SECURITIES PURCHASE AGREEMENT
EXECUTION
VERSION
This
Securities Purchase Agreement is entered into and dated as of May 26, 2010 (this
“Agreement”), by and
among Paradigm Holdings, Inc., a Wyoming corporation (the “Company”), Xxxx Capital
Partners, LP, a Delaware limited partnership (“Xxxx Capital”), and each of
the other purchasers identified on the signature pages hereto (each, a “Purchaser” and, collectively
with Xxxx Capital, the “Purchasers”).
A.
The Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of
Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission (the “Commission”) under the 1933
Act.
B.
The Company has authorized Senior Secured
Subordinated Notes, in the form attached hereto as Exhibit
A (the “Notes”).
C.
Each Purchaser wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
(i) the aggregate original principal amount of the Notes set forth opposite such
Purchaser’s name in column (3) on the Schedule of Purchasers, and (ii) as a
financing fee in connection with the issuance of the Notes, such number of
shares Common Stock set forth opposite such Purchaser’s name in column (4) on
the Schedule of Purchasers (together with any shares of Common Stock issuable
upon conversion of the Note, if any, the “Common Shares”).
D.
Concurrently herewith, the parties hereto
shall execute and deliver an amendment to that certain Preferred Stock Purchase
Agreement, dated February 27, 2009, by and between the Company and the
Purchasers (the “Preferred
Purchase Agreement”) in the form attached hereto as Exhibit
B (the “Amendment”, and the Preferred
Purchase Agreement as amended by the Amendment, the “Amended Preferred Purchase
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Common Shares and amend the Company’s
option to repurchase the Preferred Shares (as defined in the Preferred Purchase
Agreement) as provided therein.
E.
The Notes and the Common Shares are
collectively referred to herein as the “Securities.”
F.
The Notes will be secured by a second priority perfected security interest in
all of the assets of the Company and its direct and indirect U.S. Subsidiaries
(as defined below), including a pledge of all of the capital stock of each of
the Company’s U.S. Subsidiaries and 2/3rds of the capital stock of each of the
Company’s non-U.S. Subsidiaries, (i) as evidenced by a security agreement in the
form attached hereto as Exhibit
C (the “Security
Agreement”, and together with the Security Agreement and the other
security documents and agreements entered into in connection with this Agreement
and each of such other documents and agreements, as each may be amended or
modified from time to time, collectively, the “Security Documents”), (ii)
each of its U.S. Subsidiaries and Paradigm Holdings, Inc., a Nevada corporation,
which was formed for the purpose of the Reincorporation (as defined below), will
execute a guaranty in favor of each Purchaser, in the form attached hereto as
Exhibit
D (collectively, the “Guaranties”) pursuant to which
each of them guarantees the obligations of the Company under the Transaction
Documents (as defined below) and a subordination agreement in the form attached
hereto as Exhibit
E.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser, severally and not
jointly, agree as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In
addition to the terms defined elsewhere in this Agreement, the following terms
shall have the meanings set forth in this Section 1.1:
“Affiliate” of a Person means
any other Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
first Person. Without limiting the foregoing with respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.
“Business Day” means any day
except Saturday, Sunday and any day which is a federal legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.
“Certificate of
Designations” means the Certificate of
Designations of the Series A-1 Senior Preferred Stock.
“Closing Price” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on an Eligible Market or
any other national securities exchange, the closing bid price per share of the
Common Stock for such date (or the nearest preceding date) on the primary
Eligible Market or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then reported in the “Pink Sheets”
published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of Common Stock so reported; or (c) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by Xxxx Capital.
“Commission” means the U.S.
Securities and Exchange Commission.
“Common Stock” means the common
stock of the Company, par value $0.01 per share, and any securities into which
such common stock may hereafter be reclassified or converted.
“Company” is defined in the
Preamble hereto.
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“Eligible Market” means any of
the New York Stock Exchange, the American Stock Exchange, Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market or the
over-the-counter bulletin board (“OTC Bulletin
Board”).
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“GAAP” is defined in Section
3.1(h).
“Governmental Authority” shall
mean any government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic.
“Xxxx Capital” is defined in
the Preamble hereto.
“Indebtedness” of any Person
means (i) all indebtedness representing money borrowed which is created,
assumed, incurred or guaranteed in any manner by such Person or for which such
Person is responsible or liable (whether by guarantee of such indebtedness,
agreement to purchase indebtedness of, or to supply funds to or invest in,
others or otherwise), (ii) any direct or contingent obligations of such
Person arising under any letter of credit (including standby and commercial),
bankers acceptances, bank guaranties, surety bonds and similar instruments,
(iii) all Indebtedness secured by any Lien existing on property or assets
owned by such Person and (iv) any shares of capital stock or other
securities having a redemption feature; provided that the Preferred Stock, and
any obligations due in respect thereof in accordance, as applicable, with the
Preferred Stock, as in effect on the date hereof, shall not be deemed to be
Indebtedness pursuant to this definition.
“Lien” is defined in Section
3.1(a).
“Losses” means any and all
damages, fines, penalties, deficiencies, liabilities, claims, losses (including
loss of value), judgments, awards, settlements, taxes, actions, obligations and
costs and expenses in connection therewith (including, without limitation,
interest, court costs and reasonable fees and expenses of attorneys, accountants
and other experts, or any other expenses of litigation or other Proceedings or
of any default or assessment).
“Material Adverse Effect” is
defined in Section
3.1(b).
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
“Preferred Stock” means the
Series A-1 Senior Preferred Stock of the Company, par value $0.01 per share, and
all securities into which such preferred stock may be reclassified or
converted.
“Principal Market” means the
OTC Bulletin Board.
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“Proceeding” means an action,
claim, suit, inquiry, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or, to the Company’s knowledge, threatened.
“Purchase Price” is defined in
Section
2.3.
“Purchasers” is defined in the
Preamble hereto.
“Reincorporation” is defined in
Section
6.7.
“Required Approvals” is defined
in Section
3.1(e).
“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule
415 and Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
“SEC Reports” has the meaning
set forth in Section 3.1(h).
