred Stock, of which 1,843 shares are issued and outstanding,
and 10,000 shares of Series D Convertible Preferred Stock of which 8,250 shares
are issued and outstanding. All of such outstanding shares of capital stock have
been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in SCHEDULE 3(C), (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii)
other than the stock option plans of the Company set forth in the SEC Documents
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, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character
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whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its Subsidiaries, (iii) there are no
outstanding debt securities, (iv) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the 1933 Act (except the Registration Rights
Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement; and (vii) 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 and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as amended and
as in effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. ISSUANCE OF SECURITIES. Subject to the satisfaction of the
condition set forth in Section 6(a)(v), the Preferred Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be (i) validly
issued, fully paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issue thereof and (iii) entitled to the rights and
preferences set forth in the Certificate of Designations. Subject to the
satisfaction of the condition set forth in Section 6(a)(v), prior to each of the
Closings the number of shares of Common Stock (subject to adjustment pursuant to
the Company's covenant set forth in Section 4(f) below) required to have been
reserved for issuance under the terms of this Agreement, the Certificate of
Designations and the Warrants shall have been duly authorized and reserved for
issuance upon conversion of the Preferred Shares and upon exercise of the
Warrants. Upon conversion or exercise in accordance with the Certificate of
Designations or the Warrants, as the case may be, the Conversion Shares and the
Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock,
subject to the approval by the shareholders of the proposal to increase the
number of authorized shares of Common Stock to 100,000,000 on March 3, 1999.
Assuming the accuracy of the representations made by the Buyers in Section 2
hereof, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
e. NO CONFLICTS. Subject to the satisfaction of the condition set
forth in Section 6(a)(v) and except as disclosed in SCHEDULE 3(E), the
execution, delivery and performance of the Transaction Documents by the Company,
the performance by the Company of its obligations under the Certificate of
Designations and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Conversion Shares and the Warrant Shares) will
not (i) result in a violation of the Certificate of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred stock, par value $.01 per share, of the Company or the By-laws, (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,
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acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of the principal market or exchange on which the Common Stock is traded or
listed) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected. Except as disclosed in SCHEDULE 3(E), neither the Company nor its
Subsidiaries is in violation of any term of or in default under (x) the
Certificate of Incorporation, any Certificate of Designation, Preferences and
Rights of any outstanding series of preferred stock, par value $.01 per share,
or the By-laws or their organizational charter or by-laws, respectively, or (y)
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 and its Subsidiaries is
not being conducted, and shall not be conducted, in violation of any law,
ordinance, regulation of any governmental entity, except where such violations
have not resulted or would not result, individually or in the aggregate, in a
Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act and subject to the satisfaction of the
condition set forth in Section 6(a)(v), 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 or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents or to perform its obligations under
the Certificate of Designations in accordance with the terms hereof or thereof.
Except as disclosed in SCHEDULE 3(E), all consents, authorizations, orders,
filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company and its Subsidiaries have no knowledge of any facts or
circumstances which might give rise to any of the foregoing. The Company is not
in violation of the listing requirements of the Nasdaq National Market as in
effect on the date hereof and on each of the Closing Dates and except as set
forth in SCHEDULE 3(E), is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by the Nasdaq National Market in the
foreseeable future.
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 1996, the
Company or its predecessor Intelect Communications Systems Limited, a Bermuda
Corporation, has 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 Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
DOCUMENTS"). Set forth on SCHEDULE 3(F) is a complete list of all the SEC
Documents as of the date thereof. 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 or as amended prior to the date hereof, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates or as amended prior to the date hereof, the financial
statements of the Company
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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. 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, or if amended prior to the date
hereof, as of the date of such amendment 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). No other information provided
by or on behalf of the Company to the Buyers which is not included in the SEC
Documents, or if amended prior to the date hereof, as of the date of such
amendment, including, without limitation, information referred to in Section
2(d) of this Agreement, contains any untrue statement of a material fact or
omits 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. Except as set forth in SCHEDULE 3(J), neither the Company nor any of
its Subsidiaries or any of their officers, directors, employees or agents have
provided the Buyers with any material, nonpublic information, except for the
knowledge of the existence of the transactions contemplated by the Transaction
Documents
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3(G)
or the SEC Documents filed on XXXXX at least one (1) business day prior to the
date hereof, since December 31, 1997 there has been no material adverse change
and no material adverse development in the business, properties, operations,
financial condition, liabilities or results of operations, or prospects of the
Company or its Subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings. Except as disclosed in Schedule 3(g), since December 31,
1997 the Company has not declared or paid any dividends, sold any assets in
excess of $50,000 outside of the ordinary course of business or had capital
expenditures in excess of $2,200,000.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
which if determined adversely would have a Material Adverse Effect, except as
expressly set forth in SCHEDULE 3(H) or the SEC Documents.
i. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF PREFERRED SHARES.
