EXHIBIT 4.9
AT COMM CORPORATION
STOCK PURCHASE AND INVESTOR RIGHTS AGREEMENT
This Stock Purchase and Investor Rights Agreement (this "Agreement") is
made and entered into as of December 21, 2000, by and between At Comm
Corporation, a Delaware corporation (the "Company"), and each of the persons
listed on Exhibit A hereto, each of which is herein referred to as an
"Investor."
RECITALS
WHEREAS, the Company desires to sell to each Investor, and each
Investor desires to purchase from the Company, shares of Series C Preferred
Stock, par value $.01 per share, of the Company (the "Series C Preferred
Stock"), on the terms and conditions set forth in this Agreement;
WHEREAS, such Series C Preferred Stock will be convertible into shares
of the Common Stock, par value $.01 per share, of the Company (the "Common
Stock");
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) Authorization. As of the first Closing (as defined below),
the Company's Board of Directors (the "Board") will have authorized the issuance
and sale, pursuant to the terms and conditions of this Agreement, of up to
1,082,000 shares of Series C Preferred Stock, in one or more closings, having
the rights, preferences, privileges and restrictions set forth in the
Certificate of Designations, Preferences and Other Rights of Series C Preferred
Stock in the form attached hereto as Exhibit B (the "Certificate of
Designations") and up to 1,082,000 shares of Common Stock for issuance upon
conversion of the Series C Preferred Stock.
(b) Agreement to Purchase and Sell Securities. Subject to the
terms and conditions hereof, the Company hereby agrees to issue and sell to each
Investor and each Investor hereby agrees to acquire from the Company, the number
of shares of Series C Preferred Stock specified opposite each Investor's name on
Exhibit A hereto (collectively, the "Purchased Shares") at a price per share in
cash equal to the Per Share Purchase Price (as defined below), for an aggregate
cash consideration equal to such number of shares of Series C Preferred Stock,
multiplied by the Per Share Purchase Price. As used in this Agreement, the "Per
Share Purchase Price" shall be equal to fifteen dollars ($15.00). Exhibit A
shall be revised with respect to each Closing to reflect the identity of the
Investors and the number of shares purchased by each Investor at each Closing.
Each Investor participating in a Closing under this agreement shall be an
"Investor" within the meaning of this Agreement, and the shares of Series C
Preferred Stock purchased by such Investors shall be "Purchased Shares" within
the meaning of this Agreement.
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(c) Use of Proceeds. The Company intends to, and will (subject
to modification by Board approval) apply the net proceeds from the sale of the
Purchased Shares for corporate purposes disclosed to the Investors by the
Company prior to the date hereof.
2. CLOSING.
(a) The purchase and sale of the Purchased Shares shall take
place at one or more closings (each a "Closing"). At each Closing, the Company
will deliver to each Investor certificates representing the Purchased Shares
against delivery to the Company by each Investor of the consideration set forth
in Section 1(b) paid by wire transfer of funds to the Company. Closing documents
may be delivered by facsimile with original signature pages sent by overnight
courier.
(b) The Closings shall occur at the offices of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx at 2:00 p.m.
Pacific Daylight Time, within three (3) business days after the conditions set
forth in Section 5 have been satisfied, or at such other time and place as the
Company and each Investor mutually agree upon. All Closings shall occur on or
before ______ __, 2000.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that the
statements in this Section 3 are true and correct, except as set forth in the
Disclosure Letter from the Company of even date herewith (the "Disclosure
Letter") or disclosed in the SEC Documents (as defined below):
(a) Organization Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority required
to (a) carry on its business as presently conducted, and (b) enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect. As used
in this Agreement, "Material Adverse Effect" means a material adverse effect on,
or a material adverse change in, or a group of such effects on or changes in,
the business, operations, financial condition, results of operations, prospects,
assets or liabilities of the applicable party and its subsidiaries, taken as a
whole.
(b) Capitalization. The capitalization of the Company, without
giving effect to the transactions contemplated by this Agreement, is as follows.
The authorized stock of the Company consists of 50,000,000 shares of Common
Stock and 10,000,000 shares of Preferred Stock, of which 1,907,989 shares have
been designated Series A Preferred Stock, 1,020,000 shares have been designated
Series B Preferred Stock and 1,082,000 shares will have been designated Series C
Preferred Stock. As of September 30, 2000, there were issued and outstanding
5,417,549 shares of Common Stock, no shares of Series A Preferred Stock, 816,500
shares of Series B Preferred Stock and no shares of Series C Preferred Stock.
All such shares of Common Stock and Preferred Stock have been duly authorized,
and all such issued and outstanding shares of Common Stock and Preferred Stock
have been validly issued, are fully paid and nonassessable and are free and
clear of
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all liens, claims and encumbrances, other than any liens, claims or encumbrances
created by or imposed upon the holders thereof. As of September 30, 2000, the
Company has also reserved 1,500,000 shares of Common Stock for issuance upon
exercise of options granted to officers, directors, employees or independent
contractors or affiliates of the Company under the Company's Restated 1984 Stock
Option Plan and the Company's 1994 Stock Plan. As of September 30, 2000, of the
1,500,000 shares of Common Stock reserved for issuance upon exercise of options,
1,075,804 shares remained subject to outstanding options with a weighted average
exercise price of approximately $14.61 per share, and 332,172 shares were
reserved for future grant. All shares of Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no other equity
securities, options, warrants, calls, rights, commitments or agreements of any
character to which the Company is a party or by which it is bound obligating the
Company to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of the capital stock of the
Company or obligating the Company to grant, extend or enter into any such equity
security, option, warrant, call, right, commitment or agreement. The Company
does not have any subsidiaries, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any other interest
(including, without limitation, any equity or partnership interest) in, or any
outstanding loan or advance to or from, any person or entity.
(c) Due Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery of, and the performance of all obligations of
the Company under this Agreement, and the authorization, issuance, reservation
for issuance and delivery of all of the Purchased Shares being sold under this
Agreement, has been taken, and this Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except (a) as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies and (b) as rights
to indemnity or contribution may be limited under federal or state securities
laws or by principles of public policy thereunder.
(d) Valid Issuance of Stock.
(i) Valid Issuance. The shares of Series C Preferred
Stock to be issued pursuant to this Agreement, and the shares of Common Stock
issuable upon conversion thereof, will be, upon payment therefor by each
Investor in accordance with this Agreement, or conversion in accordance with the
Certificate of Designations, duly authorized, validly issued, fully paid and
non-assessable.
(ii) Compliance with Securities Laws. Assuming the
correctness of the representations made by each Investor in Section 4 hereof,
the Purchased Shares will be issued to each Investor in compliance with
applicable exemptions from (i) the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and (ii) the registration and qualification requirements of all applicable
securities laws of the states of the United States.