“Securities” means the Notes
and the Common Shares issued or issuable (as applicable) to the Purchasers
pursuant to the Transaction Documents.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Subsidiary” is defined in
Section
3.1(a).
“Trading Day” means
(a) any day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if the Common Stock is not then listed or
quoted and traded on any Trading Market, then any Business Day.
“Trading Market” means the OTC
Bulletin Board or any other primary Eligible Market or any national securities
exchange, market or trading or quotation facility on which the Common Stock is
then listed or quoted.
“Transaction Documents” means
this Agreement, the Notes, the Security Documents, the Guarantees, the Amended
Preferred Purchase Agreement and any other documents, certificates or agreements
executed or delivered in connection with the transactions contemplated
hereby.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Purchase and Sale of the
Securities. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5.1 and 5.2 below, the Company shall issue and
sell to each Purchaser, and each Purchaser severally, but not jointly, shall
purchase from the Company on the Closing Date (as defined below), a Note in the
original principal amount as is set forth opposite such Purchaser’s name in
column (3) on the Schedule of Purchasers along with (as a financing fee in
connection with issuance of the Notes) that aggregate number of Common Shares as
is set forth opposite such Purchaser’s name in column (4) on the Schedule of
Purchasers.
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2.2 Closing. The
closing (the “Closing”)
of the purchase of the Notes and the Common Shares by the Purchasers shall occur
at the offices of Xxxxxxxxx Traurig, LLP, MetLife Building, 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st)
Business Day on which the conditions to the Closing set forth in Sections 5.1
and 5.2 below are satisfied or waived (or such later date as is mutually agreed
to by the Company and each Purchaser).
2.3 Purchase Price.
The aggregate purchase price for the Notes to be purchased by each Purchaser
(the “Purchase Price”)
shall be the amount set forth opposite such Purchaser’s name in column (5) on
the Schedule of Purchasers. The parties hereby acknowledge and agree that
at the Closing each Purchaser shall receive a financing fee in Common Shares as
set forth in the applicable Note at a price per Common Share equal to
$0.086.
2.4 Form of Payment. On
the Closing Date, (i) each Purchaser shall pay its respective Purchase Price to
the Company for the Note to be issued and sold to such Purchaser at the Closing,
by wire transfer of immediately available funds in accordance with the Company’s
written wire instructions and (ii) the Company shall deliver to each
Purchaser (A) a Note (in such amount as is set forth opposite such Purchaser’s
name in column (3) of the Schedule of Purchasers), and (B) such number of Common
Shares as is set forth opposite such Purchaser’s name in column (4) of the
Schedule of Purchasers, in all cases, duly executed on behalf of the Company and
registered in the name of such Purchaser or its designee.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and
Warranties of the Company. The Company hereby represents and
warrants to, and agrees with, the Purchasers as follows:
(a)
Subsidiaries.
The Company does not directly or indirectly control or own 50% or more of the
stock or other equity interests in any other Person other than those listed in
Schedule 3.1(a)
(each a “Subsidiary”,
and collectively, the “Subsidiaries”). The
jurisdiction of organization of each Subsidiary is as set forth on Schedule
3.1(a). Except as disclosed in Schedule 3.1(a), the
Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction (collectively, “Liens”), and all the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar
rights.
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(b)
Organization and
Qualification. Each of the Company and, except as set forth on
Schedule
3.1(b), the Subsidiaries is an entity duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Except as disclosed
in Schedule
3.1(b), neither the Company nor any Subsidiary is in violation or default
of any of the provisions of its respective certificate or articles of
incorporation or bylaws or other organizational or charter documents. Each
of the Company and the Subsidiaries is duly qualified to conduct business and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to, individually
or in the aggregate, (i) adversely affect the legality, validity or
enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s or
any Subsidiary’s ability to perform fully on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and
no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
(c)
Authorization;
Enforcement. The Company and each Subsidiary has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its respective obligations hereunder and
thereunder. The execution and delivery by the Company and each Subsidiary
of each of the Transaction Documents to which it is a party and the consummation
by it of the transactions contemplated hereunder and thereunder have been duly
authorized by all necessary action on the part of the Company and the
Subsidiaries and no further consent or action is required by the Company or any
Subsidiary, or their respective Board of Directors or shareholders. Each
Transaction Document has been (or upon delivery will have been) duly executed by
the Company and/or the Subsidiaries, as applicable, and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company, and/or the Subsidiaries, as applicable, enforceable
against the Company, and/or the Subsidiaries, as applicable, in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, or (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies.
(d)
No
Conflicts. Except as set forth on Schedule 3.1(d), the
execution, delivery and performance of the Transaction Documents by the Company
and the Subsidiaries and the consummation by them of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any Governmental Authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of clause (i) or (ii) above, as could not, reasonably be expected to
have or result in, individually or in the aggregate, a Material Adverse
Effect.
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(e)
Filings, Consents and
Approvals. Neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization, permit or order of, give any notice
to, or make any filing or registration with, any Governmental Authority or other
Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than the filing by the Company with the
Commission of the Registration Statement (as defined in the Amended Preferred
Purchase Agreement), the filing by the Company of a Notice of Sale of Securities
on Form D with the Commission under Regulation D of the Securities Act and state
and applicable Blue Sky filings, and the consents, waivers, authorizations,
permits, orders, notices, filings or registrations set forth on Schedule 3.1(e)
(collectively, the “Required
Approvals”).
(f)
Issuance of the
Securities. The Notes and the Common Shares shall be duly
authorized as of the Closing. As of the Closing, the Notes and the Common
Shares shall be validly issued, fully paid and nonassessable and free of
preemptive or similar rights. Assuming the accuracy of each Purchaser’s
representations and warranties set forth in Section 3.2(b)-(e),
as of the Closing, (i) the Notes and the Common Shares have been issued in
compliance with applicable securities laws, rules and regulations and (ii) the
issuance and sale of the Securities contemplated hereby does not conflict with
or violate any rules or regulations of the Trading Market.
(g)
Capitalization.