The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of arm's length purchaser with respect to the Transaction
Documents, the Certificate of Designations and the transactions contemplated
thereby. The Company further acknowledges that each Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents, the Certificate of Designations and the
transactions contemplated
-11-
thereby and any advice given by any of the Buyers or any of their respective
representatives or agents in connection with the Transaction Documents, the
Certificate of Designations and the transactions contemplated 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.
j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. Except as set forth on SCHEDULE 3(J) and excluding liabilities
incurred in the ordinary course of business consistent with past practices, no
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, prospects, operations or financial condition
that would be required to be disclosed by the Company under applicable
securities laws on a registration statement (including by way of incorporation
by reference) filed with the SEC, on the date this representation is made or
deemed to be made, relating to an issuance and sale by the Company of its Common
Stock and which has not been publicly disclosed.
k. NO GENERAL SOLICITATION. 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 under the 0000 Xxx) in connection with the offer or sale of the
Securities.
l. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require (i) registration of any
of the Securities under the 1933 Act, (ii) except as set forth on SCHEDULE 3(L),
cause this offering of Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act, or (iii) cause this offering of Securities
to be integrated with prior offerings by the Company for purposes of 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. Neither the
Company nor any of its Subsidiaries shall take any action or steps that would
require registration of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.
m. EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. None of the
Company's or its Subsidiaries' employees is a member of a union. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with
their employees are good. No executive officer (as defined in Rule 501(f) of the
0000 Xxx) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the Company. No
executive officer, to the best knowledge of the Company and its Subsidiaries,
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-
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competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
n. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own 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. Except as set forth on SCHEDULE 3(n), none of the
Company's material trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement. The
Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries 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, or of any
such development of similar or identical trade secrets or technical information
by others and, except as set forth on SCHEDULE 3(N) or in the SEC Documents,
there is no claim, action or proceeding being made or brought against, or to the
Company's knowledge, being threatened against, the Company or its Subsidiaries
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 and its Subsidiaries are unaware of any
facts or circumstances which might reasonably be expected to give rise to any of
the foregoing. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
o. ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance in all material respects with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance in all material respects with all terms and conditions of any such
permit, license or approval.
p. TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in SCHEDULE 3(P) or 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 or any of its
Subsidiaries. Any real property and facilities held under lease by the Company
or any of its Subsidiaries are held by them 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 and its Subsidiaries.
-13-
q. INSURANCE. The Company and each of its Subsidiaries are 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 and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.
r. REGULATORY PERMITS. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
s. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific 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.
t. TAX STATUS. The Company and each of its Subsidiaries 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 (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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, except as set forth in SCHEDULE 3(T). 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, except as set forth in SCHEDULE 3(T).
u. DILUTIVE EFFECT. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Preferred Shares
will increase in certain circumstances. The Company further acknowledges that
its obligation to issue Conversion Shares upon conversion of the Preferred
Shares in accordance with this Agreement and the Certificate of Designations and
its obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is, in each case, absolute and
-14-
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
v. NO OTHER AGREEMENTS. As of the date hereof and as of the Initial
Closing Date, 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.
w. TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
3(W) or in the SEC Documents filed on Xxxxx at least ten days prior to the date
hereof and other than the grant of stock options disclosed on SCHEDULE 3(C),
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (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.
x. APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors have taken all necessary action, if any should be required, 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 Certificate of Incorporation or the
laws of the state of its incorporation which is or would become applicable to
the Buyers as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and the
Buyer's ownership of the Securities.
y. NONMATERIAL SUBSIDIARIES. The Nonmaterial Subsidiaries have no
(i) liabilities, contingent or otherwise, whether known or unknown, which would
have a Material Adverse Effect or (ii) material assets.
z. FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
aa. NO MATERIALLY ADVERSE CONTRACTS. Except as specifically
disclosed in the SEC Documents, or as set forth in SCHEDULE 3(AA), neither the
Company nor any of its Subsidiaries is 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
-15-
have a Material Adverse Effect. Except as specifically disclosed in the SEC
Documents, or as set forth in SCHEDULE 3(AA), neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the judgment of
the Company's officers has or is expected to have a Material Adverse Effect.
bb. RIGHTS AGREEMENT. As of the date hereof, the Company has not
adopted a shareholder rights plan or similar arrangement relating to
accumulation of beneficial ownership of Common Stock or a change in control of
the Company.
cc. ACCOUNTANTS. The Company has retained Xxxxx Xxxxxxxx LLP ("XXXXX
XXXXXXXX") as its accountants for the audit of fiscal 1998. Xxxxx Xxxxxxxx has
not stated to the Company that it will be unable to complete its review of the
Company's 1998 financial statements so as to cause delays in the filing of the
Company's year end financial statements on Form 10-K with the SEC by March 31,
1999, nor has Xxxxx Xxxxxxxx stated that as of their review through the date
hereof, that a restatement of prior financials will be necessary. Neither Xxxxxx
Xxxxxxxx LLP nor KPMG Peat Marwick have stated that they will be unable or
unwilling to provide their consent to the filing of their financial reports for
the applicable years prior to 1998 for which they acted as the Company's
accountants, assuming the filing of the Form 10-K for the 1998 financial
statements with the SEC and receipt of customary representations from Xxxxx
Xxxxxxxx regarding the Company upon completion of the audit for the 1998
financial statements. Neither Xxxxxx Xxxxxxxx LLP nor KPMG Peat Marwick have
stated that they will require any consideration in connection with providing
such consents other than for the payment of fees and expenses for which the
Company has previously accrued liabilities and for fees and expenses billed in
connection with the review required to provide the consents. The Company has
discussed each of the foregoing with Grant Xxxxxxxx, Xxxxxx Xxxxxxxx LLP and
KPMG Peat Marwick, as applicable.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its 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. Promptly after each of the Closing Dates, 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 after such
filing. The Company shall, on or before each of the Closing Dates, take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for, or obtain exemption for the Securities for, sale to the Buyers
at each of the Closings 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 such Closing Dates. 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 such
states of the United States following the Initial Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date which is one
year after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares and the
Warrant Shares without restriction pursuant to Rule
-16-
144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the date
on which (A) the Investors shall have sold all the Conversion Shares and the
Warrant Shares and (B) none of the Preferred Shares or Warrants is outstanding
(the "REGISTRATION PERIOD"), the Company shall 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 otherwise permit such
termination.
