THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
THIRD AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (the
"Agreement"), dated as of February 9, 2007, by and among Ascendia Brands, Inc.
(f/k/a Cenuco, Inc.), a Delaware corporation, with headquarters located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and the
investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers entered into that certain Second Amended and
Restated Securities Purchase Agreement, dated as of June 30, 2006 (as amended
from time to time in accordance with its terms, the "ORIGINAL SECURITIES
PURCHASE AGREEMENT"), whereby the Company, among other things, issued (i) a
Senior Secured Convertible Note (the "ORIGINAL NOTE"), (ii) warrants a copy of
which is attached hereto as EXHIBIT A-1 (the "SERIES A WARRANTS"), to acquire up
to that number of additional shares of the Company's common stock, par value
$0.001 (the "COMMON STOCK") set forth opposite such applicable Buyer's name in
column (4) of the Schedule of Buyers (as exercised, collectively, the "SERIES A
WARRANT SHARES") and (iii) warrants, a copy of which is attached hereto as
EXHIBIT A-2 (the "SERIES B WARRANTS", and together with the Series A Warrants,
the "WARRANTS"), to acquire up to that number of additional shares of Common
Stock set forth opposite such applicable Buyer's name in column (5) of the
Schedule of Buyers (as exercised, collectively, the "SERIES B WARRANT SHARES",
and together with the Series A Warrant Shares, the "WARRANT SHARES").
B. Contemporaneously with the execution and delivery of the Original
Securities Purchase Agreement, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and Prencen LLC,
a Delaware limited liability company ("PRENCEN"), executed and delivered that
certain Securities Purchase Agreement, dated as of June 30, 2006 (the "▇▇▇▇▇▇▇▇▇
AGREEMENT"), whereby Prencen acquired an aggregate of Three Million, Three
Hundred and Twenty Two Thousand, Four Hundred and Eighty Two (3,322,482) shares
of Common Stock (the "ORIGINAL ▇▇▇▇▇▇▇▇▇ SHARES" and such number of Original
▇▇▇▇▇▇▇▇▇ Shares held by Prencen or its affiliates as of the Closing Date (as
defined below), the "▇▇▇▇▇▇▇▇▇ SHARES").
C. The Company and the Buyers entered into that certain Amendment and
Exchange Agreement, dated as of December 27, 2006 (the "COMMON EXCHANGE
AGREEMENT"), whereby, among other things, Prencen and the Company exchanged
certain shares of Common Stock held by Prencen (the "INITIAL COMMON SHARES") for
300 shares of a new series of convertible preferred stock of the Company
designated as Series B Convertible Preferred Stock, the terms of which are set
forth in the certificate of designations filed with the Secretary of State of
Delaware on December 27, 2006 for such series of preferred shares (the "SERIES B
CERTIFICATE OF DESIGNATIONS") (together with any convertible preferred shares
issued in replacement thereof in accordance with the terms thereof, the "SERIES
B PREFERRED STOCK"), which Series B Preferred Stock is convertible into shares
of Common Stock (the shares into which such Series B Preferred Stock may be
converted, the "SERIES B PREFERRED CONVERSION SHARES") in accordance with the
terms of the Series B Certificate of Designations.
D. The Company and the Buyers entered into that certain Amendment No. 1 to
the Amendment and Exchange Agreement, dated as of December 29, 2006 (the
"AMENDMENT TO COMMON EXCHANGE AGREEMENT"), whereby, among other things, Prencen
and the Company exchanged certain shares of Common Stock (the "ADDITIONAL COMMON
SHARES", and together with the Initial Common Shares, the "COMMON SHARES") held
by Prencen for 30 shares of a new series of convertible preferred stock of the
Company designated as Series B-1 Convertible Preferred Stock, the terms of which
are set forth in the certificate of designations filed with the Secretary of
State of Delaware on December 29, 2006 for such series of preferred shares (the
"SERIES B-1 CERTIFICATE OF DESIGNATIONS" and together with the Series B
Certificate of Designations, the "CERTIFICATES OF DESIGNATIONS" and each a
"CERTIFICATE OF DESIGNATIONS") (together with any convertible preferred shares
issued in replacement thereof in accordance with the terms thereof, the "SERIES
B-1 PREFERRED STOCK" and together with the Series B Preferred Stock, the
"PREFERRED STOCK"), which Series B-1 Preferred Stock is convertible into shares
of Common Stock (the shares into which such Series B-1 Preferred Stock may be
converted, the "SERIES B-1 PREFERRED CONVERSION SHARES" and together with the
Series B Preferred Conversion Shares, the "PREFERRED CONVERSION SHARES") in
accordance with the terms of the Series B-1 Certificate of Designations.
E. The Company and the Buyers entered into that certain Amendment
Agreement, dated as of December 30, 2006 (the "NOTE AMENDMENT AGREEMENT"),
whereby, among other things, (i) the Company amended and restated the Original
Note as an Amended and Restated Senior Secured Convertible Note (the "AMENDED
NOTE") and (ii) Prencen Lending LLC, a Delaware limited liability company
("PRENCEN LENDING"), waived certain Existing Events of Default (as defined in
the Note Amendment Agreement).
F. The Company has authorized a new series of secured convertible notes of
the Company, in substantially the form attached hereto as EXHIBIT B (such notes
issued hereunder, the "NOTES" and each a "NOTE"), which shall be convertible
into Common Stock in accordance with the terms of such Notes (the Common Stock
received upon such conversion, collectively, the "NOTE CONVERSION SHARES" and
together with the Preferred Conversion Shares, the "CONVERSION SHARES").
G. In accordance with Section 9(b) of the Amended Note, which permits the
Company to redeem up to $20 million in principal amount of the Amended Note in
an Acquisition Redemption (as defined in the Amended Note) for the Acquisition
Redemption Price (as defined in the Amended Note), the Company and the Buyers
have agreed, upon the terms and conditions set forth herein, that (i)
$21,464,000 (the "ACQUISITION PRINCIPAL PAYOFF AMOUNT") shall be paid by the
Company to Prencen Lending on the Closing Date in cash by wire transfer of
immediately available funds in accordance with Prencen Lending's written wire
instructions delivered to the Company on or prior to the Closing Date in
consideration of the redemption of $15 million of principal amount of the
Amended Note and (ii) the Amended Note shall be cancelled and the Company shall
issue a new Note to Prencen Lending hereunder on the Closing Date, which shall
reflect, among other things, the new outstanding principal amount of $76,000,000
(the "ACQUISITION REMAINING PRINCIPAL AMOUNT").
H. In accordance with Section 2 of the Amended Note, the Company shall pay
on the Closing Date to Prencen Lending, in cash by wire transfer of immediately
available funds in
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accordance with Prencen Lending's written wire instructions delivered to the
Company on or prior to the Closing Date, all accrued but unpaid interest on the
Amended Note during the period commencing on August 2, 2006 and ending on the
Closing Date in the amount of $4,372,077 (the "ACQUISITION INTEREST PAYOFF
AMOUNT", and together with the Acquisition Principal Payoff Amount, the
"ACQUISITION PAYOFF AMOUNT").
I. Contemporaneously with the execution and delivery of this Agreement,
the Company is executing and delivering that certain Securities Purchase
Agreement (the "OTHER SECURITIES PURCHASE AGREEMENT"), by and among the Company,
Watershed Capital Partners, L.P. ("WCP") and Watershed Capital Institutional
Partners, L.P. (together with WCP, "WATERSHED"), whereby the Company has agreed
on the Closing Date to sell, and Watershed has agreed to purchase, upon the
terms and conditions stated in the Other Securities Purchase Agreement,
$10,000,000 in principal amount of additional Notes (the "OTHER NOTES" and
together with the Notes, the "AGGREGATE NOTES"), which shall be convertible into
Common Stock in accordance with the terms of such Other Notes (the Common Stock
received upon such conversion, collectively, the "OTHER CONVERSION SHARES"). The
terms and provisions of the Notes and the Other Notes are substantially
identical.
J. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto and Watershed are executing and delivering a Registration
Rights Agreement, substantially in the form attached hereto as EXHIBIT C (as
amended or modified from time to time in accordance with its terms, the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Conversion Shares, the
Other Conversion Shares, the Warrant Shares and the ▇▇▇▇▇▇▇▇▇ Shares and certain
shares held by affiliates of the Investors (as defined in the Registration
Rights Agreement) under the Securities Act of 1933, as amended (the "1933 ACT")
and the rules and regulations promulgated thereunder, and applicable state
securities laws. Upon the execution of the Registration Rights Agreement by the
parties thereto, the Second Amended and Restated Registration Rights Agreement,
by and among the Company and the Buyers, dated as of June 30, 2006 (as amended
by the Common Exchange Agreement, the Amendment to Common Exchange Agreement and
the Note Amendment Agreement) shall be cancelled and shall have no further force
or effect.
K. The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the 1933 Act, and Rule 506 of Regulation D ("REGULATION D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the ▇▇▇▇ ▇▇▇. The issuance of the Notes pursuant to this Agreement in
exchange for the surrender (and cancellation) of the Amended Note is being made
in reliance upon the exemption from registration provided by Section 3(a)(9) of
the 1933 Act.
L. The Notes, the Preferred Shares, the Conversion Shares, the Warrants,
the Warrant Shares and the ▇▇▇▇▇▇▇▇▇ Shares are collectively referred to herein
as the "SECURITIES".
M. The Aggregate Notes will rank junior to the Permitted Senior
Indebtedness (as defined in the Notes) and will be secured by a perfected
security interest in all of the assets of the Company and the stock and assets
of each of the Company's subsidiaries, pursuant to the terms of (i) a security
agreement, in the form attached hereto as EXHIBIT D (as amended or modified
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from time to time in accordance with its terms, the "SECURITY AGREEMENT"), and
(iii) the guarantees of certain domestic Subsidiaries of the Company, in the
form attached hereto as EXHIBIT E-1 (as amended or modified from time to time in
accordance with its terms, the "DOMESTIC GUARANTEES") and the guarantee of a
certain foreign Subsidiary of the Company, in the form attached hereto as
EXHIBIT E-2 (as amended or modified from time to time in accordance with its
terms, the "CANADIAN GUARANTEE", and together with the Domestic Guarantees, the
"GUARANTEES", and the Guarantees, together with the Security Agreement, and any
ancillary documents related thereto, collectively the "SECURITY DOCUMENTS").
N. Contemporaneously with the execution and delivery of this Agreement,
the Buyers are executing and delivering that certain Intercreditor Agreement, by
and among the Buyers, the Other Buyers and the agent for those certain lenders
under the WFF Facility (as defined in the Notes) and the Watershed Facility (as
defined in the Notes) and the other parties thereto, in the form attached hereto
as EXHIBIT F (as amended or modified from time to time in accordance with its
terms, the "INTERCREDITOR AGREEMENT"), which, among other things, delineates
certain restrictions on the Buyer's and the Other Buyer's rights and remedies
under the Notes and the Other Notes.