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(e) Governmental Consents. No consent, approval, order or
authorization of, or registration qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for: (i) compliance with the HSR
Requirements (as defined below) that may be required for the voluntary
conversion of the Series C Preferred Stock; (ii) the filing of a Form 8-K with
the Securities and Exchange Commission ("SEC") following the Closing; (iii) the
filing of such qualifications or filings under the Securities Act and the
regulations thereunder and all applicable state securities laws as may be
required in connection with the transactions contemplated by this Agreement;
(iv) the listing of the Common Stock issuable upon conversion of the Series C
Preferred Stock on the Nasdaq SmallCap Market and (v) the filing of the
Certificate of Designations with the Secretary of State of the State of
Delaware. All such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law. As used herein, the term "HSR
Requirements" means compliance with the filing and other requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
(f) Non-Contravention. The execution, delivery and performance
of this Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby, do not and will not (i) contravene or conflict
with the Certificate of Incorporation or Bylaws of the Company; (ii) constitute
a violation of any provision of any federal, state, local or foreign law binding
upon or applicable to the Company; or (iii) constitute a default or require any
consent under, give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit to which the Company is entitled
under, or result in the creation or imposition of any lien, claim or encumbrance
on any assets of the Company under, any contract to which the Company is a party
or any permit, license or similar right relating to the Company or by which the
Company may be bound or affected in such a manner as, together with all other
such matters, would have Material Adverse Effect.
(g) Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending or, to the best of the Company's
knowledge, threatened: (i) against the Company, its activities, properties or
assets, or any officer, director or employee of the Company in connection with
such officer's, director's or employee's relationship with, or actions taken on
behalf of, the Company, that is reasonably likely to have a Material Adverse
Effect, or (ii) that seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement. The Company is not a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. No Action by the Company is currently
pending nor does the Company intend to initiate any Action that is reasonably
likely to have a Material Adverse Effect.
(h) Compliance with Law and Charter Documents. The Company is
not in violation or default of any provisions of its Certificate of
Incorporation or Bylaws, both as amended. The Company has complied and is in
compliance with all applicable statutes, laws, rules, regulations and orders of
the United States of America and all states thereof, foreign countries and other
governmental bodies and agencies having jurisdiction over the Company's business
or properties, except for any violations that would not, either individually or
in the aggregate, have a Material Adverse Effect.
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(i) SEC Documents.
(i) Reports. The Company has furnished to each
Investor prior to the date hereof copies of its Annual Report on Form 10-K SB
for the fiscal year ended December 31, 1999 ("Form 10-K"), its Quarterly Reports
on Form 10-Q SB for the fiscal quarters ended March 31, June 30, and September
30, 2000 (the "Form 10-Q's"), and all other registration statements, reports and
proxy statements filed by the Company with the SEC on or after December 31, 1999
(the Form 10-K, the Form 10-Q's and such registration statements, reports and
proxy statements are collectively referred to herein as the "SEC Documents").
Each of the SEC Documents, as of the respective date thereof (or if amended or
superseded by a filing prior to the closing date of this Agreement, then on the
date of such filing), did not, and each of the registration statements, reports
and proxy statements filed by the Company with the SEC after the date hereof and
prior to the Closing will not, as of the date thereof (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company is
not a party to any material contract, agreement or other arrangement that was
required to have been filed as an Exhibit to the SEC Documents that was not so
filed.
(ii) Financial Statements. The Company has provided
each Investor with copies of its audited financial statements (the "Audited
Financial Statements") for the fiscal year ended December 31, 1999, and its
unaudited financial statements for the nine-month period ended September 30,
2000 (the "Balance Sheet Date"). Since the Balance Sheet Date, the Company has
duly filed with the SEC all registration statements, reports and proxy
statements required to be filed by it under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Securities Act. The audited and
unaudited consolidated financial statements of the Company included in the SEC
Documents filed prior to the date hereof fairly present, in conformity with
generally accepted accounting principles ("GAAP") (except, in the case of the
Form 10-Q's, as may otherwise be permitted by Form 10-Q) applied on a consistent
basis (except as otherwise may be stated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject to normal year-end audit adjustments in the
case of unaudited interim financial statements).
(j) Absence of Certain Changes Since Balance Sheet Date. Since
the Balance Sheet Date, the business and operations of the Company have been
conducted in the ordinary course consistent with past practice, and there has
not been:
(i) any declaration, setting aside or payment of any
dividend or other distribution of the assets of the Company with respect to any
shares of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company or any subsidiary of the Company of any outstanding
shares of the Company's capital stock;
(ii) any damage, destruction or loss, whether or not
covered by insurance, except for such occurrences, individually and
collectively, that have not resulted, and are not expected to result, in a
Material Adverse Effect;
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(iii) any waiver by the Company of a valuable right
or of a material debt owed to it, except for such waivers, individually and
collectively, that have not resulted and are not expected to result, in a
Material Adverse Effect;
(iv) any material change or amendment to, or any
waiver of any material right under a material contract or arrangement by which
the Company or any of its assets or properties is bound or subject, except for
changes, amendments or waivers, individually and collectively, that are
expressly provided for or disclosed in this Agreement or that have not resulted,
and are not expected to result, in a Material Adverse Effect;
(v) any change by the Company in its accounting
principles, methods or practices or in the manner it keeps its accounting books
and records, except any such change required by a change in GAAP; or
(vi) any other event or condition of any character,
except for such events and conditions that have not resulted, and are not
expected to result, either individually or collectively, in a Material Adverse
Effect.
(k) Invention Assignment and Confidentiality Agreement. Each
employee and consultant or independent contractor of the Company whose duties
include the development of products or Intellectual Property (as defined below),
and each former employee and consultant or independent contractor whose duties
included the development of products or Intellectual Property, has entered into
and executed an invention assignment and confidentiality agreement in customary
form or an employment or consulting agreement containing substantially similar
terms.
(l) Intellectual Property.
(i) Ownership or Right to Use. To the best of the
Company's knowledge, the Company has sole title to and owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents or patent
applications, software, know-how, registered or unregistered trademarks and
service marks and any applications therefor, registered or unregistered
copyrights, trade names, and any applications therefor, trade secrets or other
confidential or proprietary information ("Intellectual Property") necessary to
enable the Company to carry on its business as currently conducted, except where
any deficiency, or group of deficiencies, would not have a Material Adverse
Effect.
(ii) Licenses; Other Agreements. The Company is not
currently the licensee of any material portion of the Intellectual Property of
the Company. There are not outstanding any licenses or agreements of any kind
relating to any Intellectual Property owned by the Company, except for
agreements with customers of the Company entered into in the ordinary course of
the Company's business and other licenses and agreements that, collectively, are
not material. The Company is not obligated to pay any royalties or other
payments to third parties with respect to the marketing, sale, distribution,
manufacture, license or use of any Intellectual Property, except as the Company
may be so obligated in the ordinary course of its business, as disclosed in the
Company's SEC Documents (as defined below) or where the aggregate amount of such
payments could not reasonably be expected to be material.