d. USE OF PROCEEDS. The Company will use the net proceeds from the
sale of the Preferred Shares for working capital and general corporate purposes.
e. FINANCIAL INFORMATION. The Company agrees to send the following
to each Investor (as that term is defined in the Registration Rights Agreement)
during the Registration Period: (i) within two (2) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, provided
that if any such report is not filed with the SEC through XXXXX then the Company
shall deliver a copy of such report to each Investor by facsimile on the same
day it is filed with the SEC and (ii) copies of any notices and other
information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
f. RESERVATION OF SHARES. On and after the Initial Closing Date, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 200% of the number of shares
of Common Stock needed to provide for the issuance of the Conversion Shares
(without regard to any limitations on conversions) and 125% of the number of
shares of Common Stock needed to provide for the issuance of the shares of
Common Stock upon exercise of all outstanding Warrants.
g. RIGHT OF FIRST REFUSAL. Subject to the exceptions described
below, the Company shall not contract with any party for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or securities convertible or exchangeable into or for
equity securities of the Company (including debt securities with an equity
component) in any form ("FUTURE OFFERINGS") during the period beginning on the
Initial Closing Date and ending on and including the date which is 365 days
after the Initial Closing Date, provided, however, that on and after the date
that the Registration Statement is declared effective the Company may have a
Future Offering if it shall have first delivered to each Buyer or a designee
appointed by such Buyer written notice (the "FUTURE OFFERING NOTICE") describing
the proposed Future Offering, including the terms and conditions thereof, and
providing each Buyer an option to purchase up to its Aggregate Percentage (as
defined below), as of the date of delivery of the Future Offering Notice on the
same terms and conditions set forth in the Future Offering Notice (the
limitations referred to in this sentence are collectively referred to as the
"CAPITAL RAISING LIMITATION"). For purposes of this Section 4(g), "AGGREGATE
PERCENTAGE" at any time with respect to any Buyer shall mean the percentage
equal to the product of (A) 0.5 multiplied by (B) the quotient of (i) the number
of Preferred Shares purchased by such Buyer at the Initial Closing and the
Mandatory Closing and (ii) the aggregate number of Preferred Shares purchased
-17-
by all the Buyers at the Initial Closing and the Mandatory Closing; provided,
however, for the purpose of this Section 4(g) only, that during the first 75
days the Mandatory Preferred Shares will be considered to have been purchased in
the respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers. A Buyer can exercise its option to participate in a Future Offering by
delivering written notice thereof to participate to the Company within three (3)
business days of receipt of a Future Offering Notice, which notice shall state
the quantity of securities being offered in the Future Offering that such Buyer
will purchase, up to its Aggregate Percentage, and that number of securities it
is willing to purchase in excess of its Aggregate Percentage. In the event that
one or more Buyers fail to elect to purchase up to each such Buyer's Aggregate
Percentage then each Buyer which has indicated that it is willing to purchase a
number of securities in excess of its Aggregate Percentage shall be entitled to
purchase its pro rata portion (determined in the same manner as described in the
preceding sentence) of the securities in the Future Offering which one or more
Buyers have not elected to purchase. In the event the Buyers fail to elect to
fully participate in the Future Offering within the periods described in this
Section 4(g), the Company shall have 45 days thereafter to sell the securities
of the Future Offering for which such Buyer's rights were not exercised, upon
the same terms and conditions (including the amount thereof) specified in the
Future Offering Notice. In the event the Company has not sold such securities of
the Future Offering within such 45-day period, the Company shall not thereafter
issue or sell such securities without first offering such securities to the
Buyers in the manner provided in this Section 4(g). The Capital Raising
Limitation shall not apply to (i) a bona-fide loan from a commercial lender
which does not have any equity feature, (ii) the issuance of securities upon
exercise or conversion of the Company's options, warrants or other convertible
securities or debt outstanding as of the date hereof (iii) the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option plan, restricted stock plan or stock purchase plan for
the benefit of the Company's employees or directors, (iv) any registered firm
commitment underwritten public offering of securities of the Company, (v) any
transaction intended to be made in reliance upon Rule 144A under the Securities
Act or (vi) any equipment loans or financing which do not have an equity
feature.
h. LISTING. The Company shall secure in accordance with the
applicable rules and regulations, but in no event later than 30 days after the
date hereof, the listing of all of the Registrable Securities upon each national
securities exchange and automated quotation system (including the Nasdaq
National Market), upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents and the
Certificate of Designations. The Company shall maintain the Common Stock's
authorization for listing on the Nasdaq National Market, NYSE or AMEX. Neither
the Company nor any of its Subsidiaries shall take any action which may result
in the delisting or suspension of the Common Stock on the Nasdaq National
Market, NYSE or AMEX (other than to switch listings from the Nasdaq National
Market, AMEX or NYSE). The Company shall promptly provide to each Buyer copies
of any notices it receives from the Nasdaq Stock Market, Inc., NYSE or AMEX
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 4(h).