O. On January 17, 2007, Coty B.V., a Dutch BESLOTEN VENNOOTSCHAP ("COTY
BV"), Coty Canada Inc., a Canadian corporation ("COTY CANADA"), Coty S.A.S., a
French SOCIETE PAR ACTIONS SIMPLIFIEE ("▇▇▇▇ ▇▇"), ▇▇▇▇ Inc., a Delaware
corporation ( "COTY, INC."), Coty US LLC, a Delaware limited liability company
("COTY US", and together with Coty BV, Coty Canada, ▇▇▇▇ ▇▇ and ▇▇▇▇ Inc.,
"COTY") and the Company, as guarantor, and certain of its subsidiaries, as
purchasers, entered into that certain Asset Purchase Agreement (the "COTY
PURCHASE AGREEMENT"), whereby (i) on or about the Closing Date (as defined
below), the Company shall (x) execute and deliver that certain Registration
Rights Agreement, dated as of the Closing Date, by and among the Company and
Coty, Inc. (the "COTY REGISTRATION RIGHTS AGREEMENT") and (y) issue to Coty,
Inc. that certain promissory note with an initial principal amount of
$20,000,000 (the "COTY NOTE") and (ii) following the Earn-Out Period (as defined
in the Coty Purchase Agreement), subject to the satisfaction of certain terms
and conditions as set forth in the Coty Purchase Agreement, the Company may be
required to (x) pay an additional Cash Amount (as defined in the Coty Purchase
Agreement) to Coty, Inc. and (y) either (A) issue an additional promissory note
in the principal amount of the In-Kind Amount (as defined in the Coty Purchase
Agreement) to Coty, Inc. or (B) increase the outstanding principal amount of the
Coty Note by an amount equal to the In-Kind Amount (collectively, the "COTY EARN
OUT PAYMENT").
NOW, THEREFORE, the Second Amended and Restated Securities Purchase
Agreement is hereby amended and restated in its entirety and the Company and
each Buyer hereby agree as follows:
1. SURRENDER AND ISSUANCE OF NOTES; REDEMPTION; WAIVER; CONSENT.
(a) NOTES; REDEMPTION. Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 6 and 7 below, and the contemporaneous
purchase by Watershed of the Other Notes pursuant to the Other Securities
Purchase Agreement, on the Closing Date (as
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defined below), (i) the Company shall issue, sell and deliver to each applicable
Buyer, and each such Buyer severally, but not jointly, agrees to accept and
purchase, a principal amount of Notes as is set forth opposite such Buyer's name
in column (3) on the Schedule of Buyers, (ii) Prencen Lending shall surrender to
the Company at the Closing (as defined below) contemplated by this Agreement,
the Amended Note issued to Prencen Lending and (iii) the Company shall deliver
the Acquisition Payoff Amount to Prencen Lending in cash by wire transfer of
immediately available funds in accordance with Prencen Lending's written wire
instructions delivered to the Company on or prior to the Closing Date
(collectively, the "CLOSING").
(b) WAIVER. Prencen Lending hereby acknowledges that effective as of
December 30, 2006, Prencen Lending waived the Existing Events of Default (as
defined in the Note Amendment Agreement). The Buyers hereby acknowledge that
effective as of December 27, 2006, the Buyers waived the right to receive the
Outstanding Registration Delay Payments (as defined in the Common Exchange
Agreement); provided, however, that such waiver shall only apply to the
Outstanding Registration Delay Payments and shall not apply to any Registration
Delay Payments (as defined in the Registration Rights Agreement) incurred after
the Closing Date. Prencen hereby agrees that notwithstanding the provisions of
Section 2 of the Warrants currently held by Prencen, the Exercise Price (as
defined in the Warrants) of the Warrants shall not be adjusted solely as a
result of the issuance on the Closing Date of the Notes hereunder and the Other
Notes pursuant to the Other Securities Purchase Agreement.
(c) CONSENT. The Buyers hereby consent to (i) the terms, conditions
and amendments set forth in this Agreement and the other Transaction Documents,
(ii) the consummation of the transactions contemplated hereby, in each case, as
required by the terms of the Amended Note and (iii) the consummation of the
transactions contemplated by the WFF Facility and the Watershed Facility.
(d) CLOSING. The date and time of the Closing (the "CLOSING DATE")
shall (x) be 10:00 a.m., New York City time, on the date hereof (or such later
date as is mutually agreed to by the Company and the Buyers after notification
of satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (y) occur simultaneously with the "Closing"
as defined in the Other Securities Purchase Agreement.
(e) TERMINATION OF ORIGINAL DOCUMENTS. Effective as of the Closing
Date, the documents listed on APPENDIX I attached hereto and any and all other
documents and agreements related thereto other than any voting agreements,
transfer agent instructions or consents executed therewith, shall in each case
be terminated in full and shall be null and void (collectively, the "TERMINATED
DOCUMENTS"), except that the waiver contained in Section 2(c) of the Amendment
Agreement, dated as December 30, 2006, by and among Ascendia Brands, Inc.,
Prencen LLC and Prencen Lending LLC shall not be terminated. Effective as of the
Closing Date, Prencen Lending hereby consents to the filing by or on behalf of
the Company and its Subsidiaries of UCC-3 Termination Statements solely with
respect to termination of the UCC Financing Statements filed in connection with
the Terminated Documents. Effective as of the Closing Date, Prencen Lending
hereby consents to the filing by or on behalf of the Company and its
Subsidiaries and authorizes the Company to file instruments to terminate the
effectiveness of the Terminated Documents, including, without limitation,
mortgage releases, re-assignments or
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releases of trademarks, copyrights and patents as are necessary to release, as
of record, the security interests previously recorded with respect to the
Terminated Documents or otherwise relating to the Terminated Documents, but in
each case, at the sole cost and expense of the Company.
(f) ISSUANCE OF WARRANTS AND PREFERRED SHARES. For the avoidance of
doubt, the Warrants and Preferred Shares were issued previously and are not
being issued hereunder.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants to the Company with respect to
only itself (and solely with respect to the Securities purchased by such Buyer)
that as of the Closing Date:
(a) ORGANIZATION; AUTHORITY. Such Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents (as
defined below) to which it is a party and otherwise to carry out its obligations
hereunder and thereunder.
(b) NO PUBLIC SALE OR DISTRIBUTION. Such Buyer (i) is acquiring the
Notes and has acquired the Preferred Shares and the Warrants, (ii) upon
conversion (if applicable) of the Notes will acquire the Note Conversion Shares,
(iii) upon conversion (if applicable) of the Preferred Shares will acquire the
Preferred Conversion Shares and (iii) upon exercise (if applicable) of the
Warrants, as applicable, will acquire the Warrant Shares, in each case, for its
own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act. Such Buyer is acquiring or has
acquired, as applicable, the Securities hereunder in the ordinary course of its
business. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.
(c) ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
(d) RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(e) INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by such Buyer. Such
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Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on the
Company's representations and warranties contained herein. Such Buyer
understands that its investment in the Securities involves a high degree of
risk. Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.
(f) NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(g) TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Investor (as defined in the
Registration Rights Agreement) shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Investor provides the
Company with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144(k) promulgated under the 1933 Act,
as amended, (or a successor rule thereto) (collectively, "RULE 144"); (ii) any
sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s)) through whom the sale is made) may
be deemed to be an underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(h) LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Notes, Preferred Shares and the Warrants and, until
such time as the resale of the Conversion Shares and the Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement, the stock certificates representing the Conversion Shares and the
Warrant Shares, except as set forth below, shall bear any legend as required by
the "blue sky" laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE
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STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144(K) UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
Such Buyer understands (and the Company agrees) that upon the request of the
holders of the Securities, the legend set forth above shall be removed and the
Company shall issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933
Act, (ii) in connection with a sale, assignment or other transfer, such holder
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that such sale, assignment or transfer of the Securities may be
made without registration under the applicable requirements of the 1933 Act, or
(iii) such holder provides the Company with reasonable assurance, including an
opinion of counsel in a generally acceptable form, that the Securities can be
sold, assigned or transferred pursuant to Rule 144.
(i) VALIDITY; ENFORCEMENT. The Transaction Documents to which such
Buyer is a party, have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
(j) NO CONFLICTS. The execution, delivery and performance by such
Buyer of the Transaction Documents to which such Buyer is a party, and the
consummation by such Buyer of the transactions contemplated hereby and thereby,
will not (i) result in a violation of the organizational documents of such Buyer
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Buyer is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Buyer to perform its obligations hereunder or thereunder.
(k) RECEIPT OF DOCUMENTS. Such Buyer and/or its counsel acknowledges
that,
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to the extent such Buyer and/or its counsel has deemed necessary, such
Buyer and/or its counsel has read in their entirety: (i) this Agreement and each
representation, warranty and covenant set forth herein, and the other
Transaction Documents (as defined below); (ii) the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2004; (iii) the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 2006; (iv) the
Company's Quarterly Report on Form 10-QSB for the fiscal quarters ended
September 30, 2004, December 31, 2004 and March 31, 2005; (v) the Company's
Quarterly Report on Form 10-Q for the fiscal quarters ended May 28, 2005, August
27, 2005, November 26, 2005, May 27, 2006, August 26, 2006 and November 25,
2006; (vi) Amendment No. 1 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarters ended May 28, 2005, August 27, 2005 and November 26, 2005;
and (vii) Amendment No. 2 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 26, 2005.
(l) NO LEGAL ADVICE FROM THE COMPANY. Such Buyer acknowledges that
it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel and investment and tax
advisors. Such Buyer is relying solely on itself and such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction, except that the Buyers are relying on the
accuracy of the representations and warranties made by Company herein.
(m) ORGANIZATION; DOMICILE. Such Buyer is organized in that
jurisdiction specified below its address on the Schedule of Buyers.
(n) REMAINING FEES AND EXPENSES Such Buyer acknowledges that except
for the payment of the Legal Expense Amount (as defined below) on the Closing
Date and any amounts to be paid on the Closing Date as set forth in Section 1
hereof, as of the Closing, there will be no fees, expenses or other amounts
accrued, outstanding or payable by the Company to such Buyer or any of its
Affiliates as of the Closing Date with respect to any of the Preferred Shares,
the Preferred Conversion Shares, the ▇▇▇▇▇▇▇▇▇ Shares, the Warrants and the
Warrant Shares or arising under the Original Securities Purchase Agreement as
amended on or prior to the Closing Date or any Terminated Document or any other
equity securities owned by the Buyers and/or any of their Affiliates.
(o) NOTE OBLIGATIONS. Prencen Lending acknowledges that it is must
comply with the terms of the Notes and fulfill its obligations thereunder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as of the date of execution
hereof and as of the Closing Date (after giving effect to the Acquisition (as
defined in the Notes) (the "ACQUISITION")) to each of the Buyers (except for
such representations and warranties that are not true and correct as of the date
hereof solely by virtue of the Stockholder Approval (as defined below) not being
obtained as of the Closing Date and the amendments to the Certificate of
Incorporation (as defined in Section 3(r)) of the Company not having been filed
with the
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Secretary of State of Delaware to effectuate the amendments specified in clauses
(x) and (y) of Section 4(p)(ii) below as of the Closing Date):
(a) ORGANIZATION AND QUALIFICATION. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any joint venture or
any entity in which the Company, directly or indirectly, owns capital stock or
holds an equity or similar interest) are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse
Effect. The Company is not required to qualify as a foreign corporation in any
jurisdiction. As used in this Agreement, "MATERIAL ADVERSE EFFECT" means any
material adverse effect on the business, assets, operations, results of
operations, condition (financial or otherwise) of the Company, its Subsidiaries,
individually or taken as a whole, or on the transactions contemplated hereby or
in the other Transaction Documents. The Company has no Subsidiaries, except as
set forth on SCHEDULE 3(A). Each of the Company's Subsidiaries are, directly or
indirectly, wholly owned by the Company and no other Person owns any stock,
membership interest, or any equity interest in such Subsidiary or any option,
warrant or other similar interest with respect thereto.