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(iii) No Infringement. To the best of the Company's
knowledge, the Company has not violated or infringed and is not currently
violating or infringing, and the Company has not received any communications
alleging that the Company (or any of its employees or consultants) has violated
or infringed, any Intellectual Property of any other person or entity, to the
extent that any such violation or infringement, either individually or together
with all other such violations and infringements, would have a Material Adverse
Effect.
(iv) Employees and Consultants. To the best of the
Company's knowledge, no employee of or consultant to the Company is in default
under any term of any employment contract, agreement or arrangement relating to
Intellectual Property of the Company or any non-competition arrangement, other
contract or any restrictive covenant relating to the Intellectual Property of
the Company, where such default, together with all other such defaults, would
have a Material Adverse Effect. The Intellectual Property of the Company (other
than any Intellectual Property duly acquired or licensed from third parties) was
developed entirely by the employees of or consultants to the Company during the
time they were employed or retained by the Company, and to the best knowledge of
the Company, at no time during conception or reduction to practice of such
Intellectual Property of the Company were any such employees or consultants
operating under any grant from a government entity or agency or subject to any
employment agreement or invention assignment or non-disclosure agreement or any
other obligation with a third party that would materially and adversely affect
the Company's rights in the Intellectual Property of the Company. Such
Intellectual Property of the Company does not, to the best knowledge of the
Company, include any invention or other intellectual property of such employees
or consultants made prior to the time such employees or consultants were
employed or retained by the Company nor any intellectual property of any
previous employer of such employees or consultants nor the intellectual property
of any other person or entity.
(m) Registration Rights. Except as provided in this Agreement,
effective upon the Closing, the Company is not currently subject to any grant or
agreement to grant to any person or entity any rights (including piggyback
registration rights) to have any securities of the Company registered with the
SEC or registered or qualified with any other governmental authority.
(n) Title to Property and Assets. The properties and assets of
the Company are owned by the Company free and clear of all mortgages, deeds of
trust, liens, charges, encumbrances and security interests except for statutory
liens for the payment of current taxes that are not yet delinquent and liens,
encumbrances and security interests that arise in the ordinary course of
business and do not in any material respect affect the properties and assets of
the Company. With respect to the property and assets it leases, the Company is
in compliance with such leases in all material respects.
(o) Tax Matters. The Company has filed all material tax
returns required to be filed, which returns are true and correct in all material
respects, and the Company is not in default in the payment of such taxes,
including penalties and interest, assessments, fees and other charges, other
than those being contested in good faith and for which adequate reserves have
been provided or those currently payable without interest that were payable
pursuant to said returns or any assessments with respect thereto.
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(p) Full Disclosure. The information contained in this
Agreement, the Disclosure Letter and the SEC Documents with respect to the
business, operations, assets, results of operations and financial condition of
the Company, and the transactions contemplated by this Agreement , are true and
complete in all material respects and do not omit to state any material fact or
facts necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(q) Finder's Fee. The Company shall issue to Xxxx Xxxxxx a
Warrant for 25,000 shares of Common Stock, at an exercise price of the Fair
Market Value (as defined below) of the Common Stock on the date of issuance of
the Warrant, in consideration for a finder's fee in connection with this
transaction. For the purposes of this paragraph, Fair Market Value shall be
deemed to be the average of the closing high bid and low asked prices quoted on
the principal securities on which the Common Stock is listed for trading.
(r) Small Business Concern. The Company is a "small business
concern" within the meaning of the federal Small Business Investment Act of
1958, as amended, and the regulations thereunder, and Part 121 of the United
States Code of Federal Regulations. The information set forth on SBA Forms 480,
652D and 1031 furnished by the Company to the Investors that are Small Business
Investment Companies (each, an "SBIC") is complete and correct in all material
respects. Furthermore, as long as any SBIC is an investor in the Company, the
Company will provide the SBIC any information that is reasonably requested by
the Small Business Administration ("SBA"). The Company will provide SBA
examiners access to its books and records for SBA audit purposes in accordance
with ordinary SBA procedures.
(s) Real Property Holding Corporation. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF EACH INVESTOR.
Each Investor hereby severally, and not jointly, represents and
warrants to the Company, and agrees that:
(a) Organization Good Standing and Qualification. The Investor
is either
(i) a corporation duly organized, validly existing
and in good standing under the laws of the state or nation indicated on Exhibit
A and has all corporate power and authority required to (A) carry on its
business as presently conducted, and (B) enter into this Agreement and the other
agreements, instruments and documents contemplated hereby, and to consummate the
transactions contemplated hereby and thereby, or
(ii) a partnership duly organized, validly existing
and in good standing under the laws of the state indicated on Exhibit A and has
all power and authority required to (A) carry on its business as presently
conducted, and (B) enter into this Agreement and the other agreements,
instruments and documents contemplated hereby, and to consummate the
transactions contemplated hereby and thereby.
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The Investor is qualified to do business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
(b) Authorization. This Agreement has been duly authorized by
all necessary corporate or partnership action, as applicable, on the part of the
Investor. This Agreement constitutes the Investor's legal, valid and binding
obligation, enforceable in accordance with its terms, except as may be limited
by (i) applicable bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies. Each Investor has, as applicable, full corporate or
partnership power and authority to enter into this Agreement.
(c) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Investor is required in connection with the consummation of the transactions
contemplated by this Agreement, except for the filing of such qualifications or
filings under the Securities Act or the Exchange Act and the regulations
thereunder and all applicable state securities laws as may be required in
connection with the transactions contemplated by this Agreement. All such
qualifications and filings will, in the case of qualifications, be effective on
the Closing and will, in the case of filings, be made within the time prescribed
by law.
(d) Non-Contravention. The execution, delivery and performance
of this Agreement by the Investor, and the consummation by the Investor of the
transactions contemplated hereby, do not and will not (i) contravene or conflict
with the Certificate of Incorporation, Bylaws, or the Partnership Agreement or
comparable governing document, as applicable, of the Investor; (ii) constitute a
violation of any provision of any federal, state, local or foreign law binding
upon or applicable to the Investor; or (iii) constitute a default or require any
consent under, give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit to which the Investor is entitled
under, or result in the creation or imposition of any lien, claim or encumbrance
on any assets of the Investor under, any contract to which the Investor is a
party or any permit, license or similar right relating to the Investor or by
which the Investor may be bound or affected in such a manner as, together with
all other such matters, would have a Material Adverse Effect.
(e) Litigation. There is no Action pending against the
Investor that seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.
(f) Purchase for Own Account. The Purchased Shares to be
purchased by the Investor are being acquired for investment for the Investor's
own account, not as a nominee or agent, and not with a view to the public resale
or distribution thereof within the meaning of the Securities Act, and the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Investor also represents that it has not
been formed for the specific purpose of acquiring its Purchased Shares.