The number of shares and type of all authorized, issued and outstanding capital
stock of the Company and each Subsidiary is as specified on Schedule
3.1(g). Except as specified on Schedule 3.1(g), no
securities of the Company or any Subsidiary are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the
purchase and sale of the Securities and except as disclosed in Schedule 3.1(g),
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock. The issue and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than
the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities, or to take any other action punitive to the Company or any
Subsidiary. Schedule 3.1(g)
contains a list of all stock option plans, stock purchase plans and management
grants, in each case as reflected as of the Closing Date, true and complete
copies of which have been delivered to the Purchasers. Except as disclosed
on Schedule
3.1(g), there are no existing agreements, arrangements or commitments
relating to any shares of Common Stock that require or permit any shares of
Common Stock to be voted by or at the discretion of anyone other than the record
owner. Immediately following the Closing, the Company shall have no
Indebtedness other than Permitted Indebtedness (as defined in the Notes).
There are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities.
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(h)
SEC Reports; Financial
Statements. The Company has filed all reports, schedules, forms,
applications and other documents, together with any amendments required to be
made with respect thereto, required to be filed by it under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the 12 months preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such materials) (the foregoing
materials being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company and its consolidated Subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial
(individually and in the aggregate), year-end audit adjustments and the absence
of footnotes.
(i)
Litigation.
Except as set forth in Schedule 3.1(i),
there is no Proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties before or by any Governmental Authority. Neither the Company
nor any Subsidiary, nor, to the knowledge of the Company, any director or
officer thereof (in his or her capacity as such), is or has been the subject of
any Proceeding involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty. There has
not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company (in his or her capacity as
such). The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act.
(j)
Compliance.
Except as set forth in Schedule 3.1(j),
neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of
any Governmental Authority, or (iii) is or has been in violation of any
statute, rule or regulation of any Governmental Authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety, employment and labor matters or other laws applicable to its business;
except in each case as could reasonably be expected to have or result in,
individually or in the aggregate, a Material Adverse Effect.
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(k)
Internal Accounting
Controls. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the Exchange Act (such date,
the “Evaluation
Date”). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no changes in the Company’s internal control over financial reporting
(as such term is defined in the Exchange Act) that has materially affected, or
is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
(l)
Solvency.
The Company believes that, based on the financial condition of the Company
immediately following the Closing Date, (i) the Company’s fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the
Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. Following the Closing Date, the
Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its Indebtedness).
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(m)
Certain
Fees. Except as set forth in Schedule 3.1(m), no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims (other than such fees or
commissions owed by a Purchaser pursuant to written agreements executed by such
Purchaser which fees or commissions shall be the sole responsibility of such
Purchaser) made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions
contemplated by this Agreement. The Company shall indemnify and hold
harmless the Purchasers, their employees, officers, directors, agents, and
partners, and their respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney’s fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
(n)
Private
Placement. Assuming the accuracy of each Purchaser’s
representations and warranties set forth in Section 3.2(b)-(e),
(i) no registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers under the Transaction
Documents, and (ii) the issuance and sale of the Securities hereunder does
not contravene the rules and regulations of the Trading Market.
(o)
Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Purchaser’s
purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives. The Company further acknowledges that no Purchaser has
made any promises or commitments other than as set forth in this Agreement,
including any promises or commitments for any additional investment by any such
Purchaser in the Company.
(p)
No Event of
Default. After giving effect to the transactions contemplated by
this Agreement to occur at the Closing, no Event of Default (as defined in the
Notes) or Event of Default (as defined in the Certificate of Designations) has
occurred and is continuing.
(q)
Acknowledgement
Regarding Purchasers’ Trading Activity. Anything in this Agreement
or elsewhere herein to the contrary notwithstanding, it is understood and
acknowledged by the Company (i) that none of the Purchasers have been asked
to agree, nor has any Purchaser agreed, to desist from purchasing or selling,
long and/or short, securities of the Company, or “derivative” securities based
on securities issued by the Company or to hold the Securities for any specified
term; (ii) that past or future open market or other transactions by any
Purchaser, including short sales, and specifically including, without
limitation, short sales or “derivative” transactions, before or after the
Closing Date or future private placement transactions, may negatively impact the
market price of the Company’s publicly-traded securities; (iii) that any
Purchaser, and counter-parties in “derivative” transactions to which any such
Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) that each Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. The Company further
understands and acknowledges that (a) one or more Purchasers may engage in
hedging activities at various times during the period that the Securities are
outstanding and (b) such hedging activities (if any) could reduce the value
of the existing shareholders’ equity interests in the Company at and after the
time that the hedging activities are being conducted. The Company
acknowledges that such aforementioned hedging activities do not constitute a
breach of any of the Transaction Documents.
10
(r)
Manipulation of
Price. The Company has not, and to its knowledge no one acting on
its or any of its officers’ or Affiliates’ behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid
any compensation for soliciting purchases of, any of the Securities or
(iii) except as set forth on Schedule 3.1(r)(iii),
paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company.
(s)
Margin
Regulations. Neither the Company nor any of its Subsidiaries is
engaged in the business of extending credit for the purpose of purchasing or
carrying any "margin stock" (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System). No part of the proceeds from the
sale of the Notes will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of purchasing,
carrying or trading in any securities under such circumstances as to involve the
Company or any of its Subsidiaries in a violation of Regulation X of the Board
of Governors of the Federal Reserve System (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of the Board of Governors of the
Federal Reserve System. Margin stock does not constitute more than 25% of
the value of the consolidated property and assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 25% of the value of such consolidated property
and assets. None of the transactions contemplated by this Agreement
(including, without limitation, the direct and indirect use of proceeds of the
Notes) will violate or result in a violation of the Exchange Act or any of the
rules and regulations promulgated thereunder or in such Regulation T, U or X, as
applicable, or, assuming the accuracy of the representations and warranties made
by you in this Agreement, the Securities Act or any of the rules and regulations
promulgated thereunder.