-18-
i. EXPENSES. Subject to Section 9(l) below, within one (1) business
day of the Initial Closing the Company shall pay a non-accountable expense
allowance of $40,000 to the Buyers or their designees.
j. FILING OF FORM 8-K. On or before (i) the third (3rd ) business
day following the date hereof, (ii) the first (1st) business day following (a)
each of the Closing Dates and (b) the Mandatory Share Notice Date, and (iii) the
Second (2nd) business day following each Additional Share Notice Date, the
Company shall file a Form 8-K with the SEC describing the terms of the
transaction contemplated by the Transaction Documents and consummated at such
Closing, in each case in the form required by the 1934 Act. On or before the
third (3rd) business day following the date hereof, the Company shall file a
Form 8-K with the SEC describing the terms of the transactions disclosed in
SCHEDULE 3(J) hereto in the form required by the 1934 Act.
k. SHAREHOLDER APPROVAL/PROXY STATEMENT. The Company shall provide
each stockholder entitled to vote at the next meeting of stockholders of the
Company (other than the stockholder meeting scheduled to be held on March 3,
1999, or any adjournment thereof), which meeting shall not be later than June
30, 1999 (the "STOCKHOLDER MEETING DEADLINE"), a proxy statement, which has been
previously reviewed by the Buyers and a counsel of their choice, soliciting each
such stockholder's affirmative vote at such stockholder meeting for approval of
the Company's issuance of all of the Securities as described in this Agreement,
and the Company shall use its best efforts to solicit its stockholders' approval
of such issuance of the Securities and cause the Board of Directors of the
Company to recommend to the stockholders that they approve such proposal. If the
Company fails to hold a meeting of its stockholders by the Stockholder Meeting
Deadline, then, as partial relief (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each
holder of Preferred Shares an amount in cash per Preferred Share equal to the
product of (i) $1,000; multiplied by (ii) .02; multiplied by (iii) the quotient
of (x) the number of days after the Stockholder Meeting Deadline that a meeting
of the Company's stockholders is not held, divided by (y) 30. The Company shall
make the payments referred to in the immediately preceding sentence within five
days of the earlier of (I) the holding of the meeting of the Company's
stockholders, the failure of which resulted in the requirement to make such
payments, and (II) the last day of each 30-day period beginning on the
Stockholder Meeting Deadline. In the event the Company fails to make such
payments in a timely manner, such payments shall bear interest at the rate of
2.0% per month (pro rated for partial months) until paid in full.
l. TRANSACTIONS WITH AFFILIATES. So long as any Preferred Shares are
outstanding the Company shall not, and shall cause each of its Subsidiaries not
to, enter into, amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiaries' officers, directors, persons
who were officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of the Common Stock, or affiliates
or with any individual related by blood, marriage or adoption to any such
individual or with any entity in which any such entity or individual owns a 5%
or more beneficial interest (each a "RELATED PARTY"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
agreement, transaction, commitment or arrangement on an arms-length
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basis on terms no less favorable than terms which would have been obtainable
from a person other than such Related Party, or (c) any agreement, transaction,
commitment or arrangement which is approved by a majority of the disinterested
directors of the Company. "AFFILIATE" for purposes hereof means, with respect to
any person or entity, another person or entity that, directly or indirectly, (i)
has a 5% or more equity interest in that person or entity, (ii) has 5% or more
common ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity. "CONTROL" or
"CONTROLS" for purposes of this Section 4(l) means that a person or entity has
the power, direct or indirect, to conduct or govern the policies of another
person or entity.
m. CAPITAL AND SURPLUS; SPECIAL RESERVES. The Company agrees that
the capital of the Company (as such term is used in Section 154 of the General
Corporation Law of Delaware) in respect of the Preferred Shares shall be equal
to the aggregate par value of such Preferred Shares and that it shall not
increase the capital of the Company with respect to any shares of the Company's
capital stock at any time on or after the date of this Agreement. The Company
also agrees that it shall not create any special reserves under Section 171 of
the General Corporation Law of Delaware without the prior written consent of
each holder of Preferred Shares. So long as any Preferred Shares remain
outstanding, the Company shall not account for as surplus or transfer to or
otherwise allocate to the Company's surplus account for purposes of the Delaware
General Corporation Law any of the capital represented by the Preferred Shares,
including, without limitation, for the purpose of reducing any of its capital
stock as contemplated by Section 244 of the Delaware General Corporation Law.
The amount to be represented in the capital account for the Series E Convertible
Preferred Stock at all times for each outstanding Preferred Share shall be an
amount equal to the product of (i) the Liquidation Preference (as defined in the
Certificate of Designations) and (ii) 120%.
n. CORPORATE EXISTENCE. So long as a Buyer beneficially owns any
Preferred Shares, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, except in the event
of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction
(i) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is listed for trading on the Nasdaq National
Market, NYSE or AMEX.
o. ADDITIONAL ISSUANCE OF PREFERRED STOCK. So long as a Buyers or
any of its Affiliates beneficially owns Preferred Shares or has the right to
acquire any Preferred Shares, the Company shall not issue or agree to issue any
additional shares of Preferred Stock other than in accordance with this
Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
Prior to each applicable Closing, the Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates, registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares and the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of
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the Preferred Shares or exercise of the Warrants (the "IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and the
Warrant Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares and the
Warrant Shares, prior to registration of the Conversion Shares and the Warrant
Shares under the 0000 Xxx) will be given by the Company to its transfer agent
and that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section 5 shall affect in any way
each Buyer's obligations and agreements set forth in Section 2(g) to comply with
all applicable prospectus delivery requirements, if any, upon resale of the
Securities. If a Buyer provides the Company with an opinion of counsel, in a
generally acceptable form, to the effect that a public sale, assignment or
transfer of the Securities may be made without registration under the 1933 Act
or the Buyer provides the Company with reasonable assurances that the Securities
can be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by such
Buyer and without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyers 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.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
a. INITIAL CLOSING DATE. The obligation of the Company hereunder to
issue and sell the Initial Preferred Shares to each Buyer at the Initial Closing
is subject to the satisfaction, at or before the Initial 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) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
(iii) Such Buyer shall have delivered to the Company the Purchase
Price for the Preferred Shares and the related Warrants being purchased by
such Buyer at the Initial
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Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
(iv) 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 Initial Closing Date as though made at that time (except for
representations and warranties that speak as of a specific 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 Initial Closing Date.