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(g) Investment Experience. The Investor understands that its
purchase of the Purchased Shares to be purchased by the Investor involves
substantial risk. The Investor has experience as an investor in securities of
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment in the Purchased Shares and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of this investment in the Purchased Shares and protecting
its own interests in connection with this investment.
(h) Accredited Investor Status. The Investor is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
(i) Restricted Securities. The Investor understands that the
Purchased Shares are characterized as "restricted securities" under the
Securities Act, inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. The
Investor is familiar with Rule 144 of the SEC, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
(j) Legends. The Investor agrees that the certificates for the
Purchased Shares shall bear the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 or with any state securities commission, and
may not be transferred or disposed of by the holder in the absence of a
registration statement which is effective under the Securities Act of 1933 and
applicable state laws and rules, or, unless, immediately prior to the time set
for transfer, such transfer may be effected without violation of the Securities
Act of 1933 and other applicable state laws and rules."
In addition, the Investor agrees that the Company may place stop
transfer orders with its transfer agents with respect to such certificates. The
appropriate portion of the legend and the stop transfer orders will be removed
promptly upon delivery to the Company of such satisfactory evidence as
reasonably may be required by the Company that such legend or stop orders are
not required to ensure compliance with the Securities Act.
(k) Finder's Fee. The Investor neither is nor will be
obligated for any finder's or broker's fee or commission in connection with this
transaction.
5. CONDITIONS TO EACH INVESTOR'S OBLIGATIONS AT CLOSING.
(a) The obligations of each Investor under Sections l and 2 of
this Agreement are subject to the fulfillment or waiver, on or before the
respective Closing, of each of the following conditions:
(i) Representations and Warranties True. Each of the
representations and warranties of the Company contained in Section 3 will be
true and correct in all material respects on and as of the date hereof and on
and as of the date of the Closing, except as set forth in the
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Disclosure Letter or the SEC Documents, with the same effect as though such
representations and warranties had been made as of the Closing.
(ii) Performance. The Company will have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing, and will have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
(iii) Securities Exemptions. The offer and sale of
the Purchased Shares to each Investor pursuant to this Agreement will be exempt
from the registration requirements of the Securities Act and the registration
and/or qualification requirements of all applicable state securities laws.
(iv) Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto will be reasonably satisfactory in
form and substance to each Investor, and each Investor will have received all
such counterpart originals and certified or other copies of such documents as it
may reasonably request. Such documents shall include but not be limited to the
following:
(v) Certified Charter Documents. A copy of (1) the
Certificate of Incorporation certified as of a recent date by the Secretary of
State of Delaware as a complete and correct copy thereof, (2) the Certificate of
Designations certified as of a recent date by the Secretary of State of Delaware
and (3) the Bylaws of the Company (as amended through the date of the Closing)
certified by the Secretary of the Company as a true and correct copy thereof as
of the Closing.
(vi) Board Resolutions. A copy, certified by the
Secretary of the Company, of the resolutions of the Board of Directors of the
Company providing for the approval of this Agreement and the issuance of the
Purchased Shares and the other matters contemplated hereby.
(vii) Opinion of Company Counsel. Each Investor will
have received an opinion on behalf of the Company, dated as of the date of the
Closing, from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to the Company, in the
form attached as Exhibit C.
(viii) No Material Adverse Effect. Between the date
hereof and the Closing, there shall not have occurred any Material Adverse
Effect.
(ix) Nasdaq Requirements. The Company shall have
satisfied all requirements of the Nasdaq Stock Market Marketplace Rules with
respect to the issuance of the Purchased Shares.
(x) Other Actions. The Company shall have executed
such certificates, agreements, instruments and other documents, and taken such
other actions as shall be customary or reasonably requested by each Investor in
connection with the transactions contemplated hereby.
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6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to each Investor under this Agreement
are subject to the fulfillment or waiver, on or before the Closing, of each of
the following conditions:
(a) Representations and Warranties True. The representations
and warranties of each Investor contained in Section 4 will be true and correct
in all material respects on and as of the date hereof and on and as of the date
of the Closing.
(b) Performance. Each Investor will have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing and will have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
(c) Payment of Purchase Price. Each Investor will have
delivered to the Company at the Closing the full purchase price of the Purchased
Shares as specified in Section 1(b).
(d) Securities Exemptions. The offer and sale of the Purchased
Shares to each Investor pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
(e) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto will be reasonably satisfactory in form and
substance to the Company and to the Company's legal counsel, and the Company
will have received all such counterpart originals and certified or other copies
of such documents as it may reasonably request.
(f) Nasdaq Requirements. If required by the Nasdaq Stock
Market Marketplace Rules, the Company shall have obtained the approval of its
shareholders to the issuance of the Purchased Shares.
(g) Other Actions. Each Investor shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Company in
connection with the transactions contemplated hereby.
7. COVENANTS OF THE PARTIES.
(a) Information Rights.
(i) Financial Information. The Company covenants and
agrees that, commencing on the Closing and continuing for so long as each
Investor holds any Purchased Shares, the Company shall:
(1) Annual Reports. Furnish to each Investor
promptly following the filing of such report with the SEC a copy of the
Company's Annual Report on Form 10-K SB for each fiscal year, which shall
include a consolidated balance sheet as of the end of such fiscal year, a
consolidated statement of income and a consolidated statement of cash flows of
the Company and its subsidiaries for such year, setting forth in each case in
comparative form the figures from the
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Company's previous fiscal year, all prepared in accordance with generally
accepted accounting principles and practices and audited by nationally
recognized independent certified public accountants. In the event the Company
shall no longer be required to file Annual Reports on Form 10-K SB, the Company
shall, within ninety (90) days following the end of each respective fiscal year,
deliver to each Investor a copy of such balance sheets, statements of income and
statements of cash flows, or such form that replaces Form 10-K SB.
(2) Quarterly Reports. Furnish to each
Investor promptly following the filing of such report with the SEC, a copy of
each of the Company's Quarterly Reports on Form 10-Q SB, which shall include a
consolidated balance sheet as of the end of the respective fiscal quarter,
consolidated statements of income and consolidated statements of cash flows of
the Company and its subsidiaries for the respective fiscal quarter and for the
year to-date, setting forth in each case in comparative form the figures from
the comparable periods in the Company's immediately preceding fiscal year, all
prepared in accordance with generally accepted accounting principles and
practices (except, in the case of any Form 10-Q SB, as may otherwise be
permitted by Form 10-Q SB), but all of which may be unaudited. In the event the
Company shall no longer be required to file Quarterly Reports on Form 10-Q SB,
the Company shall, within forty-five (45) days following the end of each of the
first three (3) fiscal quarters of each fiscal year, deliver to each Investor a
copy of such balance sheets, statements of income and statements of cash flows.
(ii) SEC Filings. The Company shall deliver to each
Investor copies of each other document filed with the SEC on a non-confidential
basis promptly following the filing of such document with the SEC.
(b) Registration Rights.