(t)
Security
Interests. Except as set forth on Schedule 3.1(t), each
Security Agreement creates in favor of each Purchaser a legal, valid and
enforceable second priority security interest in the Collateral (as defined in
the Security Documents) secured thereby. Except as set forth on Schedule 3.1(t), upon
the filing of the UCC-1 financing statements in the State of Wyoming and the
recording of the Copyright Security Agreement, Patent Security Agreement and
Trademark Security Agreement, in each case, as defined in the Security Agreement
(collectively, the “Collateral
Assignments for Security”), in the United States Patent and Trademark
Office, as applicable, such security interests in and Liens on the Collateral
(as defined in the Security Agreement) granted thereby shall be perfected,
second priority security interests, and no further recordings or filings are or
will be required in connection with the creation, perfection or enforcement of
such security interests and Liens, other than (i) the filing of continuation
statements in accordance with applicable law, (ii) the recording of the
Collateral Assignments for Security in the United States Patent and Trademark
Office, as applicable, with respect to after-acquired U.S. patent and trademark
applications and registrations and U.S. copyrights and (iii) the recordation of
appropriate evidence of the security interest in the appropriate foreign
registry with respect to all foreign intellectual property. The
Continuation Statement (as defined in the Security Agreement) was filed in error
in the State of Wyoming and there are no obligations (financial or otherwise)
due or owing to SunTrust Bank by the Company or any Subsidiary.
11
(u)
Disclosure. All
of the written information furnished on or prior to the date hereof by or on
behalf of the Company or any of its Subsidiaries to you pursuant to or in
connection with this Agreement and the other Transaction Documents, taken as a
whole, was true and complete in all material respects as of the date on which
such information was so provided. All of the written information furnished
after the date hereof by or on behalf of the Company or any of its Subsidiaries
to you pursuant to or in connection with this Agreement and the other
Transaction Documents, taken as a whole, will be true and correct in all
material respects as of the date on which such information is so provided.
All such information, taken as a whole, does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made therein, in light of the circumstances under which any such
statements were made, not misleading. All financial projections and
forecasts that have been prepared by or on behalf of the Company or any of its
Subsidiaries and made available to you have been prepared in good faith based
upon reasonable assumptions and represented, at the time each such financial
projection or forecast was delivered to you, the Company's best estimate of
future financial performance (it being recognized that such financial
projections or forecasts are not to be viewed as facts and that the actual
results during the period or periods covered by any such financial projections
or forecasts may differ from the projected or forecasted results).
3.2
Representations and
Warranties of the Purchasers. Each Purchaser hereby, as to itself
only and for no other Purchaser, represents and warrants to the Company as
follows:
(a)
Organization;
Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, limited liability company or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution, delivery and
performance by such Purchaser of the Transaction Documents to which it is a
party have been duly authorized by all necessary corporate or, if such Purchaser
is not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Purchaser. Each of the
Transaction Documents to which such Purchaser is a party has been duly executed
by such Purchaser and, when delivered by such Purchaser in accordance with terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms.
12
(b)
Investment
Intent. Such Purchaser is acquiring the Securities as principal for
its own account for investment purposes and not with a view to distributing or
reselling such Securities or any part thereof in violation of applicable
securities laws, without prejudice, however, to such Purchaser’s right at all
times to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such Purchaser
to hold the Securities for any period of time. Such Purchaser understands
that the Securities have not been registered under the Securities Act, and
therefore the Securities may not be sold, assigned or transferred unless
pursuant to (i) an effective registration statement under the Securities
Act with respect thereto or (ii) an available exemption from the
registration requirements of the Securities Act.
(c)
Purchaser
Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule
501(a) under the Securities Act. Such Purchaser is not a registered
broker-dealer under Section 15 of the Exchange Act.
(d)
Experience of such
Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(f)
Access to Data.
Such Purchaser has received and reviewed information about the Company and has
had an opportunity to discuss the Company’s business, management and financial
affairs with its management and to review the Company’s facilities. The
foregoing, however, does not limit or modify the representations and warranties
made by the Company in this Agreement or any other provision in this Agreement
or the right of the Purchasers to rely thereon.
(g)
Manipulation of
Price. During the 12-month period immediately preceding the Closing
Date, such Purchaser has not, and to its knowledge no one acting on its or any
of its officers’ or Affiliates’ behalf has taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Securities.
The
Company acknowledges and agrees that each Purchaser does not make and has not
made any representations or warranties with respect to the transactions
contemplated hereby or by any other Transaction Document other than those
specifically set forth in this Section 3.2.
13
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions.
(a)
The Securities may only be disposed of pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any
applicable state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, except as otherwise set forth herein, the Company may require the
transferor to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company
and with its transfer agent, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an “accredited investor” as
defined in Rule 501(a) under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by the terms of
this Agreement (and any other applicable Transaction Document) and shall have
the rights of a Purchaser under this Agreement.
(b) The
Purchasers agree to the imprinting on any certificate evidencing Securities,
except as otherwise permitted by Section 4.1(c),
of a restrictive legend in substantially the form as follows, together with any
additional legend required by (i) any applicable state securities laws and
(ii) any securities exchange upon which such Securities may be
listed:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
14
(c)
Certificates evidencing Securities shall not be required to contain the
legend set forth in Section 4.1(b)
(i) following any sale of such Securities pursuant to an effective
registration statement covering the resale of such Securities under the
Securities Act, (ii) following any sale of such Securities in compliance
with Rule 144, (iii) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall
cause its counsel to issue a legal opinion to the Company’s transfer agent
promptly after the Effective Date (as defined in the Amended Preferred Purchase
Agreement) if required by the Company’s transfer agent to effect the removal of
the legend hereunder. Following the Effective Date or at such earlier time
as a legend is no longer required for certain Securities, the Company will no
later than three (3) Trading Days following the delivery by a Purchaser to the
Company or the Company’s transfer agent of a legended certificate representing
such Securities, deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in Section 4.1(b).
For so long as any Purchaser owns Securities, the Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the shares of Common Stock.
(d)
The Company acknowledges and agrees that a Purchaser
may from time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement secured by the
Securities and, if required under the terms of such agreement, such Purchaser
may transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval of the
Company and no legal opinion of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of
such pledge. At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or transfer of
the Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
shareholders thereunder.