(v) The stockholders of the Company shall have approved at the March
3, 1999 stockholder meeting the proposal to (a) approve the increase of
the number of authorized shares of Common Stock to 100,000,000 and (b)
approve the issuance of shares of Common Stock upon the conversion of the
Series C Convertible Preferred Stock and the Series D Convertible
Preferred Stock in excess of the Exchange Cap (as defined in the
Certificate of Designations, Preferences and Rights of the Series C
Convertible Preferred Stock).
b. MANDATORY CLOSING DATES. The obligation of the Company hereunder
to issue and sell the Mandatory Preferred Shares to each Buyer at the Mandatory
Closings is subject to the satisfaction, at or before the Mandatory 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 delivered to the Company the Purchase
Price for the Mandatory Preferred Shares being purchased by such Buyer at
the Mandatory Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(ii) 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 Mandatory Closing Date as though made at that time (except for
representations and warranties that speak as of a specific 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 Mandatory Closing Date.
c. ADDITIONAL CLOSING DATES. The obligation of the Company hereunder
to issue and sell the Additional Preferred Shares to each Buyer at each of the
Additional Closings is
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subject to the satisfaction, at or before the respective Additional 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 complied with the requirements of Section
1(d) and the other conditions of Section 1(d) shall have been satisfied.
(ii) Such Buyer shall have delivered to the Company the Purchase
Price for the Additional Preferred Shares being purchased by such Buyer at
the Additional 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 Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific 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 Additional Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. INITIAL CLOSING DATE. The obligation of each Buyer hereunder to
purchase the Initial Preferred Shares at the Initial Closing is subject to the
satisfaction, at or before the Initial 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 executed each of the
Transaction Documents, and delivered the same to such Buyer.
(ii) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware, and a copy of the Certificate
of Designations that has been certified by such Secretary of State shall
have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for quotation on the
Nasdaq National Market, NYSE or AMEX, trading in the Common Stock issuable
upon conversion of the Initial Preferred Shares shall not have been
suspended by the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX during
the 10 trading days prior to and including the Initial Closing Date.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date) and the
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Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents or the
Certificate of Designations to be performed, satisfied or complied with by
the Company at or prior to the Initial Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the
Company, dated as of the Initial Closing Date, to the foregoing effect and
an update as of the Initial Closing Date regarding the representations
contained in Section 3(c).
(v) Such Buyer shall have received the opinion of Xxxx & Sudan dated
as of the Initial Closing Date in substantially the form of EXHIBIT C
attached hereto (the "XXXX & SUDAN OPINION").
(vi) The Company shall have executed and delivered to such Buyer the
Warrants and the Stock Certificates (in such denominations as such Buyer
shall request) for the Initial Preferred Shares and the Warrants being
purchased by such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b)(ii) above and in a form
reasonably acceptable to such Buyer (the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, at least 200% of the number of shares of Common
Stock which would be issuable upon conversion in full of the Initial
Preferred Shares to be issued at the Initial Closing and 125% of the
number of shares of Common Stock issuable upon exercise of the Warrants to
be issued at the Initial Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D attached hereto, shall have been delivered to and acknowledged
in writing by the Company's transfer agent with a copy forwarded to the
Buyers.
(x) The Company shall have delivered to such Buyer a copy of a
certificate evidencing the incorporation and good standing of the Company
and each subsidiary in such corporation's state of incorporation issued by
the Secretary of State of such state of incorporation as of a date within
ten days of the Initial Closing Date.
(xi) The Company shall have delivered to such Buyer a secretary's
certificate or an assistant secretary's certificate (so long as the
assistant secretary is duly authorized to deliver such certificate)
certifying as to (a) the Resolutions, (b) the Certificate of Incorporation
and (c) Bylaws, each as in effect at the Initial Closing.
(xii) The Company shall have delivered to such Buyer a copy of its
Certificate of Incorporation as certified by the Secretary of State of the
State of Delaware within ten days of the Initial Closing Date.
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(xiii) 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 Initial Closing
Date.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by the Transaction
Documents as such Buyer or its counsel may reasonably request.
(xv) Each of Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx and Xxxxxx Sudan shall
have executed and delivered copies thereof to such Buyer agreements which,
during the period beginning on the Initial Closing Date and ending on the
date the Initial Registration Statement (as defined in the Registration
Rights Agreement) is declared effective, prohibit them from (i) selling
the Company's securities for less than $3.25 per share, (ii) selling in
the aggregate (all three combined) in excess of $200,000 and (iii) making
demand on any promissory note or other debt instrument for which the
Company is liable.
(xvi) The stockholders of the Company shall have approved at the
March 3, 1999 stockholder meeting the proposal to (a) approve the increase
of the number of authorized shares of Common Stock to 100,000,000 and (b)
approve the issuance of shares of Common Stock upon the conversion of the
Series C Convertible Preferred Stock and the Series D Convertible
Preferred Stock in excess of the Exchange Cap (as defined in the
Certificate of Designations, Preferences and Rights of the Series C
Convertible Preferred Stock).
b. MANDATORY CLOSING DATES. The obligation of each Buyer hereunder
to purchase the Mandatory Preferred Shares at the Mandatory Closings is subject
to the satisfaction, at or before the Mandatory 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 complied with the requirements of Section
1(c) as of the Mandatory Closing Date.