(i) Definitions. For purposes of this Section 7(b):
(1) Registration. The terms "register,"
"registered," and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act of
1933, as amended, (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement
(2) Registrable Securities. The term
"Registrable Securities" means: (x) the Purchased Shares and any shares of
Common Stock of the Company issued or issuable upon conversion of the Purchased
Shares, and (y) any shares of Common Stock of the Company or other securities of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, any of
the securities described in the immediately preceding Clause (x).
Notwithstanding the foregoing, "Registrable Securities" shall exclude any
Registrable Securities sold by a person in a transaction in which rights under
this Section 7(b) are not assigned in accordance with this Agreement or any
Registrable Securities sold in a public offering, whether sold pursuant to Rule
144 promulgated under the Securities Act, or in a registered offering, or
otherwise.
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(3) Registrable Securities Then Outstanding.
The number of shares of "Registrable Securities then outstanding" shall mean the
number of shares of Purchased Shares, shares of Common Stock and other
securities that are Registrable Securities and are then issued and outstanding.
(4) Holder. For purposes of this Section 7,
the term "Holder" means any person owning of record Registrable Securities that
have not been sold to the public or pursuant to Rule 144 promulgated under the
Securities Act or any permitted assignee of record of such Registrable
Securities to whom rights under this Section 7(b) have been duly assigned in
accordance with this Agreement.
(5) Form S-3. The term "Form S-3" means such
form under the Securities Act as is in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by the
SEC that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(ii) Demand Registration.
(1) Request by Holders. If (i) the Company
shall at any time after the one hundred and twentieth (120th) day after the
Closing receive a written request from the Holders of at least fifty percent
(50%) of the Series C Preferred issued as of the Closing, that the Company file
a registration statement under the Securities Act (including, without
limitation, a "shelf" registration statement, if requested by such Holders,
during any period of time that Rule 144 is not available as an exemption for the
sale in a single 90-day period of all of the Registrable Securities that any
such Holder desires to sell, in which case the Company would maintain the
effectiveness of such "shelf" registration statement until the earlier of the
first anniversary of the effectiveness thereof or the date on which all such
Registrable Securities could be sold under Rule 144 in a single 90-day period)
covering the registration of Registrable Securities, and (ii) the expected gross
proceeds of the sale of Registrable Securities under such registration statement
would equal or exceed $2,000,000, then the Company shall, within ten (10)
business days of the receipt of such written request, give written notice of
such request ("Request Notice") to all Holders, and use commercially reasonable
efforts to effect, as soon as practicable, the registration under the Securities
Act of all Registrable Securities that Holders request to be registered and
included in such registration by written notice given such Holders to the
Company within twenty (20) days after receipt of the Request Notice, subject
only to the limitations of this Section 7(b); provided that the Company shall
not be obligated to effect any such registration if the Company has, within the
six (6) month period preceding the date of such request, already effected a
registration under the Securities Act pursuant to Section 7(b)(iii), other than
a registration from which the Registrable Securities of Holders have been
excluded with respect to all or any portion of the Registrable Securities the
Holders requested be included in such registration. If requested by such Holders
upon the advice of the underwriter, the Company shall register such Registrable
Securities on Form S-1 or any successor registration form.
(2) Underwriting. If the Holders initiating
the registration request under this Section 7(b)(ii) ("Initiating Holders")
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, then they shall so advise the Company as a
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part of their request, and the Company shall include such information in the
written notice referred to in Section 7(b)(ii)(A). In such event, the right of
any Holder to include his or her Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the initiating
Holders and such Holder determined based on the number of Registrable Securities
held by such Holders being registered). All Holders proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting by the Holders of a majority of the Registrable
Securities being registered and reasonably acceptable to the Company (including
a market stand-off agreement of up to 180 days if required by such
underwriters). Notwithstanding any other provision of this Section 7(b)(ii), if
the underwriter(s) advise(s) the Company in writing that marketing factors
require a limitation of the number of securities to be underwritten then the
Company shall so advise all Holders of Registrable Securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
Registrable Securities that may be included in the underwriting shall be reduced
as required by the underwriter(s) and allocated among the Holders of Registrable
Securities on a pro rata basis according to the number of Registrable Securities
then outstanding held by each Holder requesting registration (including the
Initiating Holders); provided, however, that the number of shares of Registrable
Securities to be included in such underwriting and registration shall not be
reduced unless all other securities of the Company and any selling security
holder other than the Holders are first entirely excluded from the underwriting
and registration. Any Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.
(3) Maximum Number of Demand Registrations.
The Company shall be obligated to effect only one (1) such registration pursuant
to this Section 7(b)(ii).
(4) Deferral. Notwithstanding the foregoing,
if the Company shall furnish to Holders requesting the filing of a registration
statement pursuant to this Section 7(b)(ii) a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board, it would be materially detrimental to the Company
and its stockholders for such registration statement to be filed, then the
Company shall have the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request of the initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve (12) month period.
(5) Expenses. All expenses incurred in
connection with any registration pursuant to this Section 7(b)(ii), including
without limitation all federal and "blue sky" registration, filing and
qualification fees, printer's and accounting fees, and fees and disbursements of
counsel for the Company (but excluding underwriters' discounts and commissions
relating to shares sold by the Holders), shall be borne by the Company. Each
Holder participating in a registration pursuant to this Section 7(b)(ii) shall
bear such Holder's proportionate share (based on the total number of shares sold
in such registration other than for the account of the Company) of all
discounts, commissions or other amounts payable to underwriters or brokers in
connection with such offering by the Holders. Notwithstanding the foregoing, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 7(b)(ii) if the registration request
is subsequently withdrawn at the request of the Holders of a majority of the
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Registrable Securities to be registered, unless the Holders of such majority
agree that such registration constitutes the use by the Holders of one (1)
demand registration pursuant to this Section 7(b)(ii) (in which case such
registration shall also constitute the use by all Holders of Registrable
Securities of one (l) such demand registration); provided further, however, that
if at the time of such withdrawal, the Holders have learned of a Material
Adverse Effect not known to the Holders at the time of their request for such
registration and have withdrawn their request for registration after learning of
such material adverse change, then the Holders shall not be required to pay any
of such expenses and such registration shall not constitute the use of a demand
registration pursuant to this Section 7(b)(ii).