4.2
Furnishing of
Information. As long as any Purchaser owns Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. Upon the
request of any Purchaser, the Company shall deliver to such Purchaser a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as any Purchaser owns Securities, if the
Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Purchasers and make publicly available in accordance with
paragraph (c) of Rule 144 such information as is required for the Purchasers to
sell the Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may reasonably request
to satisfy the provisions of Rule 144 applicable to the issuer of securities
relating to transactions for the sale of securities pursuant to Rule
144.
4.3
Integration.
The Company shall not, and shall use its reasonable best efforts to ensure that
no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
15
4.4
Reservation and Listing of
Securities.
(a)
Following the Reincorporation, the Company shall, as
applicable (i) prepare and timely file with each Trading Market an
additional shares listing application covering all of the Common Shares,
(ii) use reasonable best efforts to cause the Common Shares to be approved
for listing on each Trading Market as soon as practicable thereafter,
(iii) provide to the Purchasers evidence of such listing, and (iv) use
reasonable best efforts to maintain the listing of the Common Shares on each
such Trading Market or another Eligible Market.
(b)
In the case of a breach by the Company of Section 4.4(a),
in addition to the other remedies available to the Purchasers, the Purchasers
shall have the right to require the Company to either: (i) use its
reasonable best efforts to obtain the required shareholder approval necessary to
permit the issuance of such shares of Common Stock as soon as is possible, but
in any event not later than the 60th day
after such notice, or (ii) within five (5) Trading Days after delivery of a
written notice, pay cash to such Purchaser, as liquidated damages and not as a
penalty, in an amount equal to the number of shares of Common Stock not issuable
by the Company times 115% of the average Closing Price over the five (5) Trading
Days immediately prior to the date of such notice or, if greater, the five (5)
Trading Days immediately prior to the date of payment (the “Cash Amount”). If the
exercising or converting Purchaser elects the first option under the preceding
sentence and the Company fails to obtain the required shareholder approval on or
prior to the 60th day
after such notice, then within three (3) Trading Days after such 60th day,
the Company shall pay the Cash Amount to such Purchaser, as liquidated damages
and not as a penalty or as an exclusive remedy hereunder.
16
4.5
Securities Laws
Disclosure; Publicity. Within two (2) Business Days following the
Closing Date, the Company shall issue a press release reasonably acceptable to
the Purchasers disclosing the transactions contemplated hereby. Within two
(2) Business Days of the Closing Date, the Company shall file a Current Report
on Form 8-K with the Commission (the “8-K Filing”) describing the
material terms of the transactions contemplated by the Transaction Documents and
including as exhibits to such Current Report on Form 8-K this Agreement, the
form of the Note and the form of the Amendment, in the form required by the
Exchange Act. Thereafter, the Company shall timely file any filings and
notices required by the Commission or applicable law with respect to the
transactions contemplated hereby and provide copies thereof to the Purchasers
promptly after filing. The Company shall, at least two (2) Trading Days
prior to the filing or dissemination of any disclosure required by this
paragraph, provide a copy thereof to the Purchasers for their review. The
Company and the Purchasers shall consult with each other in issuing any press
releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or Trading Market
with respect to the transactions contemplated hereby, and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other communication without the prior consent of the other, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market (other than as permitted by the Amended Preferred Purchase Agreement, the
Registration Statement, the 8-K Filing and any exhibits to filings made in
respect of this transaction in accordance with periodic filing requirements
under the Exchange Act and any application to list additional shares filed with
the Trading Market), without the prior written consent of such Purchaser, except
to the extent such disclosure (but not any disclosure as to the controlling
Persons thereof) is required by law, Trading Market regulations or the
Commission, in which case the Company shall provide the Purchasers with prior
notice of such disclosure. If at any time the Purchasers do not have a
designee or observer on the Company’s Board of Directors and any Purchaser has
notified the Company that it does not wish to receive any material nonpublic
information, the Company shall not, and shall cause each of its Subsidiaries and
its and each of their respective officers, directors, employees and agents not
to, provide any such Purchaser with any material nonpublic information regarding
the Company or any of its Subsidiaries without the express written consent of
such Purchaser. In the event of a breach of the foregoing covenant by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Purchaser shall have the right to require the
Company to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material nonpublic information. No
Purchaser shall have any liability to the Company, its Subsidiaries, or any of
its or their respective officers, directors, employees, shareholders or agents
for any such disclosure. In addition, if at any other time, a Purchaser so
requests, the Company will confirm to such Purchaser in writing that the Company
does not believe that such Purchaser, or any employee, officer, director, agent
or representative of such Purchaser, has been provided any material non-public
information relating to the Company by the Company or any Subsidiary, or any of
their respective employees, officers, directors, agents or
representatives. In the event that the Company is unable to make such
confirmation, or any Purchaser otherwise requests, the Company will make public
disclosure of any information in the possession of such Purchaser which the
Company or such Purchaser believes might constitute material non-public
information relating to the Company. No Purchaser shall have any liability
to the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, shareholders or agents for any such disclosure.
Subject to the foregoing, neither the Company nor any Purchaser shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as
is required by applicable law and regulations (provided that in the case of
clause (i) each Purchaser shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release).
Each press release disseminated by the Company during the 12 months prior to the
Closing Date did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
17
4.6
Use of
Proceeds. The Company shall use the net proceeds from the sale of
the Securities hereunder as security for the issuance of a letter of credit
issued by Silicon Valley Bank to Zurich American Insurance Company and Fidelity
and Deposit Company of Maryland in the aggregate amount of $4.0 million (the
“Performance
Bond”).
4.7
No Impairment.
At all times after the date hereof, the Company will not take or permit any
action, or cause or permit any Subsidiary to take or permit any action that
impairs or adversely affects the rights of the Purchasers under any Transaction
Document.
4.8
Indemnification.