(ii) The Certificate of Designations shall be in full force and
effect and shall not have been amended since the Initial Closing Date, and
a copy of the Certificate of Designations that has been certified by the
Secretary of State of the State of Delaware shall have been delivered to
such Buyer.
(iii) The Common Stock shall be authorized for quotation on the
Nasdaq National Market, NYSE or AMEX, trading in the Common Stock issuable
upon conversion of the Additional Preferred Shares shall not be suspended
by the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX on the Mandatory
Closing Date.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Mandatory Closing Date
as though made at that
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time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and
complied with the covenants, agreements and conditions required by the
Transaction Documents or the Certificate of Designations to be performed,
satisfied or complied with by the Company at or prior to the Mandatory
Closing Date. Such Buyer shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the Mandatory
Closing Date, to the foregoing effect and an update as of such Mandatory
Closing Date regarding the representations contained in Section 3(c).
(v) Such Buyer shall have received the Xxxx & Sudan Opinion, dated
as of such Mandatory Closing Date.
(vi) The Company shall have executed and delivered to such Buyer the
Warrants and the Stock Certificates (in such denominations as such Buyer
shall request) for the Mandatory Preferred Shares and the Warrants being
purchased by such Buyer at such Mandatory Closing.
(vii) The Board of Directors of the Company shall not have amended
the Resolutions.
(viii) As of such Mandatory Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to at
least 200% of the number of shares of Common Stock which would be issuable
upon conversion in full of the then outstanding Preferred Shares and 125%
of the number of shares of Common Stock which would be issuable upon the
exercise in full of the then outstanding Warrants, including for such
purposes any Mandatory Preferred Shares and Warrants to be issued at such
Mandatory Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D attached hereto, shall have been delivered to and acknowledged
in writing by the Company's transfer agent and shall be in effect as of
the Mandatory Closing Date.
(x) The Company shall have delivered to such Buyer a copy of a
certificate evidencing the incorporation and good standing of the Company
and each Subsidiary in such corporation's state of incorporation issued by
the Secretary of State of such state of incorporation as of a date within
ten days of such Mandatory Closing Date.
(xi) The Company shall have delivered to such Buyer a secretary's
certificate or an assistant secretary's certificate (so long as the
assistant secretary is duly authorized to deliver such certificate)
certifying as to (a) the Resolutions, (b) the Certificate of Incorporation
and (c) Bylaws, each as in effect at the Mandatory Closing.
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(xii) The Company shall have delivered to such Buyer a copy of its
Certificate of Incorporation as certified by the Secretary of State of the
State of Delaware within ten days of the Mandatory Closing Date.
(xiii) 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 Mandatory Closing
Date.
(xiv) The Registration Statement is declared effective on or before
the date that is 90 days after Initial Closing Date.
(xv) 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.
c. ADDITIONAL CLOSING DATES. The obligation of each Buyer hereunder
to purchase the Additional Preferred Shares at each of the Additional Closings
is subject to the satisfaction, at or before the Additional Closing Dates, 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 consent thereof:
(i) The Certificate of Designations shall be in full force and
effect and shall not have been amended since the Initial Closing Date, and
a copy of the Certificate of Designations that has been certified by the
Secretary of State of the State of Delaware shall have been delivered to
such Buyer.
(ii) The Common Stock shall be authorized for quotation on the
Nasdaq National Market, NYSE or AMEX, trading in the Common Stock issuable
upon conversion of the Additional Preferred Shares shall not have been
suspended by the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX during
the 10 trading days prior to and including the applicable Additional
Closing Date.
(iii) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the respective
Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents or the
Certificate of Designations to be performed, satisfied or complied with by
the Company at or prior to the respective Additional Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of such Additional Closing Date, to the
foregoing effect and an update as of such Additional Closing Date
regarding the representations contained in Section 3(c).
(iv) Such Buyer shall have received the Xxxx & Sudan Opinion, dated
as of such Additional Closing Date.
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(v) The Company shall have executed and delivered to such Buyer the
Warrants and the Stock Certificates (in such denominations as such Buyer
shall request) for the Additional Preferred Shares and the Warrants being
purchased by such Buyer at such Additional Closing.
(vi) The Board of Directors of the Company shall not have amended
the Resolutions.
(vii) As of such Additional Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to at
least 200% of the number of shares of Common Stock which would be issuable
upon conversion in full of the then outstanding Preferred Shares and 125%
of the number of shares of Common Stock which would be issuable upon
exercise in full of the then outstanding Warrants, including for such
purposes any Additional Preferred Shares and Warrants to be issued at such
Additional Closing.
(viii) The Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT D attached hereto, shall have been delivered to and acknowledged
in writing by the Company's transfer agent and shall be in effect as of
such Additional Closing Date.
(ix) The Company shall have delivered to such Buyer a copy of a
certificate evidencing the incorporation and good standing of the Company
and each Subsidiary in such corporation's state of incorporation issued by
the Secretary of State of such state of incorporation as of a date within
ten days of such Additional Closing Date.
(x) The Company shall have delivered to such Buyer a secretary's
certificate or an assistant secretary's certificate (so long as the
assistant secretary is duly authorized to deliver such certificate)
certifying as to (a) the Resolutions, (b) the Certificate of Incorporation
and (c) Bylaws, each as in effect at the Additional Closing.