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. Each of the Company and
its Subsidiaries has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement, the Other Securities Purchase
Agreement, the Notes, the Other Notes, the Preferred Shares, the Warrants, the
Registration Rights Agreement, the Voting Agreements (as defined in Section
7(n)), the Security Documents, the Irrevocable Transfer Agent Instructions (as
defined in Section 5(b)), the Intercreditor Agreement, the Intercompany
Subordination Agreement and each of the other agreements entered into by the
parties thereto in connection with the transactions contemplated hereby and
thereby (collectively, the "TRANSACTION DOCUMENTS") and to issue the Notes in
accordance with the terms hereof and thereof. The execution and delivery of the
Transaction Documents by the Company and/or its Subsidiaries, as applicable, and
the consummation by the Company and/or its Subsidiaries, as applicable, of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Notes, the Preferred Shares and the Warrants, the transactions
contemplated by the ▇▇▇▇▇▇▇▇▇ Agreement, the reservation for issuance and the
issuance of the Conversion Shares issuable upon conversion of the Notes and the
Preferred Shares, the transfer of the ▇▇▇▇▇▇▇▇▇ Shares and the reservation for
issuance and issuance of the Warrant Shares issuable upon exercise of the
Warrants, have been duly authorized by the Company's board of directors and
(other than the filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement and any
other filings as may be required by any state securities agencies) no further
filing, consent, or authorization is required by the Company, its board of
directors or its stockholders. This Agreement and the other Transaction
Documents and the agreements and documents relating to the Acquisition (as
defined in the Notes) have been duly executed and delivered by the Company
and/or its Subsidiaries, as applicable, and constitute the legal, valid and
binding obligations of the Company and/or its Subsidiaries, as applicable,
enforceable against each of them in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies. To the Company's knowledge, the Voting
Agreements constitute the legal, valid and binding obligations of the parties
thereto, enforceable against them in accordance
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with their respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(c) ISSUANCE OF SECURITIES. The issuance of the Notes, the Other
Notes, the Preferred Shares and the Warrants are or were, as the case may be,
duly authorized and upon issuance in accordance with the terms of the
Transaction Documents shall be free from all taxes, liens and charges with
respect thereto and the ▇▇▇▇▇▇▇▇▇ Shares and the Preferred Shares are fully paid
and nonassessable. Subject to obtaining the Stockholder Approval (as defined
below) and the filing with the Secretary of State of Delaware of an amendment to
the Certificate of Incorporation to increase the number of authorized shares as
contemplated by the Stockholder Approval, the Company shall have reserved from
its duly authorized (but unissued) capital stock not less than the sum of (i)
130% of the maximum number of shares of Common Stock issuable upon conversion of
the Aggregate Notes (assuming for purposes hereof, that the Aggregate Notes are
convertible at the Conversion Rate (as defined in the Aggregate Notes) and
without taking into account any limitations on the conversion of the Aggregate
Notes set forth in the Aggregate Notes), (ii) 130% of the maximum number of
shares of Common Stock issuable upon conversion of the Preferred Shares
(assuming for purposes hereof, that the Preferred Shares are convertible at the
Conversion Rate (as defined in the applicable Certificate of Designations) and
without taking into account any limitations on the conversion of the Preferred
Shares set forth in the applicable Certificate of Designations), (iii) 130% of
the maximum number of shares of Common Stock issuable upon exercise of the
Warrants (without taking into account any limitations on the exercise of the
Warrants set forth in the Warrants) and (iv) 105% of the maximum number of
shares of Common Stock or other equity of the Company issuable in connection
with all other options, warrants, convertible securities and other instruments
that are convertible or exercisable into such Common Stock and other equity of
the Company. Upon issuance or conversion in accordance with the Notes or the
applicable Certificate of Designations or exercise in accordance with the
Warrants, as the case may be, the Conversion Shares and the Warrant Shares,
respectively, will be validly issued, fully paid and nonassessable and free from
all preemptive or similar rights, taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Assuming that the representations and warranties of the
Buyers set forth in clauses (b), (c) and (e) of Section 2 herein are true, the
offer and issuance by the Company of the Securities being sold by it are exempt
from registration under the 1933 Act.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and/or its Subsidiaries, as applicable, and
the consummation by the Company and/or its Subsidiaries, as applicable, of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes, the Other Notes, the Preferred Shares, the Warrants, and
reservation for issuance of the Conversion Shares, the Other Conversion Shares
and the Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation of the Company or any of its Subsidiaries, any capital stock of
the Company or
-11-
Bylaws (as defined in Section 3(r)) or the certificates of designations of the
Company or the constitutive documents of any of its Subsidiaries, including
without limitation, the Certificates of Designations, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party
(including, without limitation, any right of any executive officer to terminate
his or her employment agreement and/or receive any severance payments or give
rights to any payment obligation other than listing fees to be paid to the
Principal Market (as defined below)), or (iii) result in a violation of any
material law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
American Stock Exchange (the "PRINCIPAL MARKET") applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected.
(e) CONSENTS. Other than the Stockholder Approval, the filing of an
amendment to the Certificate of Incorporation to increase the number of
authorized shares of Common Stock as contemplated by the Stockholder Approval or
the listing application with the Principal Market, neither the Company nor any
of its Subsidiaries is required to obtain any consent, authorization or order
of, or make any application to or filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in accordance
with the terms hereof or thereof. Except as provided in the first sentence of
Section 3(e), all consents, authorizations, orders, filings and registrations
which the Company and/or its Subsidiaries, as applicable, are required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the Closing Date, and the Company and its Subsidiaries are unaware of any facts
or circumstances which might prevent the Company from obtaining or effecting any
of the consents, authorizations, orders, registrations, applications or filings
pursuant to the preceding sentence. Except as set forth on SCHEDULE 3(E), the
Company is not in violation of the listing requirements of the Principal Market
and has no knowledge of any facts which could reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future.
(f) ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents to which
it is a party and the transactions contemplated hereby and thereby and that no
Buyer is (i) an officer or director of the Company, (ii) an "affiliate" of the
Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to the
knowledge of the Company, a "beneficial owner" of more than 10% of the shares of
Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
Act of 1934, as amended (the "1934 ACT")). The Company further acknowledges that
no Buyer is acting as a financial advisor or fiduciary of the Company or any of
its Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer's purchase of the Securities. The Company
further represents to each Buyer that the Company's decision to enter into the
Transaction Documents and the transactions contemplated thereby has been based
solely on the independent evaluation
-12-
by the Company and its representatives.
(g) NO GENERAL SOLICITATION; PLACEMENT AGENT'S FEES. Neither the
Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its
or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or brokers' commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney's fees and out-of-pocket expenses) arising in
connection with any such claim. Except as set forth on SCHEDULE 3(G), neither
the Company nor any of its Subsidiaries has engaged any placement agent or other
agent in connection with the sale of the Securities.
(h) NO INTEGRATED OFFERING. None of the Company, its Subsidiaries,
any of their respective affiliates, and/or any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of any of the Securities under the 1933 Act or cause this offering
of the Securities to be integrated with prior offerings by the Company for
purposes of the 1933 Act in a manner that would require registration of the
Securities under the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are
listed or designated. Except for the transactions contemplated by the
Registration Rights Agreement and the Coty Registration Rights Agreement, none
of the Company, its Subsidiaries, their affiliates and any Person acting on
their behalf has taken any action or steps that could or would require
registration of any of the Securities under the 1933 Act or cause the offering
of the Securities to be integrated with other offerings.
(i) DILUTIVE EFFECT. The Company understands and acknowledges that
(i) the number of Conversion Shares issuable upon conversion of the Notes and
the Preferred Shares, and, the Warrant Shares issuable upon exercise of the
Warrants, will increase in certain circumstances and (ii) the Company's board of
directors determined that the transactions contemplated by the Transaction
Documents are in the best interests of the Company's stockholders. The Company
further acknowledges that its obligation to issue Note Conversion Shares upon
conversion of all or a portion of the Notes in accordance with this Agreement
and the Notes, its obligation to issue the Preferred Conversion Shares upon
conversion of the Preferred Shares in accordance with the Certificates of
Designations and its obligation to issue the Warrant Shares upon exercise of the
Warrants in accordance with the Warrants is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
(j) APPLICATION OF TAKEOVER PROTECTIONS; RIGHTS AGREEMENT. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the jurisdiction of its formation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this
Agreement and/or the other Transaction
-13-
Documents, including, without limitation, the Company's issuance of the
Securities and any Buyer's ownership of the Securities. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
(k) SEC DOCUMENTS; FINANCIAL STATEMENTS. Except as set forth on
SCHEDULE 3(K), during the two (2) years prior to the date hereof, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC DOCUMENTS"). The Company has delivered to the Buyers or their respective
representatives true, correct and complete copies of the SEC Documents not
available on the ▇▇▇▇▇ system. Except as set forth on SCHEDULE 3(K), as of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Except as
set forth on SCHEDULE 3(K), as of their respective dates, the financial
statements of the Company included in the SEC Documents complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyers that is not included in the SEC Documents, including, without
limitation, information referred to in Section 2(e) of this Agreement, contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein not misleading, in the light
of the circumstance under which they are or were made.
(l) ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE
3(L), since February 28, 2006, there has been no material adverse change and no
material adverse development in the business, assets, properties, operations,
condition (financial or otherwise), results of operations of the Company or its
Subsidiaries. Except as disclosed in SCHEDULE 3(L), since February 28, 2006,
neither the Company nor any of its Subsidiaries has (i) declared or paid any
dividends, (ii) sold any assets, individually or in the aggregate, in excess of
$100,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually, in excess of $100,000, or in the aggregate, in
excess of $250,000 (other than the Acquisition). Neither the Company nor any of
its Subsidiaries has taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any
knowledge of any fact which would reasonably lead a creditor to do so. The
Company and its Subsidiaries, individually and on a
-14-
consolidated basis, are not as of the date hereof, and after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(l), "INSOLVENT"
means, with respect to any Person (i) the present fair saleable value of such
Person's assets is less than the amount required to pay such Person's total
Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
(m) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists, with respect to the Company, its Subsidiaries or their respective
businesses, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws on a registration
statement on Form S-1 filed with the SEC relating to an issuance and sale by the
Company of its Common Stock and which has not been publicly announced.
(n) CONDUCT OF BUSINESS; REGULATORY PERMITS. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, any certificate of designation, preferences or
rights of any other outstanding series of preferred stock of the Company or
Bylaws or their organizational charter or certificate of incorporation or bylaws
or other constitutive documents, respectively. Neither the Company nor any of
its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and the Company covenants that neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the foregoing,
except in all cases for possible violations which could not, individually or in
the aggregate, have a Material Adverse Effect. Without limiting the generality
of the foregoing, the Company is not in violation of any of the rules,
regulations or requirements of the Principal Market, except as set forth on
SCHEDULE 3(N), and has no knowledge of any facts or circumstances that would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future. During the two (2) years prior to the date
hereof, (i) the Common Stock has been designated for quotation on the Principal
Market, (ii) trading in the Common Stock has not been suspended by the SEC or
the Principal Market and (iii) except as set forth on SCHEDULE 3(N), the Company
has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
(o) FOREIGN CORRUPT PRACTICES. Neither the Company nor any of its
Subsidiaries nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company or any of its Subsidiaries (i) used
any funds for any unlawful contribution, gift,
-15-
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(p) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT. The Company is in compliance, in all
material respects, with any and all applicable requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 that are effective as of the date hereof, and any and
all applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.
(q) TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Documents filed at least ten (10) days prior to the date hereof and other than
as disclosed on SCHEDULE 3(Q), none of the officers, directors or employees of
the Company or any of its Subsidiaries or, to the knowledge of the Company or
any of its Subsidiaries, any Material Stockholder (as defined below) is
presently (directly or indirectly) a party to any transaction with the Company
or any of its Subsidiaries (other than for ordinary course services as
employees, officers or directors), including any contract, agreement or other
arrangement providing for any financing, the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or any
Material Stockholder or any corporation, partnership, trust or other entity in
which any such officer, director, or employee or Material Stockholder has a
substantial interest or is an officer, director, affiliate, trustee, stockholder
or partner. For the purpose of the Agreement, a "MATERIAL STOCKHOLDER" as of any
given date, means, to the knowledge of the Company, any stockholder of the
Company that, together with any such stockholder's affiliates, holds Common
Stock, Options and/or Convertible Securities (as defined below), which in the
aggregate represent at least 5% of the outstanding Common Stock of the Company
(as determined on an as-converted basis).