(iii) Piggyback Registrations. The Company shall
notify all Holders of Registrable Securities in writing at least thirty (30)
days prior to filing any registration statement under the Securities Act for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating to any
employee benefit plan or any merger or other corporate reorganization) and will
afford each such Holder an opportunity to include in such registration statement
all or any part of the Registrable Securities then held by such Holder. Each
Holder desiring to include in any such registration statement all or any part of
the Registrable Securities held by such Holder shall within twenty (20) days
after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(1) Underwriting. If a registration
statement under which the Company gives notice under this Section 7(b)(iii) is
for an underwritten offering, then the Company shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder's
Registrable Securities to be included in such a registration pursuant shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the managing underwriter or underwriters selected for
such underwriting (including a market stand-off agreement of up to 180 days if
required by such underwriters); provided, however, that it shall not be
considered customary to require any of the Holders to provide representations
and warranties regarding the Company or indemnification of the underwriters for
material misstatements or omissions in the registration statement or prospectus
for such offering. Notwithstanding any other provision of this Agreement, if the
managing underwriter determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares from the registration and the underwriting;
provided; however, that the securities to be included in the registration and
the underwriting shall be allocated, (1) first to the Company (provided,
however, that a minimum of twenty percent (20%) of the number of Registrable
Securities that each holder of ten percent (10%) or more of the then outstanding
Common Stock (where any Registrable Securities that are not shares of Common
Stock
16
but are exercisable or exchangeable for, or convertible into, shares of Common
Stock, shall be deemed to have been so exercised, exchanged or converted for
such purpose) must also in any event be included), (2) second, to the extent the
managing underwriter determines additional securities can be included after
compliance with Clause (1), to each of the Holders and other holders of
registration rights on a parity with the Holders requesting inclusion of their
Registrable Securities in such registration statement on a pro rata basis based
on the total number of Registrable Securities and other securities entitled to
registration then held by each such Holder or other holder, and (3) third, to
the extent the managing underwriter determines additional securities can be
included after compliance with Clauses (1) and (2), any shares or other
securities held by any person who is an employee, officer or director of the
Company (or any subsidiary of the Company) or any other person. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration. For any Holder that is a partnership, the
Holder and the partners and retired partners of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons, and for any Holder that is a
corporation, the Holder and all corporations that are affiliates of such Holder,
shall be deemed to be a single "Holder," and any pro rata reduction with respect
to such "Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
(2) Expenses. All expenses incurred in
connection with a registration pursuant to this Section 7(b)(iii) (excluding
underwriters' and brokers' discounts and commissions relating to shares sold by
the Holders), including, without limitation all federal and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, and
fees and disbursements of counsel for the Company, shall be borne by the
Company.
(3) Not Demand Registration. Registration
pursuant to this Section 7(b)(iii) shall not be deemed to be a demand
registration as described in Section 7(b)(ii) above. Except as otherwise
provided herein, there shall be no limit on the number of times the Holders may
request registration of Registrable Securities under this Section 7(b)(iii).
(iv) Form S-3 Registration. The Company shall use all
reasonable commercial efforts, on or prior to the one hundred and twentieth
(120th) day after the date of Closing, cause to be filed and become effective
with the SEC a Registration Statement on Form S-3 relating to all of the
Registrable Securities (in the event such registration statement is not
effective at the expiration of such 120-day period, the Company shall continue
to use all reasonable commercial efforts to cause it to become effective until
it becomes effective); provided; however, that in the event Form S-3 is not
available to the Company, the Company shall file such other form as may be
available if Holders who hold Registrable Securities with a market value of at
least One Million Dollars ($1,000,000) deliver a written request to the Company
that the Company do so, where such market value is determined as of the date of
such written request. The Company shall use its best efforts to cause any such
Registration Statement to become effective as promptly as possible after such
filing and shall also use its best efforts to obtain any related qualifications,
registrations or other compliances that may be necessary under any applicable
"blue sky" laws. In connection with such registration, the Company will:
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(1) Notice. Promptly give written notice to
the Holders of the proposed registration and any related qualification or
compliance; and
(2) Registration. Prior to the one hundred
and twentieth (120th) day after the day of Closing, effect such registration and
all such qualifications and compliances and as would permit or facilitate the
sale and distribution of all or such portion of such Holders or Holders'
Registrable Securities; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 7(b)(iv) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(3) Expenses. The Company shall pay all
expenses incurred in connection with each registration requested pursuant to
this Section 7(b)(iv), excluding underwriters' or brokers' discounts and
commissions relating to shares sold by the Holders, including without limitation
federal and "blue sky" registration, filing and qualification fees, printers'
and accounting fees, and fees and disbursements of counsel.
(4) Deferral. Notwithstanding the foregoing,
if the Company shall furnish to Holders requesting the filing of a registration
statement pursuant to this Section 7(b)(iv), a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board, it would be materially detrimental to the Company
and its stockholders for such registration statement to be filed, then the
Company shall have the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request of the initiating Holders;
provided, however, that the Company may not utilize this right more than once in
any twelve (12) month period, and the period of time that the Company is
obligated to maintain the effectiveness of any registration statement under
Clause (F) below shall be extended for the length of any such period of
deferral.
(5) Not Demand Registration. Form S-3
registrations shall not be deemed to be demand registrations as described in
Section 7(b)(ii) above.
(6) Maintenance. The Company shall use all
commercially reasonable efforts to maintain the effectiveness of any Form S-3
registration statement filed under this Section 7(b)(iv) until the earlier of:
(a) the date on which all of the Registrable Securities have been sold; and (b)
the second anniversary of the Closing; provided, however, that unless all of the
Registrable Securities held by each Investor as of such second anniversary could
then be sold in a single transaction in accordance with Rule 144 under the
Securities Act without exceeding the volume limitations thereof, if the Company
receives written notice from each Investor that each Investor may be deemed to
be an "affiliate" of the Company for purposes of the Securities Act, the date in
this Clause (b) shall be extended until each Investor advises the Company that
it no longer has any reasonable basis to believe it is such an "affiliate."
(v) Obligations of the Company. Whenever required to
effect the registration of any Registrable Securities under this Agreement the
Company shall, as expeditiously as reasonably possible:
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(1) Registration Statement. Prepare and file
with the SEC a registration statement with respect to such Registrable
Securities and use commercially reasonable efforts to cause such registration
statement to become effective; provided, however, that, except as otherwise
required by in this Section 7(b), the Company shall not be required to keep any
such registration statement effective for more than ninety (90) days.
(2) Amendments and Supplements. Prepare and
file with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement.
(3) Prospectuses. Furnish to the Holders
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them that are included in such registration.
(4) Blue Sky. Use commercially reasonable
efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions.
(5) Underwriting. In the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement in usual and customary form (including, without
limitation, customary indemnification of the underwriters by the Company), with
the managing underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement; provided, however, that it shall not be considered customary to
require any of the Holders to provide representations and warranties regarding
the Company or indemnification of the underwriters for material misstatements or
omissions in the registration statement or prospectus for such offering.
(6) Notification. Notify each Holder of
Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(7) Opinion and Comfort Letter. Furnish, at
the request of any Holder requesting registration of Registrable Securities, on
the date that such Registrable Securities are delivered to the underwriters for
sale, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to a
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majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities and (ii) in the event that such securities are being sold through
underwriters, a "comfort" letter dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the underwriters
and to the Holders requesting registration of Registrable Securities. (vi)
Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 7(b)(ii), (iii) or
(iv) that the selling Holders shall furnish to the
Company such information regarding themselves, the Registrable Securities held
by them, and the intended method of disposition of such securities as shall be
required to timely effect the registration of their Registrable Securities.