(xi) During the period beginning on the Additional Share Notice Date
and ending on and including the respective Additional Closing Date, the
Company shall have delivered Conversion Shares upon conversion of the
Preferred Shares on a timely basis as set forth in Section 2(e)(ii) of the
Certificate of Designations.
(xii) The Company shall have delivered to such Buyer a copy of its
Certificate of Incorporation as certified by the Secretary of State of the
State of Delaware within ten days of the Additional Closing Date.
(xiii) 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 Additional Closing
Date.
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(xiv) 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. 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 and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's 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 the Transaction Documents, the Certificate of Designations or any
other certificate, instrument or document contemplated hereby or thereby, (b)
any breach of any covenant, agreement or obligation of the Company contained in
the Transaction Documents, the Certificate of Designations or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from (i) the execution, delivery, performance or
enforcement of the Transaction Documents or the Certificate of Designations,
(ii) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or (iii) solely
the status of such Buyer or holder of the Securities as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of
the State of Delaware shall govern all issues concerning the relative rights of
the Company and its stockholders. All other 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 non-exclusive jurisdiction of the state and federal
courts sitting 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
-29-
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 HEREWITH 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 each other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
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.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes 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
discussed herein, and this Agreement and the Exhibits, Schedules and other
instruments referenced herein 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 other than by an
instrument in writing signed by the Company and the holders of at least
two-thirds (2/3) of the Preferred Shares then outstanding, and no provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement of such waiver is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Preferred 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 or the Certificate of Designations unless the
same consideration also is offered to all of the parties to the Transaction
Documents or holders of Preferred Shares, as the case may be.
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
-30-
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 shall be:
If to the Company:
INTELECT COMMUNICATIONS, INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone: (000)000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to:
XXXX & SUDAN, L.L.P.
Two Houston Center
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Sudan, Jr., Esq.
If to the Transfer Agent:
AMERICAN STOCK TRANSFER & TRUST COMPANY
0000 00xx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx
If to a Buyer, to it at the 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, or at 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 days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
-31-
g. SUCCESSORS AND ASSIGNS. The rights under this Agreement shall not
be assignable by the holders of Preferred Shares without the prior written
consent of the Company. Notwithstanding the foregoing, the rights under this
Agreement shall be assignable by the holders of Preferred Shares, without the
consent of the Company, to any Permitted Transferee (as defined below) upon the
transfer of all or any portion of Preferred Shares if: (i) the holders of
Preferred Shares agrees in writing with the Permitted Transferee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such Permitted Transferee; (iii) at or before the time the
Company receives the written notice contemplated by clause (ii) of this sentence
the Permitted Transferee agrees in writing with the Company to be bound by all
of the provisions contained herein; and (iv) such transfer shall have been made
in accordance with the applicable requirements of the Transaction Documents. Any
attempted assignment without the prior written consent of the Company, other
than to an Permitted Transferee shall be void and without effect. A "PERMITTED
TRANSFEREE" shall mean (i) a Buyer, (ii) an Affiliate (as such term is defined
in this Agreement) of a Buyer, (iii) any holder of Preferred Shares and (iv) any
Affiliate of a holder of Preferred Shares.
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.
i. SURVIVAL. Unless this Agreement is terminated under Section 9(l),
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9,
and the indemnification provisions set forth in Section 8, shall survive each of
the Closings regardless of any investigation made by or on behalf of the such
Buyer or by or on behalf of the Company. Each Buyer shall be responsible only
for its own representations, warranties, agreements and covenants hereunder.
j. PUBLICITY. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. TERMINATION. In the event that the Initial Closing shall not have
occurred with respect to a Buyer on or before March 12, 1999 to the Company's or
such Buyer's failure
-32-
to satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the non-breaching Buyers for the expenses described in
Section 4(i) above.
m. PLACEMENT AGENT. The Company acknowledges that it has engaged
Overlook Consulting, L.L.C. as placement agent in connection with the sale of
the Preferred Shares, which placement agent may have formally or informally
engaged other agents on its behalf. The Company shall be responsible for the
payment of any placement agent's fees or broker's commissions relating to or
arising out of the transactions contemplated hereby which agents or brokers have
been or are alleged to have been engaged by the Company. The Company shall pay,
and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim. Each Buyer, severally and not jointly,
represents and warrants that it has not engaged any placement agent or broker in
connection with the acquisition of the Securities. Each Buyer, severally and not
jointly, shall pay and hold the Company harmless for any liability, loss or
expense (including, without limitation, attorneys' fees and out-of-pocket
expense) arising in connection with any clams for placement agent fees or broker
commissions which agents or brokers have been or are alleged to have been
engaged by such Buyer.
n. 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.
o. REMEDIES. Each Buyer and each holder of the Securities shall have
all rights and remedies set forth in the Transaction Documents and the
Certificate of Designations and all rights and remedies which such holders have
been granted at any time under any other agreement or contract relating to the
subject matter hereof and all of the rights which such holders have under any
law. Any person or entity 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.
p. PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to the Buyers hereunder or pursuant to the Certificate of
Designations or Warrants 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, 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.
-33-
*** REST OF PAGE INTENTIONALLY LEFT BLANK ***
-34-
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
INTELECT COMMUNICATIONS, INC. HFTP INVESTMENT LLC
By: Promethean Investment Group L.L.C.
Its: Investment Manager
By: _____________________________ By: _________________________________
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxx X. X'Xxxxx, Xx.
Its: Chief Executive Officer Its: President
XXXXXXX CAPITAL LTD.