If any Purchaser or any of its Affiliates or any officer, director, partner,
controlling person, employee or agent of a Purchaser or any of its Affiliates (a
“Related Person”)
becomes involved in any capacity in any Proceeding brought by or against any
Person in connection with or as a result of the transactions contemplated by the
Transaction Documents, the Company will indemnify and hold harmless such
Purchaser or Related Person for its reasonable legal and other expenses
(including the reasonable costs of any investigation, preparation and travel)
and for any Losses incurred in connection therewith, as such expenses or Losses
are incurred, excluding only Losses that result directly from such Purchaser’s
or Related Person’s gross negligence or willful misconduct. In addition,
the Company shall indemnify and hold harmless each Purchaser and Related Person
from and against any and all Losses, as incurred, arising out of or relating to
any misrepresentation or breach by the Company or any Subsidiary of any of the
representations, warranties or covenants made by the Company or any Subsidiary
in this Agreement or any other Transaction Document, or any allegation by a
third party that, if true, would constitute such a breach or
misrepresentation. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by
Section 6.6(c) of the Amended Preferred Purchase Agreement. The
indemnification obligations of the Company under this paragraph shall be in
addition to any liability that the Company or any Subsidiary may otherwise have
and shall be binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Purchasers and any such Related
Persons. If the Company or any Subsidiary breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or reimburse the Purchasers on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses). Without
limiting the generality of the foregoing, the Company specifically agrees to
reimburse the Purchasers on demand for all costs of enforcing the
indemnification obligations in this paragraph.
4.9
Shareholders Rights
Plan. No claim will be made or enforced by the Company or any other
Person that any Purchaser is an “Acquiring Person” or any similar term under any
shareholders rights plan or similar plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company
and the Purchasers.
18
4.10
Delivery of
Certificates. In addition to any other rights available to a
Purchaser, if the Company fails to deliver or cause to be delivered to such
Purchaser a certificate representing Common Stock on the date on which delivery
of such certificate is required by any Transaction Document, and if after such
date such Purchaser purchases (in an open market transaction or otherwise)
Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares that the Purchaser anticipated receiving from the Company (a “Buy-In”), then the Company
shall, within three Trading Days after such Purchaser’s request and in such
Purchaser’s discretion, either (i) pay cash to such Purchaser in an amount
equal to such Purchaser’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point
the Company’s obligation to deliver such certificate (and to issue such Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to
such Purchaser a certificate or certificates representing such Common Stock and
pay cash to such Purchaser in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Price on the date of the event giving rise to the
Company’s obligation to deliver such certificate.
4.11
Access. In
addition to any other rights provided by law or set forth herein, from and after
the date of this Agreement and for so long as any Notes remain outstanding, the
Company shall, and shall cause each of the Subsidiaries, to give each Purchaser
and its representatives, at the request of the Purchasers, access during
reasonable business hours to (a) all properties, assets, books, contracts,
commitments, reports and records relating to the Company and the Subsidiaries,
and (b) the management, accountants, lenders, customers and suppliers of
the Company and the Subsidiaries; provided, however, that the Company shall not
be required to provide such Purchaser access to any information or Persons if
the Company reasonably determines that access to such information or Persons
(x) would adversely affect the attorney-client privilege between the
Company and its counsel and cannot be provided to the Purchasers in a manner
that would avoid the adverse affect on the attorney-client privilege between the
Company and its counsel, (y) would result in the disclosure of trade
secrets, material nonpublic information or other confidential or proprietary
information and cannot be provided to the Purchasers in a manner that would
avoid the disclosure of trade secrets, material nonpublic information or other
confidential or proprietary information, or (z) would violate the
requirements of any Governmental Authority, applicable law or regulation with
respect to the confidentiality of information or security clearances and cannot
be provided to the Purchasers in a manner that would not violate any such
requirements, law or regulation; provided further that the Company shall be
required to provide such Purchaser with access to the information contemplated
in clause (y) if the Purchaser signs a customary confidentiality agreement with
the Company with respect to such information.
4.12 Amendments to Transaction
Documents. So long as any principal amount of the Notes purchased
on the Closing Date are outstanding, the Company shall not, and shall not permit
any of its Subsidiaries to, enter into or become or remain subject to any
agreement or instrument, except for the Transaction Documents, that would
prohibit or require the consent of any Person to any amendment, modification or
supplement to any of the Transaction Documents.
19
4.13 Closing
Documents. On or prior to fourteen (14) calendar days after the
Closing Date, the Company agrees to deliver, or cause to be delivered, to each
Purchaser and Xxxxxxxxx Xxxxxxx, LLP executed copies of the Transaction
Documents, Securities and other documents required to be delivered to any party
pursuant to Article 5 hereof.
ARTICLE
V.
CONDITIONS
5.1
Conditions Precedent
to the Obligations of the Purchasers. The obligation of each
Purchaser hereunder to purchase its Note and its related Common
Shares at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for each Purchaser’s sole benefit and may be waived by such Purchaser at any
time in its sole discretion by providing the Company with prior written notice
thereof:
(a) The
Company and each Subsidiary (as the case may be) shall have duly executed and
delivered to such Purchaser each of the Transaction Documents to which it is a
party and the Company shall have duly executed and delivered to such Purchaser a
Note (in such original principal amount as is set forth across from such
Purchaser’s name in column (3) of the Schedule of Purchasers and the related Common
Shares (for such aggregate number of shares of Common Stock as is set forth
across from such Purchaser’s name in column (4) of the Schedule of Purchasers,
respectively) being purchased by such Purchaser at the Closing pursuant to this
Agreement.
(b) Such
Purchaser shall have received the opinion of K&L Gates LLP, the Company’s
counsel, dated as of the Closing Date, in the form attached hereto as Exhibit
F.
(c) The
parties to the Amendment (other than such Purchaser) shall have executed and
delivered the Amendment to such Purchaser.
(d) The
Company shall have delivered to such Purchaser a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in each
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within ten
(10) days of the Closing Date.
(e) The
Company shall have delivered to such Purchaser a certificate evidencing the
Company’s and each Subsidiary’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each
jurisdiction in which the Company and each Subsidiary conducts business and is
required to so qualify, as of a date within ten (10) days of the Closing
Date.
(f) The
Company shall have delivered to such Purchaser a certified copy of the Articles
of Incorporation as certified by the Wyoming Secretary of State within ten (10)
days of the Closing Date.
(g)
Each Subsidiary shall have delivered to such Purchaser a certified copy of its
certificate of incorporation as certified by the Secretary of State (or
comparable office) of such Subsidiary’s jurisdiction of incorporation within ten
(10) days of the Closing Date.