(r) EQUITY CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) 225,000,000 shares of Common Stock,
of which as of the date hereof, 11,744,056 are issued and outstanding, 2,235,669
shares will be reserved for issuance upon the exercise of warrants granted or to
be granted under the Company's 2000 Employee Performance Equity Plan and
1,982,544 shares are reserved for issuance pursuant to securities (other than
the Aggregate Notes, Preferred Shares and the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock, (ii) 2,347.7745
shares of Series A Junior Participating Preferred Stock, par value $0.001 per
share (the "SERIES A PREFERRED STOCK") all of which, as of the date hereof, are
issued and outstanding, (iii) 300 shares of Series B Preferred Stock, all of
which, as of the date hereof, are issued and outstanding, and (iv) 30 shares of
Series B-1 Preferred Stock, all of which, as of the date hereof, are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
SCHEDULE 3(R): (i) none of the Company's nor any of its Subsidiaries' capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances; (ii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, or exercisable or exchangeable for,
any capital stock of the
-16-
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries; (iii) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing Indebtedness (except for the Permitted
Senior Indebtedness) of the Company or any of its Subsidiaries or by which the
Company or any of its Subsidiaries is or may become bound; (iv) other than with
respect to the Permitted Senior Indebtedness, there are no financing statements
securing obligations in any material amounts, either singly or in the aggregate,
filed in connection with the Company or any of its Subsidiaries; (v) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except pursuant to the Registration Rights Agreement and the Coty Registration
Rights Agreement); (vi) there are no outstanding securities or instruments of
the Company or any of its Subsidiaries that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii)
there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) the
Company does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement; and (ix) the Company and its
Subsidiaries have no liabilities or obligations required to be disclosed in the
SEC Documents but not so disclosed in the SEC Documents, other than those
incurred in the ordinary course of the Company's or its Subsidiaries' respective
businesses and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect. The Company has furnished to the Buyers true, correct
and complete copies of the Company's Certificate of Incorporation, as amended
and as in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and
the Company's Bylaws, as amended and as in effect on the date hereof (the
"BYLAWS"), the constitutive documents for each of the Company's Subsidiaries and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof in
respect of the Company and its Subsidiaries. Upon consummation of the
transactions contemplated by the Transaction Documents (as defined herein and in
the Other Securities Purchase Agreement), the capitalization of the Company
shall be as set forth on SCHEDULE 3(R-2). Except for the Warrants, none of the
options or warrants listed in SCHEDULE 3(R-2) contain any anti dilution
protection other than anti-dilution protection related to stock splits, stock
dividends, reverse stock splits, recapitalizations and reorganizations (for the
avoidance of doubt, such anti-dilution protections do not include any
"issuance-price" based anti-dilution protections).
(s) INDEBTEDNESS AND OTHER CONTRACTS. Except as set forth on
SCHEDULE 3(s), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness (other than Permitted Senior Indebtedness, the Coty
Note and the Company's Contingent Obligation to pay the Coty Earn Out Payment in
accordance with the Coty Purchase Agreement), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of or in default under any contract, agreement or instrument relating to
any Indebtedness or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of the
Company's officers, has or is expected to have a Material Adverse Effect.
SCHEDULE 3(S) lists all such outstanding Indebtedness. For purposes of this
Agreement: (x) "INDEBTEDNESS" of any
-17-
Person means, without duplication (A) all indebtedness for borrowed money, (B)
all obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, "capital leases" in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; (y) "CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; and (z)
"PERSON" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity, and/or a government or any department or agency thereof.
(t) ABSENCE OF LITIGATION. Except as set forth in SCHEDULE 3(T),
there is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body or other Person pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
its Subsidiaries' officers or directors, whether of a civil or criminal nature
or otherwise, except as would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(u) INSURANCE. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary for the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied for and
neither the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.
-18-
(v) EMPLOYEE RELATIONS. (i) Except as set forth on SCHEDULE 3(V),
neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or employs any member of a union. The Company and its
Subsidiaries believe that their relations with their employees are good. Except
as set forth on SCHEDULE 3(V), no executive officer of the Company or any of its
Subsidiaries (as defined in Rule 501(f) of the ▇▇▇▇ ▇▇▇) has notified the
Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer's employment with the
Company or any such Subsidiary. No executive officer of the Company or any of
its Subsidiaries is, or is now expected to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(w) TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except Permitted Liens (as defined in the Notes) and such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(x) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all U.S. trademarks, service
marks and all applications and registrations therefor, trade names, patents,
patent rights, copyrights, original works of authorship, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property (including without limitation the intellectual property acquired
pursuant to the Acquisition) rights ("INTELLECTUAL PROPERTY RIGHTS") necessary
to conduct their respective businesses as now conducted. Except as set forth on
SCHEDULE 3(X), all of the Company's registered, or applied for, U.S.
Intellectual Property Rights are valid, subsisting, unexpired (where registered)
and enforceable and have not been abandoned or adjudged invalid or
unenforceable, in whole or in part except as could not be reasonably expected to
result in a Material Adverse Effect. The Company does not have any knowledge of
any infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others, except as set forth on SCHEDULE 3(t). Except as set forth on
SCHEDULE 3(T), there is no claim, action or proceeding being made or brought, or
to the knowledge of the Company, being threatened, against the Company or any of
its Subsidiaries regarding its Intellectual Property Rights. The Company is
unaware of any facts or circumstances which might give rise to any of the
foregoing infringements or claims,
-19-
actions or proceedings. The Company and its Subsidiaries have taken reasonable
security measures to protect the value of all of their Intellectual Property
Rights.
(y) ENVIRONMENTAL LAWS. Except as set forth on SCHEDULE 3(Y), the
Company and its Subsidiaries (i) are in compliance with any and all
Environmental Laws (as hereinafter defined), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance with all
terms and conditions of any such permit, license or approval where, in each of
the foregoing clauses (i), (ii) and (iii), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term "ENVIRONMENTAL LAWS" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, "HAZARDOUS MATERIALS") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(z) SUBSIDIARY RIGHTS. The Company and/or one or more of its wholly
owned Subsidiaries has the unrestricted right to vote (other than as restricted
by the security documents of the Permitted Senior Indebtedness), and (subject to
limitations imposed by applicable law and restrictions under the Permitted
Senior Indebtedness) to receive dividends and distributions on, all of the
capital securities and/or equity interests of its Subsidiaries.
(aa) TAX STATUS. The Company and each of its Subsidiaries (i) has
made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply and all such returns, reports and declarations are accurate and complete.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(bb) INTERNAL ACCOUNTING AND DISCLOSURE CONTROLS. The Company and
each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accounting of assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. Except
as set forth on SCHEDULE 3(BB), the Company maintains disclosure controls and
procedures (as such term is defined in
-20-
Rule 13a-14 under the ▇▇▇▇ ▇▇▇) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
1934 Act is accumulated and communicated to the Company's management, including
its principal executive officer or officers and its principal financial officer
or officers, as appropriate, to allow timely decisions regarding required
disclosure. During the twelve months prior to the date hereof neither the
Company nor any of its Subsidiaries have received any notice or correspondence
from any accountant relating to any potential material weakness in any part of
the system of internal accounting controls of the Company or any of its
Subsidiaries.
(cc) OFF BALANCE SHEET ARRANGEMENTS. There is no transaction,
arrangement, or other relationship between (x) the Company or any of its
Subsidiaries and (y) an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its 1934 Act filings and is not so
disclosed or that otherwise would be reasonably likely to have a Material
Adverse Effect.
(dd) INVESTMENT COMPANY STATUS. The Company is not, and upon
consummation of the sale of the Securities will not be, an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
(ee) RANKING OF NOTES. Except as set forth on SCHEDULE (EE) and for
Permitted Senior Indebtedness (as defined in the Notes) (and such other
indebtedness as permitted by such Permitted Senior Indebtedness to rank senior
to the Notes), no Indebtedness of the Company is senior to or ranks PARI PASSU
with the Aggregate Notes in right of payment, whether with respect of payment of
redemptions, interest, damages or upon liquidation or dissolution or otherwise.
(ff) TRANSFER TAXES. On the Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the sale and transfer of the Securities to be sold to each
Buyer hereunder will be, or will have been, fully paid or provided for by the
Company, and all laws imposing such taxes will be or will have been complied
with.
(gg) ACKNOWLEDGEMENT REGARDING BUYERS' TRADING ACTIVITY. It is
understood and acknowledged by the Company (i) that none of the Buyers have been
asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed with
the Company or its Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or "derivative" securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) that any Buyer, and counterparties in "derivative" transactions to
which any such Buyer is a party, directly or indirectly, presently may have a
"short" position in the Common Stock, and (iii) that each Buyer shall not be
deemed to have any affiliation with or control over any arm's length
counterparty in any "derivative" transaction. The Company further understands
and acknowledges that (a) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are
outstanding, including, without limitation,
-21-
during the periods that the value of the Conversion Shares and the Warrant
Shares deliverable with respect to Securities are being determined and (b) such
hedging and/or trading activities, if any, can reduce the value of the existing
shareholders' equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a
breach of this Agreement, the Notes, the Preferred Shares, the Warrants or any
of the documents executed in connection herewith.
(hh) MANIPULATION OF PRICE. Neither the Company nor any of its
Subsidiaries has, and to the Company's knowledge no one acting on behalf of any
such Person has, (i) taken, directly or indirectly, any action designed to cause
or to result in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(ii) U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not, nor
has ever been, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Buyer's request.
(jj) DISCLOSURE. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each press release issued by the
Company and/or its Subsidiaries during the twelve (12) months preceding the date
of this Agreement did not at the time of release contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.
(kk) NO EVENT OF DEFAULT. The Company represents and warrants to the
Investor that no default or Event of Default (as defined in the Note) shall have
occurred and be continuing as of the date hereof. Notwithstanding anything
herein or in any Transaction Document, as amended, to the contrary, no default
or Event of Default shall be deemed to have occurred and be continuing as of the
date hereof solely by virtue of the Stockholder Approval not being obtained as
of the Closing Date and the amendments to the Certificate of Incorporation of
the Company not having been filed with the Secretary of State of Delaware to
effectuate the amendments specified in clauses (x) and (y) of Section 4(p)(ii)
below as of the Closing Date. No default or event of default shall have occurred
and be continuing as of the date hereof under any Transaction Documents after
giving effect to the issuance of the Aggregate Notes.
-22-
(ll) HOLDING PERIOD. For the purposes of Rule 144, the Company
acknowledges that (x) the holding period of the Note may be tacked onto the
holding period of the Amended Note, (y) the holding period of the Series B
Preferred Shares and the shares of Common Stock issuable upon conversion of the
Series B Preferred Shares may be tacked onto the holding period of the Common
Shares (as defined in the Common Exchange Agreement) exchanged in connection
with the Common Exchange Agreement, and (z) the holding period of the Series B-1
Preferred Shares and the shares of Common Stock issuable upon conversion of the
Series B-1 Preferred Shares may be tacked onto the holding period of the Common
Shares (as defined in the Amendment to Common Exchange Agreement) exchanged in
connection with the Amendment to Common Exchange Agreement, and, in each case,
so long as the Company receives a legal opinion in a generally acceptable form
in connection with a resale of the shares of Common Stock issuable upon
conversion of the Preferred Shares and/or Notes, as applicable, in reliance upon
Rule 144, the Company agrees not to take a position contrary to this Section
2(ll).