(vii) Indemnification. In the event any Registrable
Securities are included in a registration statement under Sections 7(b)(ii),
(iii) or (iv):
(1) By the Company. To the extent permitted
by law, the Company will indemnify and hold harmless each Holder, the partners,
officers, shareholders, employees, representatives and directors of each Holder,
any underwriter (as determined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Securities Exchange Act of 1934, as amended, against
any losses, claims, damages, or Liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(x) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(y) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or
(z) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any federal or
state securities law or any Rule or regulation promulgated under the Securities
Act, the Exchange Act or any federal or state securities law in connection with
the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, officer,
shareholder, employee, representative, director, underwriter or controlling
person for any legal or other expenses reasonably incurred by them, as incurred,
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be
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unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation that occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by such Holder, partner, officer, shareholder, employee,
representative, director, underwriter or controlling person of such Holder.
(2) By Selling Holders. To the extent
permitted by law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, officers, shareholders, employees, representatives and directors and
any person who controls such Holder within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such officer or director, controlling
person, underwriter or other such Holder, partner, officer, shareholder,
employee, representative, director or controlling person of such other Holder
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company or
any such officer or director, controlling person, underwriter or other Holder,
partner, officer, shareholder, employee, representative, director or controlling
person of such other Holder in connection with investigating or defending any
such loss, claim, damage, liability or action: provided, however, that the
indemnity agreement contained in this subsection shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; and provided further, that the total amounts
payable in indemnity by a Holder under this subsection or otherwise in respect
of any Violation shall not exceed the net proceeds received by such Holder in
the registered offering out of which such Violation arises.
(3) Notice. Promptly after receipt by an
indemnified party under of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this section, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, to the extent that representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
liability except to the extent the indemnifying party is prejudiced as a result
thereof.
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(4) Defect Eliminated in Final Prospectus.
The foregoing indemnity agreements of the Company and Holders are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or the
amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was timely furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act,
provided, however, the provions of this section shall apply only with respect to
a registration statement that the applicable Holder is responsible to forward to
third party purchasers.
(5) Contribution. In order to provide for
just and equitable contribution to joint liability under the Securities Act in
any case in which either (i) any Holder exercising rights under this Agreement,
or any controlling person of any such Holder, makes a claim for indemnification
pursuant to this section, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling Holder
or any such controlling person in circumstances for which indemnification is
provided under this section; then, and in each such case, the party otherwise
obligated to provide indemnification under this Agreement, in lieu of
indemnifying the party otherwise entitled to indemnification hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations; with the relative fault of
the indemnifying party and of the indemnified party to be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact pr the omission to state a material fact related to
information supplied by the indemnifying party or by the indemnified party and
the parties relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission; provided, however, that, in
any such case: (A) no such Holder will be required to contribute any amount in
excess of the net proceeds of all such Registrable Securities offered and sold
by such Holder pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(6) Survival. The obligations of the Company
and Holders under this Section 7(b)(vii) shall survive until the fifth
anniversary of the completion of any offering of Registrable Securities in a
registration statement, regardless of the expiration of any statutes of
limitation or extensions of such statutes.
(viii) Termination of the Company's Obligations. The
Company shall have no obligations pursuant to this Section 7(b) with respect to
any Registrable Securities proposed to be sold by a Holder in a registration
pursuant to Section 7(b)(ii), (iii) or (iv) more than four (4) years
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after the date of this Agreement, or, if earlier, the date on which each Holder
receives a written opinion of counsel to the Company, reasonably acceptable to
counsel for the Holder, all such Registrable Securities proposed to be sold by a
Holder may then be sold under Rule 144 in one transaction without exceeding the
volume limitations thereunder.
(ix) Suspension Provisions. Notwithstanding the
foregoing subsections of this Section 7 (b), the Company shall not be required
to take any action with respect to the registration or the declaration of
effectiveness of the registration statement following written notice to the
Holders from the Company (a "Suspension Notice") of the existence of any state
of facts or the happening of any event (including without limitation pending
negotiations relating to, or the consummation of, a transaction, or the
occurrence of any event that the Company believes, in good faith, requires
additional disclosure of material, non-public information by the Company in the
registration statement that the Company believes it has a bona fide business
purpose for preserving confidentiality or that renders the Company unable to
comply with the published rules and regulations of the SEC promulgated under the
Securities Act or the Securities Exchange Act, as in effect at any relevant time
(the "Rules and Regulations")) that would result in (1) the registration
statement, any amendment or post-effective amendment thereto, or any document
incorporated therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (2) the prospectus
issued under the registration statement, any prospectus supplement, or any
document incorporated therein by reference including an untrue statement of
material fact or omitting to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, provided that the Company (1) shall not issue a Suspension
Notice more than once in any 12 month period, (2) shall use its best efforts to
remedy, as promptly as practicable, but in any event within 60 days of the date
on which the Suspension Notice was delivered, the circumstances that gave rise
to the Suspension Notice and deliver to the Holders notification that the
Suspension Notice is no longer in effect and (3) shall not issue a Suspension
Notice for any period during which the Company's executive officers are not
similarly restrained from disposing of shares of the Company's Common Stock.
Upon receipt of a Suspension Notice from the Company, all time limits applicable
to the Holders under this Section 7(b) shall automatically be extended by an
amount of time equal to the amount of time the Suspension Notice is in effect,
the Holders will forthwith discontinue disposition of all such shares pursuant
to the registration statement until receipt from the Company of copies of
prospectus supplements or amendments prepared by or on behalf of the Company
(which the Company shall prepare promptly), together with a notification that
the Suspension Notice is no longer in effect, and if so directed by the Company,
the Holders will deliver to the Company all copies in their possession of the
prospectus covering such shares current at the time of receipt of any Suspension
Notice.
8. ASSIGNMENT. The rights of each Investor under Section 7(a) and (b)
are transferable to any person who acquires the equivalent, on an as-converted
basis, of at least five percent (5%) of the outstanding shares of the Common
Stock (subject to appropriate adjustment for all stock splits, dividends,
combinations, recapitalizations and the like where all holders of the Common
Stock participate on a pro rata basis); provided, however, that no party may be
assigned any of the foregoing rights unless the Company is given written notice
by the assigning party at the time of such assignment stating the name and
address of the assignee and identifying the securities of the Company as to
which the rights in question are being assigned; and provided further that any
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such assignee shall receive such assigned rights subject to all the terms and
conditions of this Agreement. Notwithstanding anything in the foregoing to the
contrary, this Agreement may not be assigned by any Investor in whole or in part
to any Competitor of the Company. For purposes of this Section 8, a "Competitor"
of the Company shall mean any company, one of whose principal lines of business
is the development and/or marketing of any product similar to the Company's Town
Square product line or any subset thereof, and/or call accounting, traffic
engineering, facilities and alarm management, PBX security, voicemail/auto
attendant or answer detection software and hardware systems that operate on
personal computers, local area networks and stand-alone proprietary hardware and
that are used primarily in the commercial and hospitality markets.
9. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
(b) Governing Law. This Agreement will be governed by and
construed under the internal laws of the State of Delaware, without reference to
principles of conflict of laws or choice of laws.
(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(d) Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
(e) Notices. Any notice required or permitted under this
Agreement shall be given in writing, shall be effective when received, and shall
in any event be deemed received and effectively given upon personal delivery to
the party to be notified or three (3) business days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid, or
one (1) business day after deposit with a nationally recognized courier service
such as FedEx for next business day delivery under circumstances in which such
service guarantees next business day delivery, or one (1) business day after
facsimile with copy delivered by registered or certified mail, in any case,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof or at such other address
as each Investor or the Company may designate by giving at least ten (10) days
advance written notice pursuant to this Section 9(e).
(f) No Finder's Fees. Each Investor will indemnify and hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' or broker's fee for which such Investor or any of its
officers, partners, employees or consultants, or representatives is responsible.
The Company will indemnify and hold harmless each Investor from any liability
for any commission or compensation in the nature of a finder's or broker's fee
for which the Company or any of its officers, employees or consultants or
representatives is responsible.
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(g) Amendments and Waivers. This Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of Purchased Shares
representing at least two-thirds of the total aggregate number of Purchased
Shares then outstanding (excluding any of such shares that have been sold in a
transaction in which rights under Section 7(b) are not assigned in accordance
with this Agreement or sold to the public pursuant to SEC Rule 144 or
otherwise). Any amendment or waiver effected in accordance with this Section
9(g) will be binding upon each Investor, the Company and their respective
successors and assigns.
(h) Severability. If any provision of this Agreement is held
to be unenforceable under applicable law, such provision will be excluded from
this Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement, together with the other
Transaction Agreement and all exhibits and schedules hereto and thereto
constitutes the entire agreement and understanding of the parties with respect
to the subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements. understandings duties or obligations between the
parties with respect to the subject matter hereof.
(j) Further Assurances. From and after the date of this
Agreement upon the request of the Company or each Investor, the Company and each
Investor will execute and deliver such instruments, documents or other writings
as may be reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement.
(k) Meaning of Include and Including. Whenever in this
Agreement the word "include" or "including" is used. it shall be deemed to mean
"include, without limitation" or "including. without limitation." as the case
may be. and the language following "include" or "including" shall not be deemed
to set forth an exhaustive list.
(l) Fees, Costs and Expenses. All fees, costs and expenses
(including attorney's' fees and expenses) incurred by either part hereto in
connection with the preparation, negotiation and execution of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby (including the costs associated with any filings
with, or compliance with any of the requirements of, any governmental
authorities), shall be the sole and exclusive responsibility of such party.
(m) Competition. Nothing set forth herein shall be deemed to
preclude, limit or restrict the Company's or each Investor's ability to compete
with the other.
(n) Cooperation in HSR Act Filings.
(i) In the event of a conversion of the Purchased
Shares (or any other action by an Investor with respect to any Securities of the
Company held by such Investor) that would require a filing by the Investor under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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0000 (xxx "XXX Xxx"), the Investor and its respective affiliates (including any
"ultimate parent entity", as defined in the HSR Act), and the Company and its
respective affiliates (including any "ultimate parent entity", as defined in the
HSR Act), shall promptly prepare and make their respective filings and
thereafter shall make all required or requested submissions under the HSR Act or
any analogous applicable law, if required. In taking such actions or making any
such filings, the parties hereto shall furnish information required in
connection therewith and seek timely to obtain any applicable actions, consents,
approvals or waivers of governmental authorities; provided, however, that the
parties hereto shall cooperate with each other in connection with the making of
all such filings to the extent permitted by applicable law. Without limiting the
generality of the foregoing, to the extent permitted by applicable law and so
long as the following will not involve the disclosure of confidential or
proprietary information of one party hereto to another, each party shall
cooperate with the other by (a) providing copies of all documents to be filed to
the non-filing party and its advisors prior to filing and, if requested,
accepting reasonable additions, deletions or changes suggested in connection
therewith and (b) providing to each other party copies of all correspondence
from and to any governmental authority in connection with any such filing.
(ii) Notwithstanding the foregoing, neither any
Investor nor any of its affiliates shall be under any obligation to comply with
any request or requirement imposed by the Federal Trade Commission (the "FTC"),
the Department of Justice (the "DofJ") or any other governmental authority in
connection with the compliance with the requirements of the HSR Act, or any
other applicable law, if the Investor, in the exercise of its reasonable
discretion, deems such request or requirement unduly burdensome. Without
limiting the generality of the foregoing, no Investor shall be obligated to
comply with any request by, or any requirement of, the FTC, the DofJ or any
other governmental authority: (i) to disclose information such Investor deems it
in its best interests to keep confidential; (ii) to dispose of any assets or
operations; or (iii) to comply with any proposed restriction on the manner in
which it conducts its operations. In the event such Investor shall receive a
second request in respect of its HSR Filing determined by it to be unduly
burdensome and it shall prove unable to negotiate a means satisfactory to the
Investor for complying with such burdensome second request, or the Federal Trade
Commission or Department of Justice shall impose any condition on the Investor
or its affiliates in respect thereof deemed unacceptable by the Investor, the
Company and the Investor shall cooperate in good faith to negotiate an
alternative transaction that provides such Investor with the economic benefits
it would receive if it converted the Purchased Shares (or took any such other
action referenced in the first parenthetical in the first sentence of Clause
(i)).
[The remainder of this page is intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
AT COMM CORPORATION RENNES FOUNDATION
By: By: _____________________________
-------------------------------------
Name: Name:
-----------------------------------
Title: Title:
----------------------------------
Date Signed: Date Signed: _____________________
----------------------------
Address: 000 Xxxxxxx Xxxxxxxxx, Xxxxx 000 Address: Rennes Foundation
Xxxxxxxxxx, XX 00000 Xxxxxxxxxxxx 00
XX - 0000 Xxxxx
Telephone No: (000) 000-0000 Principality of
Liechtenstein
Facsimile No: (000) 000-0000 Telephone No: 000 00-0 000 00 00
Facsimile No: 011 41-1 217 47 00
FLANDERS LANGUAGE VALLEY FUND CVA,
(Incorporated under the laws of
Belgium)
By: _____________________________
Name:
Title:
Date Signed: _____________________
Address: Flanders Language Valley
63 8900 Ieper
BELGIUM
XXXXXX XXXX & XXXX XXXX REAL
PROPERTY TRUST TR UA 10/3/85
By: _____________________________
Name:
Title:
Date Signed: _____________________
Address: 000 Xxxx Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, XX 00000-0000
Other signatures intentionally omitted.
[Signature Page to Series C Stock Purchase Agreement]
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