By: _________________________________
Name:
Its:
XXXXXX CAPITAL LTD.
By: _________________________________
Name:
Its:
NP PARTNERS (FORMERLY KNOWN AS XXXXXX
PARTNERS)
By: _________________________________
Name:
Its:
OLYMPUS SECURITIES, LTD.
By: _________________________________
Name:
Its:
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT - P. 2 OF 3]
CCG CAPITAL LTD.
By: _________________________________
Name:
Its:
CCG INTERNATIONAL FUND LTD.
By: _________________________________
Name:
Its:
XXXXXXXX, L.P.
By: XXXXXX, XXXXXX & CO., L.P.
Its: General Partner
By: _________________________________
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
GAM ARBITRAGE INVESTMENTS, INC.
By: XXXXXX, XXXXXX & CO., L.P.
Its: Investment Advisor
By: _________________________________
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: XXXXXX, XXXXXX & CO., L.P.
Its: General Partner
By: _________________________________
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT - P. 3 OF 3]
RAPHAEL, L.P.
By: _______________________________
Name: Xxxxxxx X. Xxxxxx
Its: Chief Operating Officer
RAMIUS FUND, LTD.
By: AG RAMIUS PARTNERS, L.L.C.
Its: Investment Advisor
By: _______________________________
Name: Xxxxxxx X. Xxxxxx
Its: Managing Officer
SCHEDULE OF BUYERS
NUMBER OF NUMBER OF
INITIAL MANDATORY
INVESTOR ADDRESS PREFERRED PREFERRED INVESTOR'S REPRESENTATIVES'
INVESTOR NAME AND FACSIMILE NUMBER SHARES SHARES ADDRESS AND FACSIMILE NUMBER
------------------- -------------------------------------- --------- --------- -----------------------------
HFTP Investment LLC c/o Promethean Investment Group, L.L.C. 0 1,500 Xxxxxx Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, 00xx Floor 000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. X'Xxxxx, Xx. Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: New York
Xxxxxxx Capital Ltd. c/o Citadel Investment Group, L.L.C. 342 0 Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Cayman Islands
Xxxxxx Capital Ltd. c/o Citadel Investment Group, L.L.C. 664 0 Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Cayman Islands
NP Partners c/o Citadel Investment Group, L.L.C. 1,228 0 Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Bermuda
Olympus Securities, c/o Citadel Investment Group, L.L.C. 688 0 Xxxxxx Xxxxxx & Xxxxx
Ltd. 000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Bermuda
CCG International c/o Citadel Investment Group, L.L.C. 39 0 Xxxxxx Xxxxxx & Xxxxx
Fund Ltd. 000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
NUMBER OF NUMBER OF
INITIAL MANDATORY
INVESTOR ADDRESS PREFERRED PREFERRED INVESTOR'S REPRESENTATIVES'
INVESTOR NAME AND FACSIMILE NUMBER SHARES SHARES ADDRESS AND FACSIMILE NUMBER
------------------- -------------------------------------- --------- --------- -----------------------------
CCG Capital Ltd. c/o Citadel Investment Group, L.L.C. 39 0 Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Xxxxxxxx, L.P. c/o Xxxxxx, Xxxxxx & Co., L.P. 0 1,000 Xxxxxx, Xxxxxx & Co., L.P.
000 Xxxx Xxxxxx - 26th Floor 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Cayman Islands
GAM Arbitrage c/o Xxxxxx, Xxxxxx & Co., L.P. 0 100 Xxxxxx, Xxxxxx & Co., L.P.
Investments, 000 Xxxx Xxxxxx - 26th Floor 245 Park Avenue - 26th Floor
Inc. Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: British Virgin Islands
AG Super Fund c/o Xxxxxx, Xxxxxx & Co., L.P. 0 100 Xxxxxx, Xxxxxx & Co., L.P.
International 000 Xxxx Xxxxxx - 26th Floor 245 Park Avenue - 26th Floor
Partners, L.P. New York, New York 10167 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Cayman Islands
Raphael, L.P. c/o Xxxxxx, Xxxxxx & Co., L.P. 0 100 Xxxxxx, Xxxxxx & Co., L.P.
000 Xxxx Xxxxxx - 26th Floor 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Cayman Islands
Ramius Fund, Ltd. c/o Xxxxxx, Xxxxxx & Co., L.P. 0 200 Xxxxxx, Xxxxxx & Co., L.P.
000 Xxxx Xxxxxx - 26th Floor 000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx or Xxx Xxxxxx Attention: Xxxx Xxxx or Xxx Xxxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Residence: Bermuda
LIST OF SCHEDULES
SCHEDULE 3(a) Subsidiaries
SCHEDULE 3(c) Capitalization
SCHEDULE 3(e) Conflicts
SCHEDULE 3(f) SEC Documents; Financial Statements
SCHEDULE 3(g) Material Changes
SCHEDULE 3(h) Litigation
SCHEDULE 3(j) Undisclosed Liability
SCHEDULE 3(l) Integrated Offerings
SCHEDULE 3(n) Intellectual Property
SCHEDULE 3(p) Liens
SCHEDULE 3(t) Tax Status
SCHEDULE 3(aa) Materially Adverse Contracts
LIST OF EXHIBITS
EXHIBIT A Form of Certificate of Designations,
Preferences and Rights of the Preferred
Shares
EXHIBIT B Form of Registration Rights Agreement
EXHIBIT C Form of Company Counsel Opinion
EXHIBIT D Form of Irrevocable Transfer Agent
Instructions
EXHIBIT E Form of Warrant