(mm) ACQUISITION. Contemporaneously with the Closing, the Company
and its Subsidiaries are consummating the Acquisition.
4. COVENANTS.
(a) REASONABLE BEST EFFORTS. Each Buyer shall use its reasonable
best efforts to satisfy each of the conditions under clauses (a) through (e) of
Section 6 of this Agreement. The Company shall use its reasonable best efforts
to cause each of the conditions in Section 7 hereof to be satisfied.
(b) FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Notes and Note Conversion Shares for sale to the Buyers at such Closing pursuant
to this Agreement under applicable laws including without limitation securities
or "Blue Sky" laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to such Closing Date. The Company shall make all
filings and reports relating to the offer and sale of the Securities including
without limitation those required under applicable securities or "Blue Sky" laws
of the states of the United States following the Closing Date.
(c) REPORTING STATUS. Until the date on which the Investors shall
have sold all the Conversion Shares and Warrant Shares, and none of the Notes,
the Preferred Shares or Warrants are outstanding (the "REPORTING PERIOD"), the
Company shall timely file all reports required to be filed with the SEC pursuant
to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such
termination, and from and after the date the Company is eligible to register the
Conversion Shares and the Warrant Shares for resale by the Buyers on Form S-3,
the Company shall take all actions necessary to maintain its eligibility to
register the Conversion Shares and the Warrant Shares for resale by the Buyers
on Form S-3.
-23-
(d) [Intentionally omitted]
(e) FINANCIAL INFORMATION. The Company agrees to send the following
to each Investor during the Reporting Period (i) unless the following are filed
with the SEC through ▇▇▇▇▇ and are available to the public through the ▇▇▇▇▇
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports and Quarterly Reports on Form 10-K, 10-KSB, 10-Q or
10-QSB, any interim reports or any consolidated balance sheets, income
statements, stockholders' equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K (including any press
releases filed) and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act, (ii) on the same day as the release
thereof, facsimile copies of all press releases not filed through the ▇▇▇▇▇
system issued by the Company or any of its Subsidiaries, and (iii) copies of any
notices and other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or giving thereof
to the stockholders. As used herein, "BUSINESS DAY" means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.
(f) LISTING. The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed (subject to official notice of
issuance) and shall maintain such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stock's authorization for quotation on the Principal
Market. Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).
(g) FEES. The Company shall reimburse Prencen or its designee(s) (in
addition to any other expense amounts paid to any Buyer prior to the date of
this Agreement) for all reasonable costs and expenses incurred in connection
with the transactions contemplated by the Transaction Documents (including all
reasonable legal fees and disbursements in connection therewith, documentation
and the negotiation of the Transaction Documents, due diligence in connection
therewith and the Closing contemplated by this Agreement), which amount shall be
paid by the Company to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP on the Closing Date (the "LEGAL
EXPENSE AMOUNT"). The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's commissions (other
than for Persons engaged by any Buyer or any of its affiliates) relating to or
arising out of the transactions contemplated hereby. The Company shall pay, and
hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney's fees and out-of-pocket expenses)
arising in connection with any claim against a Buyer relating to any such
payment. Except as otherwise set forth in the Transaction Documents, each party
to this Agreement shall bear its own expenses in connection with the sale of the
Securities to the Buyers.
(h) PLEDGE OF SECURITIES. The Company acknowledges and agrees that
the Securities may be pledged by an Investor in connection with a bona fide
margin agreement or
-24-
other loan or financing arrangement that is secured by the Securities. The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Investor effecting a pledge of Securities shall
be required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document or otherwise. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.
(i) ADDITIONAL REGISTRATION STATEMENTS. Until the sixtieth (60th)
day following the Initial Effective Date (as defined in the Registration Rights
Agreement), the Company shall not, except to the extent permitted under the
Registration Rights Agreement and the Coty Registration Rights Agreement, file a
registration statement under the 1933 Act, other than (i) a registration
statement on Form S-8 and (ii) a registration statement relating solely to the
issuance of certain warrants (and their underlying shares of Common Stock) with
an exercise price of $1.50 per share, to be issued by the Company to all of the
existing holders of the Company's Common Stock (other than Prencen) and Class A
Junior Participating Preferred Stock, which warrants (x) shall be exercisable in
the aggregate for a number of shares of Common Stock equal to the aggregate
number of shares of Common Stock and Series A Preferred Stock (assuming such
shares of Class A Junior Participating Preferred Stock are converted on a one to
one basis) outstanding on the date of this Agreement and (y) shall only be
exercisable to the extent the Authorized Share Increase Event (as defined below)
has occurred (the "EXISTING STOCKHOLDER WARRANTS"), relating to securities that
are not the Securities or the "Securities" (as defined in the Other Securities
Purchase Agreement).
(j) DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL INFORMATION.
(i) On or before 5:30 p.m., New York City time, on the fourth
Business Day following the date of this Agreement, the Company shall issue a
press release and file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act and, to the extent not included in prior SEC filings of the
Company, attaching the material Transaction Documents (including, without
limitation, this Agreement, the form of the Notes, the form of the Registration
Rights Agreement, the form of Voting Agreement and the form of Security
Documents) as exhibits to such filing (including all attachments, the "8-K
FILING"). From and after the filing of the 8-K Filing, except as permitted by
Section 4(j)(ii) below and, in such case, from and after the Disclosure Date (as
defined below), no Buyer shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that was not disclosed in
the 8-K Filing or other public filings by the Company with the SEC. The Company
shall not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the express written consent of such Buyer. If a Buyer has, or reasonably
believes it has, received any such material, nonpublic information regarding the
Company or any of its Subsidiaries, it shall provide the Company with written
notice thereof. The Company shall, within five (5) Trading Days of receipt of
such notice, make public disclosure of such material, nonpublic information. In
the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its
-25-
or their respective officers, directors, employees and agents, in addition to
any other remedy provided herein or in the Transaction Documents, a Buyer shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents. No Buyer shall have
any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents for any such
disclosure provided such disclosure is accurate in all material respects.
Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Buyer, to make any press release
or other public disclosure with respect to such transactions (x) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (y) as is
required by applicable law and regulations (provided that in such case each
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release). Without the prior
written consent of any applicable Buyer, neither the Company nor any of its
Subsidiaries or their affiliates shall disclose the name of such Buyer in any
filing, announcement, release or otherwise unless required by law.
Notwithstanding the foregoing, (I) in the event that Prencen or Prencen Lending
is deemed a director by deputization by virtue of the rights set forth in
Section 4(q), the restrictions set forth in this Section 4(j) shall not apply to
the provision of information in the ordinary course to such director and the
rights of Prencen and its affiliates to disclose any material non-public
information received by such director as set forth in this Section 4(j)(i) shall
not apply and (II) in the event any Buyer receives material non-public
information it solicited from any employee, officer, director, consultant,
attorney, accountant or representative of the Company or any of its Subsidiaries
the rights of such Buyer and its affiliates to disclose any material non-public
information received thereby as set forth in this Section 4(j)(i) shall not
apply.
(ii) In the event the Company desires to obtain the consent of
the Buyers to any transaction in accordance with Section 4(l) (a "CONSENT
REQUEST TRANSACTION") and the Company has made a good faith determination that
the matters relating to such Consent Request Transaction constitute material
non-public information, the Company shall submit a written request (the
"MATERIAL EVENT NOTICE") to the person designated on the Schedule of Buyers for
such Buyer, or such other person as such Buyer shall designate in writing to the
Company (the "MATERIAL NOTICE RECIPIENT") requesting permission to deliver any
such request (a "CONSENT REQUEST NOTICE"). Until the earlier to occur of (x) the
date on which the Material Notice Recipient gives written notice to the Company
authorizing the delivery of such Consent Request Notice to the Buyer (the
"MATERIAL EVENT NOTICE ACCEPTANCE") or (y) the date on which the material
non-public information which is the subject of the Consent Request Notice is
publicly disclosed in a filing with the SEC, the Company shall be relieved of
any obligation imposed by this Agreement or any other Transaction Document to
deliver the Consent Request Notice to the Buyer, such Buyer shall be deemed to
have waived the Buyer's rights hereunder to receive such Consent Request Notice
and the Buyer shall be deemed to have consented to such Consent Request
Transaction, until the earlier to occur of (I) the date the Material Notice
Recipient delivers such Material Event Notice Acceptance to the Company and (II)
the date the Consent Request Transaction has been consummated. Notwithstanding
anything in any Transaction Document to the contrary, the Company covenants and
agrees that it shall not provide the material non-public information which is
the subject of the Consent Request Notice
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to any Buyer until the earlier to occur of (x) such time as the Material Event
Notice Acceptance is received by the Company or (y) the material non-public
information which is the subject of the Consent Request Notice has been
disclosed in a filing with the SEC. The Company shall, within five (5) Trading
Days (as defined in the Note) of the earlier to occur of (i) the consummation of
the transactions contemplated by the Material Event Notice and (ii) the date the
transaction contemplated by the Consent Request Notice is withdrawn or
terminated, make public disclosure of any material non-public information
provided to any Buyer in connection with the Consent Request Notice (the
"DISCLOSURE DATE"). In the event of a breach of the foregoing covenant by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents for any such disclosure.
(k) ADDITIONAL NOTES; VARIABLE SECURITIES; DILUTIVE ISSUANCES.
(i) So long as any Buyer beneficially owns any Securities, the
Company will not, (a) without the prior written consent of the holders of a
majority in principal amount of the Aggregate Notes, issue any Notes (other than
to the Buyers as contemplated hereby or pursuant to the Other Securities
Purchase Agreement) or (b) issue any other securities that would cause a breach
or default under the Aggregate Notes.
(ii) For so long as (x) at least $5,000,000 in aggregate
principal amount of the Aggregate Notes are outstanding or (y) at least 25% of
the Series A Warrants are outstanding, the Company shall not, without the prior
written consent of the holders of a majority in principal amount of the
Aggregate Notes, in any manner, issue or sell any rights, warrants or options to
subscribe for or purchase Common Stock or directly or indirectly convertible
into or exchangeable or exercisable for Common Stock at a conversion, exchange
or exercise price which varies or may vary after issuance with the market price
of the Common Stock, including by way of one or more reset(s) to any fixed price
unless the conversion, exchange or exercise price of any such security cannot be
less than the then applicable Conversion Price (as defined in the Notes) with
respect to the Common Stock into which any Notes are convertible or the then
applicable Exercise Price (as defined in the Warrants) with respect to the
Common Stock into which any Warrant is exercisable.
(iii) For so long as any Notes or Warrants remain outstanding,
the Company shall not, in any manner, enter into or affect any dilutive issuance
if the effect of such dilutive issuance is to cause the Company to be required
to issue upon conversion of any Note or exercise of any Warrant any shares of
Common Stock in excess of that number of shares of Common Stock which the
Company may issue upon conversion of the Notes and exercise of the Warrants,
other than the issuance and exercise of the Existing Stockholder Warrants.
(iv) For so long as any Notes remain outstanding, without the
prior written consent of the holders of a majority in principal amount of the
Aggregate Notes, the
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Company shall not, in any manner, enter into or affect any issuance (including
without limitation the issuance of options, stock, equity, warrants, and
convertible securities) if the effect of such issuance is to cause the Company
to be required to issue upon conversion or exercise of any option, warrant,
convertible security or other instrument any shares of Common Stock or other
Company equity in excess of (x) that number of shares of Common Stock or Company
equity that the Company may issue upon conversion and/or exercise thereof
without breaching the Company's obligations under the rules or regulations of
the Principal Market, unless the conversion and/or exercise of any portion of
such option, warrant or convertible security is conditioned upon receipt of the
necessary approvals under the rules and regulations of the Principal Market or
(y) the authorized but unissued shares of Common Stock and/or other applicable
equity of the Company (after considering all other outstanding instruments that
may be converted into or exercised for such Common Stock or equity), unless the
conversion or exercise of any portion of such option, warrant or convertible
security in excess of the authorized but unissued shares of common stock is
conditioned upon the approval and filing of an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares to
permit such conversion or exercise; provided that the Company shall issue shares
of Common Stock in connection with any such issuance only to the extent that
Company has reserved all of the shares required to be reserved pursuant to
Section 4(m) below.