20
(h) The
Company and each Subsidiary shall have delivered to such Purchaser a
certificate, in the form attached hereto as Exhibit
G, executed by the Secretary of the Company and each Subsidiary and dated
as of the Closing Date, as to (i) the resolutions authorizing the transactions
contemplated by the Transaction Documents as adopted by the Company’s and each
Subsidiary’s board of directors in a form reasonably acceptable to such
Purchaser, (ii) the Articles of Incorporation of the Company and the
organizational documents of each Subsidiary and (iii) the Bylaws of the Company
and the bylaws of each Subsidiary, each as in effect at the
Closing.
(i)
Each and every representation and warranty of the Company shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required to
be performed, satisfied or complied with by the Company at or prior to the
Closing Date. Such Purchaser shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Purchaser in the form attached hereto as Exhibit
H.
(j)
The Company shall have delivered to such Purchaser a letter from the Company’s
transfer agent certifying the number of shares of Common Stock outstanding on
the Closing Date immediately prior to the Closing.
(k) The
Common Stock (I) shall be designated for quotation or listed on the Principal
Market and (II) shall not have been suspended, as of the Closing Date, by the
Commission or the Principal Market from trading on the Principal Market nor
shall suspension by the Commission or the Principal Market have been threatened,
as of the Closing Date, either (A) in writing by the Commission or the Principal
Market or (B) by falling below the minimum maintenance requirements of the
Principal Market.
(l) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities, including
without limitation, those required by the Principal Market.
(m) No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or other
Governmental Authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction
Documents.
(n)
Since the date of execution of this Agreement, no event or series of events
shall have occurred that reasonably would have or result in a Material Adverse
Effect.
(o)
In accordance with the terms of the Security Documents, the Company
shall have delivered to such Purchaser appropriate financing statements on Form
UCC-1 to be duly filed in such office or offices as may be necessary or, in the
opinion of the Purchasers, desirable to perfect the security interests purported
to be created by each Security Document.
21
(p)
Within two (2) Business Days prior to the Closing, the Company shall have
delivered or caused to be delivered to each Purchaser (i) true copies of UCC
search results, listing all effective financing statements which name as debtor
the Company or any of its Subsidiaries filed in the prior five years to perfect
an interest in any assets thereof, together with copies of such financing
statements, none of which, except with respect to any Permitted Liens (as
defined in the Notes) or as otherwise agreed in writing by the Purchasers, shall
cover any of the Collateral (as defined in the Security Documents) and the
results of searches for any tax lien and judgment lien filed against such Person
or its property, which results, except with respect to any Permitted Liens or as
otherwise agreed to in writing by the Purchasers shall not show any such Liens
(as defined in the Security Documents); and (ii) a perfection certificate, duly
completed and executed by the Company and each of its Subsidiaries, in form and
substance satisfactory to the Purchasers.
(q) The
Company shall have delivered, by wire transfer of U.S. dollars and immediately
available funds, the fees and expenses to be paid by the Company in accordance
with Section 6.2 below.
(r)
The Company and its Subsidiaries shall have delivered to such Purchaser such
other documents relating to the transactions contemplated by this Agreement as
such Purchaser or its counsel may reasonably request.
5.2
Conditions Precedent to the
Obligations of the Company. The obligation of the Company hereunder
to issue and sell the Notes and the related Common
Shares to each Purchaser at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Purchaser with
prior written notice thereof:
(a) Such
Purchaser shall have executed each of the other Transaction Documents to which
it is a party and delivered the same to the Company.
(b)
Such Purchaser and each other Purchaser shall have delivered to the Company the
Purchase Price for the Note and the related Common Shares being purchased by
such Purchaser at the Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(c)
The representations and warranties of such Purchaser shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such
date), and such Purchaser 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 Purchaser at or
prior to the Closing Date.
(d) The
parties to the Amendment (other than the Company) shall have executed and
delivered the Amendment to the Company.
22
(e)
No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or other
Governmental Authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction
Documents.
ARTICLE
VI.
MISCELLANEOUS
6.1
Termination.
This Agreement may be terminated by Xxxx Capital, by written notice to the other
parties, if the Closing has not been consummated within five business days of
the date hereof; provided that no such termination will affect the right of any
party to xxx for any breach by the other party (or parties).
6.2
Fees and
Expenses. At the Closing, the Company shall pay to the Purchasers
in cash by wire transfer of immediately available funds the legal and due
diligence fees and expenses incurred by them in connection with the preparation
and negotiation of the Transaction Documents, which is $95,000 as of the
Closing. In lieu of the foregoing remaining payments, the Purchasers may
retain such amounts at the Closing. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The
Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the issuance of any Securities.
6.3
Entire
Agreement. The Transaction Documents, together with the Exhibits
and Schedules thereto and the respective nondisclosure agreements between the
Company and the Purchasers, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
At or after the Closing, and without further consideration, the Company will
execute and deliver to the Purchasers such further documents as may be
reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
6.4
Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided under this Agreement or any other Transaction Document shall be in
writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) the Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, specifying next business day delivery or
(iv) upon actual receipt by the party to whom such notice is required to be
given if delivered by hand. The address for such notices and
communications shall be as follows:
23
|
If
to the Company:
|
|
|
0000
Xxx Xxxx Xxx.
|
|
|
0xx
Xxxxx
|
|
|
Xxxxxxxxx,
XX 00000
|
|
|
Attn.:
Xxxxx X. XxXxxxxxxx
|
|
|
Tel.:
(000) 000-0000
|
|
|
Fax:
(000) 000-0000
|
|
|
With
a copy to:
|
K&L
Gates
|
|
Wachovia
Financial Center, Suite 3900,
|
|
|
000
Xxxxx Xxxxxxxx Xxxxxxxxx
|
|
|
Xxxxx,
Xxxxxxx 00000-0000
|
|
|
Attn.:
Xxxxxxx X. Xxxxxx
|
|
|
Tel.:
(000) 000-0000
|
|
|
Fax:
(000) 000-0000
|
|
|
If
to the Purchasers:
|
To
the address set forth under such Purchaser’s
name
on the signature pages attached hereto.
|
|
With
a copy to:
|
Xxxxxxxxx
Traurig, LLP
|
|
MetLife
Building
|
|
|
000
Xxxx Xxxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Attention:
Xxxxxxx X. Xxxxxxxxx, Esq.
|
or such
other address as may be designated in writing hereafter, in the same manner, by
such Person by two Trading Days’ prior notice to the other party in accordance
with this Section 6.4.