(l) CORPORATE EXISTENCE; ACQUISITIONS. So long as any Buyer
beneficially owns any Securities, without the prior written consent of the
holders of a majority in principal amount of the Aggregate Notes, the Company
shall not be party to any Fundamental Transaction (as defined in the Notes)
unless the Company is in compliance with the applicable provisions governing
Fundamental Transactions set forth in the Notes, the Certificates of
Designations and the Warrants. From and after the repayment in full of the
Permitted Senior Indebtedness (as defined in the Notes), other than in
connection with one or more unrelated Acquisition Transactions (as defined
below) for aggregate gross purchase prices not in excess of $10 million, for so
long as (x) at least $5,000,000 in aggregate principal amount of the Aggregate
Notes are outstanding or (y) at least 25% of the Series A Warrants are
outstanding, without the prior written consent of the holders of a majority in
principal amount of the Aggregate Notes, the Company shall not acquire or agree
to acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets or stock of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any equity interest therein or
any assets outside the ordinary course of business (each, an "ACQUISITION
TRANSACTION").
(m) RESERVATION OF SHARES. After the Company has obtained the
Stockholder Approval and filed with the Secretary of State of Delaware an
amendment to the Certificate of Incorporation to increase the number of
authorized shares of Common Stock as contemplated by the Stockholder Approval,
which shall be filed no later than the first (1st) Business Day after the
Company has obtained the Stockholder Approval, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than (i) 130% of the maximum number of shares of Common Stock
issuable upon conversion of the Aggregate Notes (assuming for purposes hereof,
that the Aggregate Notes are convertible at the Conversion Rate (as defined in
the Aggregate Notes) and without taking into account any limitations on the
conversion of the Aggregate Notes set forth in the Aggregate Notes), (ii) 130%
of the maximum number of shares of Common Stock issuable upon conversion of the
Preferred Shares (assuming
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for purposes hereof, that the Preferred Shares are convertible at the Conversion
Rate (as defined in the applicable Certificate of Designations) and without
taking into account any limitations on the conversion of the Preferred Shares
set forth in the applicable Certificate of Designations), (iii) 130% of the
maximum number of shares of Common Stock issuable upon exercise of the Warrants
(without taking into account any limitations on the exercise of the Warrants set
forth in the Warrants) and (iv) 105% of the maximum number of shares of Common
Stock or other equity of the Company issuable in connection with all other
options, warrants, convertible securities and other instruments that are
convertible or exercisable into such Common Stock and other equity of the
Company.
(n) CONDUCT OF BUSINESS. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
(o) Additional Issuances of Securities.
(i) For purposes of this Section 4(o), the following
definitions shall apply.
(1) "EQUITY/CONVERTIBLE SECURITIES" means (x) any stock,
equity securities or securities (other than Options) convertible into or
exercisable or exchangeable for shares of Common Stock or other equity of the
Company or any of its Subsidiaries and/or (y) any debt, loans, debentures, bonds
or similar indebtedness (collectively, "FINANCING DEBT"), but only if such
Financing Debt is issued with or in connection with (including by way of related
transactions) any Equity/Convertible Securities described in the preceding
clause (x) and/or Options.
(2) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase shares of Common Stock or Equity/Convertible
Securities.
(3) "COMMON STOCK EQUIVALENTS" means, collectively,
Options and Equity/Convertible Securities.
(ii) From the date hereof until the date that is thirty (30)
Trading Days after the Initial Effective Date (the "TRIGGER DATE"), the Company
will not, without the consent of the holders of a majority in principal amount
of the Aggregate Notes, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or its Subsidiaries'
Common Stock Equivalents, equity or equity equivalent securities, including
without limitation any debt, preferred stock or other instrument or security
that is, at any time during its life and under any circumstances, convertible
into or exchangeable or exercisable for shares of Common Stock or Common Stock
Equivalents (any such offer, sale, grant, disposition or announcement being
referred to as a "SUBSEQUENT PLACEMENT").
(iii) From the Trigger Date until the date on which none of
the Aggregate Notes are outstanding, the Company will not, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first
complied with this Section 4(o)(iii).
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(1) The Company shall deliver to each Buyer (or any
assignee thereof) who then holds Notes a written notice (the "OFFER NOTICE") of
any proposed or intended issuance or sale (the "OFFER") of the Common Stock
Equivalents being offered (the "OFFERED SECURITIES") in a Subsequent Placement,
which Offer Notice shall (w) identify and describe the Offered Securities, (x)
describe the price and other terms upon which they are to be issued or sold, and
the number or amount of the Offered Securities to be issued or sold, (y)
identify the persons or entities (if known) to which or with which the Offered
Securities are to be offered, issued or sold and (z) offer to issue and sell to
such Buyers and the Other Buyers all of the Offered Securities, allocated among
such Buyers and Other Buyers ("OTHER BUYERS" means, the then current holders of
the Watershed Notes (as defined in the Notes)) (a) based on such Buyer's or
Other Buyer's pro rata portion of the aggregate principal amount of the
Aggregate Notes then held by such Persons (the "BASIC AMOUNT"), and (b) with
respect to each Buyer that elects (in its sole and absolute discretion) to
purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers and Other Buyers as such Buyer
shall indicate it will purchase or acquire should the other Buyers or Other
Buyers subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION
AMOUNT"), which process shall be repeated until the Buyers and Other Buyers
shall have an opportunity to subscribe for any remaining Undersubscription
Amount.
(2) To accept an Offer, in whole or in part, such Buyer
must deliver a written notice to the Company prior to the end of the tenth
(10th) Business Day after such Buyer's receipt of the Offer Notice (the "OFFER
PERIOD"), setting forth the portion of such Buyer's Basic Amount that such Buyer
elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, that portion of the Undersubscription Amount, if any, that such Buyer
elects to purchase (in either case, the "NOTICE OF ACCEPTANCE"). If the Basic
Amounts subscribed for by all the Buyers and the Other Buyers are less than the
total of all of the Basic Amounts hereunder and under the Other Securities
Purchase Agreement, then each Buyer who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition to
the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; PROVIDED, HOWEVER, that if the Undersubscription Amounts subscribed for
exceed the difference between the total of all the Basic Amounts and the Basic
Amounts subscribed for hereunder and under the Other Securities Purchase
Agreement (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Buyer who has
subscribed for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Basic Amount of
such Buyer bears to the total Basic Amounts of all Buyers and the Other Buyers
that have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.
(3) The Company shall have ten (10) Business Days from
the expiration of the Offer Period above to (i) offer, issue or sell all or any
part of such Offered Securities as to which a Notice of Acceptance has not been
given by the Buyers or the Other Buyers (the "REFUSED SECURITIES"), but only to
the offerees described in the Offer Notice (if so described therein) and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the
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acquiring person or persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) publicly announce (a) the execution of such
Subsequent Placement Agreement (as defined below), and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.
(4) In the event the Company shall propose to sell less
than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(o)(iii)(3) above), then each Buyer may, at its sole
option and in its sole discretion, reduce the number or amount of the Offered
Securities that it was otherwise committed to purchase to an amount that shall
be not less than the number or amount of the Offered Securities that such Buyer
elected to purchase pursuant to Section 4(o)(iii)(2) above multiplied by a
fraction, (i) the numerator of which shall be the number or amount of Offered
Securities the Company actually proposes to issue or sell (including Offered
Securities to be issued or sold to Buyers and Other Buyers pursuant to Section
4(o)(iii)(2) above prior to such reduction) and (ii) the denominator of which
shall be the original amount of the Offered Securities. In the event that any
Buyer so elects to reduce the number or amount of Offered Securities specified
that it was otherwise committed to purchase, the Company may not issue or sell
more than the reduced number or amount of the Offered Securities unless and
until such securities have again been offered to the Buyers in accordance with
Section 4(o)(iii)(1) above.
(5) Upon the closing of the issuance or sale of all or
less than all of the Refused Securities (if applicable), the Buyers shall
acquire from the Company, and the Company shall issue to the Buyers, the number
or amount of Offered Securities specified in the Notices of Acceptance, as
reduced pursuant to Section 4(o)(iii)(3) above if the Buyers have so elected,
upon the terms and conditions specified in the Offer. The purchase by the Buyers
of any Offered Securities is subject in all cases to the preparation, execution
and delivery by the Company and the Buyers of a purchase agreement and other
documents relating to such Offered Securities reasonably satisfactory in form
and substance to the Buyers and their respective counsel.
(6) Any Offered Securities not acquired by the Buyers or
the Other Buyers or other persons in accordance with Section 4(o)(iii)(3) above
may not be offered, issued or sold until they are again offered to the Buyers
under the procedures specified in this Section 4(o).
(7) The Company and the Buyers agree that if any Buyer
elects to participate in the Offer, (x) neither the securities purchase
agreement (the "SUBSEQUENT PLACEMENT AGREEMENT") with respect to such Offer nor
any other transaction documents related thereto (collectively, the "SUBSEQUENT
PLACEMENT DOCUMENTS") shall include any term or provisions (i) whereby any Buyer
shall be required to agree to any restrictions in trading as to any securities
of the Company owned by such Buyer prior to such Subsequent Placement or (ii)
that is different (other than as to quantity and price) from the terms or
provisions of the "Subsequent Placement Documents" of any other Buyer or
-31-
Other Buyer or third party offeree (if any), and (y) any registration rights set
forth in such Subsequent Placement Documents shall be similar in all material
respects to the registration rights contained in the Registration Rights
Agreement.
(8) Notwithstanding anything to the contrary in this
Section 4(o) and unless otherwise agreed to by the Buyers, the Company shall
either confirm in writing to the Buyers that the transaction with respect to the
Subsequent Placement has been abandoned or shall publicly disclose its intention
to issue the Offered Securities, in either case in such a manner such that the
Buyers will not be in possession of material non-public information, by the
twelfth (12th) Business Day following delivery of the Offer Notice. If by the
twelfth (12th) Business Day following delivery of the Offer Notice no public
disclosure regarding a transaction with respect to the Offered Securities has
been made, and no notice regarding the abandonment of such transaction has been
received by the Buyers, such transaction shall be deemed to have been abandoned
and the Buyers shall not be deemed to be in possession of any material,
non-public information with respect to the Company. Should the Company decide to
pursue such transaction with respect to the Offered Securities, the Company
shall provide each Buyer with another Offer Notice and each Buyer will again
have the right of participation set forth in this Section 4(o)(iii). The Company
shall not be permitted to deliver more than one such Offer Notice to the Buyers
in any 60 day period.
(9) The restrictions contained in subsections (ii) and
(iii) of this Section 4(o) shall not apply in connection with the issuance of
any Excluded Securities (as defined in the Notes) or the issuance of the
Existing Stockholder Warrants. For the avoidance of doubt, the rights of each
holder of any Aggregate Note under this Section 4(o) shall be transferable with
the transfer of all or a portion of such Aggregate Note.
(10) For the avoidance of doubt, this Section 4(o) may
not be waived or amended except by the written consent of all of holders of the
Aggregate Notes. To the extent Section 4(o)(ii) is waived to allow a Subsequent
Placement prior to the Trigger Date, the provisions of Section 4(o)(iii) shall
apply MUTATIS MUTANDIS to all holders of the Aggregate Notes (and any transferee
of a holder of Aggregate Notes) in connection with such Subsequent Placement.
(p) Stockholder Approval.
(i) TRANSACTION STOCKHOLDER APPROVAL. The Company shall
prepare and file with the SEC, as promptly as practicable after the Closing
Date, but in no event later than the date ten (10) calendar days after the
Closing Date, an information statement (the "TRANSACTION INFORMATION
Statement"), in a form reasonably acceptable to the Buyers and ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP, at the expense of the Company, not to exceed $5,000, informing the
stockholders of the Company of the receipt of the consents of the holders of a
majority of the outstanding voting securities of the Company in the form
attached hereto as EXHIBIT G (the "TRANSACTION STOCKHOLDER CONSENT") approving
the transaction resolutions (the "TRANSACTION RESOLUTIONS") that approve the
transactions contemplated hereby, pursuant to this Agreement and pursuant to the
Other Securities Purchase Agreement, including, without limitation, the issuance
and terms of the
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Aggregate Notes (including the conversion of the Notes into Common Stock) and
the approval of such transactions pursuant to applicable law and the rules and
regulations of the Principal Market. In addition to the foregoing, if otherwise
required by applicable law, rule or regulation, the Company shall prepare and
file with the SEC a preliminary proxy statement with respect to a special or
annual meeting of the stockholders of the Company (the "TRANSACTION STOCKHOLDER
MEETING"), which shall be called as promptly as practicable after the date
hereof, but in no event later than April 30, 2007 (the "TRANSACTION STOCKHOLDER
MEETING DEADLINE") soliciting each such stockholder's affirmative vote for
approval of, to the extent not previously adopted, the Transaction Resolutions
(such affirmative approval being referred to herein as the "TRANSACTION
STOCKHOLDER APPROVAL" and the date such approval is obtained, the "TRANSACTION
STOCKHOLDER APPROVAL DATE"), and the Company shall use its reasonable best
efforts to solicit its stockholders' approval of such Transaction Resolutions
and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve the Transaction Resolutions. The Company shall be
obligated to seek to obtain the Transaction Stockholder Approval by the
Transaction Stockholder Meeting Deadline. If, despite the Company's reasonable
best efforts, the Transaction Stockholder Approval is not obtained on or prior
to the Transaction Stockholder Meeting Deadline, the Company shall cause an
additional Transaction Stockholder Meeting to be held every six (6) month period
thereafter until the second anniversary of the Closing Date, whereafter such
Transaction Stockholder Meeting shall only be required to occur at the annual
meeting of the Company held that year and each year thereafter until Transaction
Stockholder Approval is obtained, provided that if the Board does not recommend
to the stockholders that they approve the Transaction Resolutions at any such
Transaction Stockholder Meeting and the Transaction Stockholder Approval is not
obtained, the Company shall cause an additional Transaction Stockholder Meeting
to be held each calendar quarter thereafter until such Transaction Stockholder
Approval is obtained.
(ii) ADDITIONAL STOCKHOLDER APPROVAL. The Company shall
prepare and file with the SEC, as promptly as practicable after the date of the
conversion of the Series A Preferred Stock of the Company into Common Stock, but
in no event later than the date that is twenty (20) calendar days after the
Closing Date, an information statement (the "ADDITIONAL INFORMATION STATEMENT"),
in a form reasonably acceptable to the Buyers and ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, at
the expense of the Company, not to exceed $5,000, informing the stockholders of
the Company of the receipt of the consents of the holders of a majority of the
outstanding voting securities of the Company, in form and substance reasonably
satisfactory to the Buyers, approving the authorized share resolutions (the
"ADDITIONAL RESOLUTIONS" and collectively with the Transaction Resolutions, the
"RESOLUTIONS") that approve (x) the increase in the authorized shares of Common
Stock of the Company from 225,000,000 shares to a number of shares of Common
Stock that is no less than such number of shares of Common Stock that would
permit the Company to reserve as of the date hereof from the authorized shares
of Common Stock of the Company the Required Registration Amount (as defined in
the Registration Rights Agreement) of Common Stock of the Company, (y) the
amendment of the Certificate of Incorporation of the Company to provide that the
number of authorized shares of Common Stock may be increased or decreased (but
not below the number of shares of Common Stock then outstanding) by the
affirmative vote of the
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holders of a majority of the outstanding voting securities of the Company, in
accordance with applicable law and the rules and regulations of the Principal
Market (the occurrence of (x) and (y), the ("AUTHORIZED SHARE INCREASE EVENT"),
and (z) the amendment of the Certificate of Incorporation of the Company to
eliminate Article VII thereof. In addition to the foregoing, if otherwise
required by applicable law, rule or regulation, the Company shall prepare and
file with the SEC a preliminary proxy statement with respect to a special or
annual meeting of the stockholders of the Company (the "ADDITIONAL STOCKHOLDER
Meeting"), which shall be called as promptly as practicable after the date of
the conversion of the Series A Preferred Stock of the Company into Common Stock,
but in no event later than April 30, 2007 (the "ADDITIONAL STOCKHOLDER MEETING
DEADLINE") soliciting each such stockholder's affirmative vote for approval of,
to the extent not previously adopted, the Additional Resolutions (such
affirmative approval being referred to herein as the "ADDITIONAL STOCKHOLDER
APPROVAL" and the date such approval is obtained, the "ADDITIONAL STOCKHOLDER
APPROVAL DATE" and the Additional Stockholder Approval and the Transaction
Stockholder Approval are collectively referred to as the "STOCKHOLDER
APPROVAL"), and the Company shall use its reasonable best efforts to solicit its
stockholders' approval of such Additional Resolutions and to cause the Board of
Directors of the Company to recommend to the stockholders that they approve the
Additional Resolutions. The Company shall be obligated to seek to obtain the
Additional Stockholder Approval by the Additional Stockholder Meeting Deadline.
If, despite the Company's reasonable best efforts, the Additional Stockholder
Approval is not obtained on or prior to the Additional Stockholder Meeting
Deadline, the Company shall cause an additional Additional Stockholder Meeting
to be held every six (6) month period thereafter until the second anniversary of
the Closing Date, whereafter such Additional Stockholder Meeting shall only be
required to occur at the annual meeting of the Company held that year and each
year thereafter until Additional Stockholder Approval is obtained, provided that
if the Board does not recommend to the stockholders that they approve the
Additional Resolutions at any such Additional Stockholder Meeting and the
Additional Stockholder Approval is not obtained, the Company shall cause an
additional Additional Stockholder Meeting to be held each calendar quarter
thereafter until such Additional Stockholder Approval is obtained.
(iii) STOCKHOLDER APPROVAL WAIVER; AMENDMENT. Notwithstanding
anything in this Section 4(p) to the contrary, this Section 4(p) may only be
waived or amended by the written consent of holders of all of the Aggregate
Notes.
(q) NOMINATION OF PRENCEN DIRECTOR. For so long as Prencen or any of
its affiliates owns (x) at least $5,000,000 in aggregate principal amount of the
Notes outstanding, (y) at least $5,000,000 of stated value of any preferred
stock of the Company or (z) at least 25% of the Series A Warrants purchased by
Prencen or its affiliates, as applicable, and subject to limitations, if any,
imposed by stock exchange rules in effect from time to time, the Company agrees
to cause one (1) person designated by Prencen (the "PRENCEN DIRECTOR") to be
nominated for election at every meeting of the stockholders of the Company
called with respect to the election of members of the board of directors of the
Company, and at every adjournment or postponement thereof, and on every action
or approval by written consent of the stockholders or the board of directors
with respect to the election of members of the board of directors of the Company
so that at any time there shall be one (1) director designated by Prencen on the
board
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of directors of the Company. Should a person designated pursuant to this Section
4(q) be unwilling or unable to serve, or otherwise cease to serve, the Company
shall cause one (1) person designated by Prencen to replace such member on the
board of directors. If Prencen desires to remove any person designated by
Prencen pursuant to this Section 4(q), the Company shall cooperate with and
shall support such removal and any vacancy shall be filled in accordance with
the preceding sentence.
(r) SIZE OF BOARD OF DIRECTORS. Promptly following the Closing Date,
the Company shall cause the Board of Directors of the Company to consist of
seven (7) members. Thereafter, for so long as any Notes or Warrants remain
outstanding and subject to the provisions of Section 4(q), the Company, with the
unanimous approval of all members of the Board of Directors of the Company, may
increase the size of the Board of Directors of the Company to consist of no more
than nine (9) members provided that one (1) of such additional directors is a
Prencen Director.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) REGISTER. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Notes, the Preferred
Shares and the Warrants in which the Company shall record the name and address
of the Person in whose name the Notes, the Preferred Shares and the Warrants
have been issued (including the name and address of each transferee), the
principal amount of the Notes, the number of Preferred Shares outstanding, the
number of Conversion Shares issuable upon conversion of the Notes and the
Preferred Shares and Warrant Shares issuable upon exercise of the Warrants held
by such Person. The Company shall keep the register open and available at all
times during business hours for inspection of any holder of any Aggregate Note
or its legal representatives.
(b) TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable participant accounts at The
Depository Trust Company ("DTC"), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares, and the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes and Preferred Shares or exercise of the Warrants in the
form of EXHIBIT H attached hereto (the "IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS"). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(g) hereof, will be given
by the Company to its transfer agent with respect to the Securities, and that
the Securities shall otherwise be freely transferable on the books and records
of the Company, as applicable, and to the extent provided in this Agreement and
the other Transaction Documents. If a Buyer effects a sale, assignment or
transfer of the Securities in accordance with Section 2(g), the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue one
or more certificates or credit shares to the applicable participant accounts at
DTC in such name and in such denominations as specified by such Buyer to effect
such sale, transfer or assignment. In the event that such sale, assignment or
transfer involves Conversion Shares or Warrant Shares sold, assigned or
transferred pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee or
transferee, as the case
-35-
may be, without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to a Buyer.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5(b) will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Section 5(b), that a Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
(c) PLEDGES. The Securities may be pledged in connection with a bona
fide margin account or other loan or financing arrangement secured by the
Securities and such pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including without limitation Section 2(g).
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Notes to Prencen
Lending at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:
(a) Such Buyer shall have executed each of this Agreement, the
Registration Rights Agreement, the Security Agreement, the Intercreditor
Agreement and the Intercompany Subordination Agreement and delivered the same to
the Company.
(b) Prencen Lending shall have delivered to the Company the Amended
Note for cancellation.
(c) Prencen Lending shall have delivered to the Company any stock
certificates with respect to Subsidiaries of the Company held by Prencen Lending
or for such certificates that cannot be located, certificates of lost
certificate affidavit and indemnity in form and substance reasonably
satisfactory to the Company and each such Subsidiary.
(d) Prencen Lending and Prencen shall have executed the
Intercreditor Agreement (as defined in the Security Agreement) and delivered the
same to the Company, Prencen and the Agent (as defined in the Security
Agreement).
(e) The representations and warranties of such Buyer shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the Closing Date (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Buyer at or prior to the Closing Date.
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(f) The Buyers shall have delivered the instruments necessary to
terminate effectiveness of the Terminated Documents, including, without
limitation, mortgage releases, re-assignments or releases of trademarks,
copyrights and patents as are necessary to release, as of record, the security
interests previously recorded with respect to the Terminated Documents.
(g) Concurrently with the Closing herewith, the transactions
contemplated by the Other Securities Purchase Agreement shall be consummated.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of Prencen Lending hereunder to purchase the Notes at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:
(a) The Company and each Subsidiary, as applicable, shall have duly
executed and delivered to such Buyer (i) each of the Transaction Documents and
(ii) the Notes being acquired by such Buyer at the Closing pursuant to this
Agreement (in such principal amounts as is set forth across from such Buyer's
name in column (3) of the Schedule of Buyers), if any.