6.5
Amendments;
Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by Xxxx
Capital and the Company, or, in the case of a waiver, by Xxxx Capital. Any
waiver executed by Xxxx Capital shall be binding on the Company all Purchasers
hereunder and all holders of Notes and/or Common Shares, as applicable. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered on identical terms to
all of the parties to the Transaction Documents that are holders of
Notes.
6.6
Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
24
6.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder,
other than pursuant to the Company’s reincorporation as contemplated by Section 4.19 of the
Amended Preferred Purchase Agreement (the “Reincorporation”), without the
prior written consent of the Purchasers. Any Purchaser may assign its
rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof and
of the applicable Transaction Documents that apply to the “Purchasers.”
Notwithstanding anything to the contrary herein, Securities may be pledged to
any Person in connection with a bona fide margin account or other loan or
financing arrangement secured by such Securities.
6.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except that each Related Person is an intended third party beneficiary
of Section 4.8
and (in each case) may enforce the provisions of such Sections directly
against the parties with obligations thereunder.
6.9 Governing Law; Venue; Waiver
of Jury Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York (except for matters governed by corporate law in the State of Wyoming),
without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of Manhattan.
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, Borough of
Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of this Agreement), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such
Proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any Proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of this Agreement, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its attorneys’ fees and other reasonable costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
25
6.10 Survival. The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery, exercise and/or conversion of the
Securities, as applicable.
6.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an original
thereof.
6.12 Severability.
If any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
6.13 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.
6.14
Replacement of
Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.
6.15 Remedies. In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction Documents. The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree that, in any action for specific performance of any
such obligation, it shall not assert or shall waive the defense that a remedy at
law would be adequate.
26
6.16
Payment Set
Aside. To the extent that the Company makes a payment or payments
to any Purchaser hereunder or any Purchaser enforces or exercises its rights
hereunder 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
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
6.17
Usury. To
the extent it may lawfully do so, the Company hereby agrees not to insist upon
or plead or in any manner whatsoever claim, and will resist any and all efforts
to be compelled to take the benefit or advantage of, usury laws wherever
enacted, now or at any time hereafter in force, in connection with any claim,
action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”), and, without
limiting the foregoing, in no event shall any rate of interest or default
interest, or both of them, when aggregated with any other sums in the nature of
interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate of interest applicable to the
Transaction Documents from the effective date forward, unless such application
is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to any Purchaser
with respect to indebtedness evidenced by the Transaction Documents, such excess
shall be applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser’s election.
6.18
Independent Nature of
Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase
Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Document. The Company hereby confirms that it understands and
agrees that the Purchasers are not acting as a “group” as that term is used in
Section 13(d) of the Exchange Act. Each Purchaser acknowledges that
no other Purchaser has acted as agent for such Purchaser in connection with
making its investment hereunder and that no other Purchaser will be acting as
agent of such Purchaser in connection with monitoring its investment
hereunder. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
27
6.19
Adjustments in Share
Numbers and Prices. In the event of any stock split, subdivision,
dividend or distribution payable in shares of Common Stock (or other securities
or rights convertible into, or entitling the holder thereof to receive directly
or indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each reference in
this Agreement to a number of shares or a price per share shall be amended to
appropriately account for such event.
6.20
Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
[The
remainder of the page is intentionally left blank]
28
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
|
By:
|
/s/Xxxxx X. XxXxxxxxxx
|
|
Xxxxx
X. XxXxxxxxxx
|
|
|
President
and Chief Executive
Officer
|
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES OF PURCHASERS FOLLOW.]
29
|
PURCHASERS:
|
|
|
XXXX
CAPITAL PARTNERS, LP
|
|
|
By:
|
/s/Xxxxxx Xxxx
|
|
Name:
|
|
|
Title:
|
|
|
Address
for Notice:
000
Xxxxxxxxx Xxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
|
|
|
Facsimile
No.: (000) 000-0000
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Attn.: Xxxxxx
X. Xxxx, Xx.
|
|
30
|
PURCHASERS:
|
|
|
EREF
PARA, LLC
|
|
|
By:
Xxxx Fund Management, LLC, its Managing Member
|
|
|
By:
|
/s/Xxxxxx Xxxx
|
|
Name:
Title:
|
|
|
Address
for Notice:
|
|
|
000
Xxxxxxxxx Xxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
|
|
|
Facsimile
No.: (000) 000-0000
|
|
|
Telephone
No.: (000) 000-0000
|
|
|
Attn.: Xxxxxx
X. Xxxx, Xx.
|
31
SCHEDULE
OF PURCHASERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
||||||||||
|
Purchaser
|
Address and Facsimile
Number
|
Principal
Amount of
Note
|
Number of
Common Shares
|
Purchase
Price
|
Legal Representative’s
Address and Facsimile Number
|
||||||||||
|
EREF
PARA, LLC
|
000
Xxxxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Telephone:
Facsimile:
E-Mail:
Residence:
|
$ | 1,981,952.95 | 1,698,819 | $ | 1,981,952.95 |
Xxxxxxxxx
Xxxxxxx, LLP
MetLife
Building
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxxxxx, Esq.
E-Mail:
xxxxxxxxxx@xxxxx.xxx
|
||||||||
|
Xxxx
Capital Partners, LP
|
000
Xxxxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Telephone:
Facsimile:
E-Mail:
Residence:
|
$ | 2,018,047.05 | 1,729,752 | $ | 2,018,047.05 |
Xxxxxxxxx
Traurig, LLP
MetLife
Building
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
X. Xxxxxxxxx, Esq.
E-Mail:
xxxxxxxxxx@xxxxx.xxx
|
||||||||
32