(b) Concurrently with the Closing herewith, (i) the transactions
contemplated by the Other Securities Purchase Agreement and (ii) the Acquisition
shall be consummated.
(c) The Company shall have delivered to Prencen Lending the
Acquisition Payoff Amount by wire transfer of immediately available funds
pursuant to the wire instructions provided by Prencen Lending.
(d) The Company shall have delivered to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP the
Legal Expense Amount by wire transfer of immediately available funds pursuant to
the wire instructions provided by ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP.
(e) Such Buyer shall have received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP the Company's outside counsel, dated as of the Closing
Date, in substantially the form of EXHIBIT I attached hereto.
(f) The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in the form of EXHIBIT H attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(g) The Company shall have delivered to such Buyer a certificate
evidencing the formation and good standing of the Company and each of its
Subsidiaries in each such entity's jurisdiction of formation issued by the
Secretary of State (or equivalent) of such jurisdiction of formation as of a
date within ten (10) days of the Closing Date.
(h) The Company shall have delivered to such Buyer a certified copy
of the Certificate of Incorporation as certified by the Secretary of State of
the State of Delaware within
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ten (10) days of the Closing Date.
(i) The Company shall have delivered to such Buyer a certificate,
executed by the Secretary of the Company and dated as of the Closing Date, as to
(x) the resolutions consistent with Section 3(b) as adopted by the Company's
board of directors in a form reasonably acceptable to such Buyer, (y) the
Certificate of Incorporation and (z) the Bylaws, each as in effect at the
Closing, in the form attached hereto as EXHIBIT J.
(j) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except (x) for representations and warranties that shall not be
true and correct as of the date when made and/or as of the Closing Date as
though made at that time, in each case solely by virtue of the Stockholder
Approval not being obtained as of the date when made and/or as of the Closing
Date and the amendments to the Certificate of Incorporation of the Company not
having been filed with the Secretary of State of Delaware to effectuate the
amendments specified in clauses (x) and (y) of Section 4(p)(ii) as of the date
when made and/or as of the Closing Date and (y) for representations and
warranties that speak as of a specific date) and the Company and each of its
Subsidiaries shall have performed, satisfied and complied in all respects with
the covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by the Company and each of its
Subsidiaries at or prior to the Closing Date (except for any breach of any such
covenants or agreements solely by virtue of the Stockholder Approval not being
obtained at or prior to the Closing Date and the amendments to the Certificate
of Incorporation of the Company not having been filed with the Secretary of
State of Delaware to effectuate the amendments specified in clauses (x) and (y)
of Section 4(p)(ii) at or prior to the Closing Date). Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the Company,
dated as of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as EXHIBIT K.
(k) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.
(l) The Common Stock (i) shall be designated for quotation or listed
on the Principal Market and (ii) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Closing Date, either (x) in writing by the SEC or the
Principal Market or (y) by falling below the minimum maintenance requirements of
the Principal Market.
(m) Other than the Stockholder Approval, the Company shall have
obtained all governmental, regulatory and/or third party consents and approvals,
if any, necessary for the issuance of the Securities.
(n) The Company shall have delivered to such Buyer (i) the
Transaction Stockholder Consent executed by holders of a majority of the
outstanding voting securities of the Company (the "STOCKHOLDERS") in the form
attached hereto as EXHIBIT G and (ii) duly executed
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voting agreements of the Stockholders, in the form attached hereto as EXHIBIT L
(the "VOTING Agreements"), whereby the Stockholders shall agree to vote in favor
of the Resolutions and to vote in favor of one Person designated by Prencen to
serve on the board of directors of the Company as and to the extent provided in
Section 4(q).
(o) Watershed shall have executed the Intercreditor Agreement and
delivered the same to the Company, Prencen Lending and the agent thereto.
(p) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Closing shall not have occurred with respect
to a Buyer on or before fifteen (15) Business Days from the date hereof due to
the Company's or such Buyer's failure to satisfy the conditions set forth in
Sections 6 and 7 above (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of
business on such date without liability of any party to any other party;
provided, however, if this Agreement is terminated pursuant to this Section 8,
the Company shall remain obligated to reimburse the non-breaching Buyers for the
expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) COUNTERPARTS. This Agreement may be executed in two or more
-39-
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the
other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company, the holders of at least a majority in aggregate principal amount of the
Notes and the holders of at least a majority in aggregate principal amount of
the Aggregate Notes, and any amendment to this Agreement made in conformity with
the provisions of this Section 9(e) shall be binding on all Buyers and holders
of Securities, as applicable. No provision hereof may be waived (except to the
extent such provisions call for the consent of the Required Holders or holders
of at least a majority in aggregate principal amount of the Notes or Aggregate
Notes, in which case such provision may be waived with the consent of the
Required Holders or holders of at least a majority in aggregate principal amount
of the Notes or Aggregate Notes, as applicable) other than by an instrument in
writing signed by the party against whom enforcement is sought. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Aggregate Notes then outstanding. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any Transaction Document unless the same consideration also is
offered to all of the parties to such particular Transaction Document. The
Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the
Transaction Documents except as set forth in the Transaction Documents, which
have been provided to the Other Buyers. Without limiting the foregoing, the
Company confirms that, except as set forth in this Agreement, no Buyer has made
any commitment or promise or has any other obligation to provide any financing
to the Company, its Subsidiaries or otherwise.
(f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically
-40-
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with an overnight courier service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Ascendia Brands, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy (for informational purposes only) to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to the Transfer Agent:
American Stock Transfer & Trust Co.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇, Vice President
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with a copy (for informational purposes only) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
-41-
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and, with
respect to the Buyers, the Buyers' permitted assigns, including any purchasers
of the Notes or the Warrants. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of all of the
holders of the Aggregate Notes (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth in the Note
and the Warrants). A Buyer may assign some or all of its rights hereunder only
in connection with the transfer of any of its Securities in compliance with the
terms of this Agreement without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
(i) SURVIVAL. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Buyers and the Company contained in
Sections 2 and 3, respectively, and the agreements and covenants set forth in
Sections 4, 5 and 9 shall survive the Closing and the delivery and exercise of
Securities, as applicable. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder and not those of
any other Buyer or Other Buyer and the obligations of the Buyers hereunder are
several (and not joint and several).
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents that it is a party to and acquiring the
Securities hereunder and in addition to all of the Company's other obligations
under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of the Securities and all of
their stockholders, partners, members, officers, directors, employees and direct
or indirect investors and any of the foregoing Persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty
-42-
made by the Company and/or any of its Subsidiaries in the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company and/or
any of its Subsidiaries contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company and/or any of its Subsidiaries) and arising out of or resulting
from (i) the execution, delivery, performance or enforcement of the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities,
(iii) any disclosure made pursuant to Section 4(j), or (iv) the status of such
Buyer or holder of the Securities as an investor in the Company pursuant to the
transactions contemplated by the Transaction Documents. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
Except as otherwise set forth herein, the mechanics and procedures with respect
to the rights and obligations under this Section 9(k) shall be the same as those
set forth in Section 6 of the Registration Rights Agreement.
(l) NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) REMEDIES. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law or in equity.
Furthermore, the Company recognizes that in the event that it and/or any of its
Subsidiaries fails to perform, observe, or discharge any or all of its
obligations under the Transaction Documents, any remedy at law may prove to be
inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek temporary and permanent injunctive relief in any such
case without the necessity of proving actual damages and without posting a bond
or other security.
(n) RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Buyer exercises a right, election, demand or
option under a Transaction Document and the Company does not timely perform its
related obligations within the periods therein provided, then such Buyer may
(with respect to itself) rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights
(o) PAYMENT SET ASIDE. To the extent that the Company and/or any of
its Subsidiaries makes a payment or payments to the Buyers hereunder or pursuant
to any of the other Transaction Documents or the Buyers enforce or exercise
their rights hereunder or
-43-
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
(p) INDEPENDENT NATURE OF BUYERS' OBLIGATIONS AND RIGHTS. The
obligations of each Buyer and each Other Buyer under any Transaction Document or
any other documents are several and not joint with the obligations of any other
Buyer or Other Buyer, and no Buyer or Other Buyer shall be responsible in any
way for the performance of the obligations of any other Buyer or Other Buyer
under any Transaction Document or any other documents. Nothing contained herein
or in any other Transaction Document or any other documents, and no action taken
by any Buyer or Other Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers and the Other Buyers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Buyers and the Other Buyers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents or any other documents or otherwise and the Company acknowledges that
the Buyers and the Other Buyers are not acting in concert or as a group, and the
Company will not assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents or any other documents.
Each Buyer confirms that it has independently participated in the negotiation of
the transaction contemplated hereby with the advice of its own counsel and
advisors. Each Buyer shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents or any other documents, and it shall
not be necessary for any other Buyer or the Other Buyers to be joined as an
additional party in any proceeding for such purpose.
(q) SUBORDINATION. THIS AGREEMENT IS SUBJECT TO THE TERMS AND
PROVISIONS OF THE INTERCREDITOR AGREEMENT DATED AS OF FEBRUARY 9, 2007, (AS
AMENDED, RESTATED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME, THE
"INTERCREDITOR AGREEMENT"), BY AND AMONG ▇▇▇▇▇ FARGO FOOTHILL, INC., AS FIRST
LIEN AGENT, ▇▇▇▇▇ FARGO FOOTHILL, INC., AS SECOND LIEN COLLATERAL AGENT,
WATERSHED ADMINISTRATIVE, LLC, AS SECOND LIEN ADMINISTRATIVE AGENT, ▇▇▇▇▇ FARGO
FOOTHILL, INC., AS THIRD LIEN COLLATERAL AGENT, AND PRENCEN LENDING LLC,
WATERSHED CAPITAL PARTNERS, L.P., AND WATERSHED CAPITAL INSTITUTIONAL PARTNERS,
L.P., AS THIRD LIEN LENDERS AND PRENCEN LLC. IN THE EVENT OF ANY CONFLICT
BETWEEN TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF
THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
ASCENDIA BRANDS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
PRENCEN LLC
By: Prentice Capital Management, LP,
as Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Counsel
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
PRENCEN LENDING LLC,
AS BUYER
By: Prentice Capital Management, LP,
as Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Counsel
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5) (6)
AGGREGATE NUMBER OF
PRINCIPAL NUMBER OF SERIES B
AMOUNT OF SERIES A WARRANT SHARES LEGAL REPRESENTATIVE'S
BUYER ADDRESS AND FACSIMILE NUMBER NOTES WARRANT SHARES ADDRESS AND FACSIMILE NUMBER
------------------- ----------------------------------- ---------- --------------- -------------- ----------------------------
Prencen LLC c/o Prentice Capital Management, LP N/A 3,053,358 3,000,000** ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇)-▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Prencen Lending LLC c/o Prentice Capital Management, LP $76,000,000 N/A N/A ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
**Represents maximum number of Series B Warrant Shares issuable upon exercise of the Series B Warrant. The actual number of Series B
Warrant Shares issuable at any time upon exercise of the Series B Warrant shall be determined in accordance with the terms of the
Series B Warrant.
APPENDIX I
Terminated Documents
Amended and Restated Registration Rights Agreement, dated as of August 2, 2006,
by and among Ascendia Brands, Inc., Prencen LLC and Prencen Lending LLC (the
"Amended and Restated Registration Rights Agreement").
Amendment dated October 2, 2006 to the Amended and Restated Registration Rights
Agreement, by and among Ascendia Brands, Inc., Prencen LLC and Prencen Lending
LLC.
Amendment dated October 10, 2006 to the Amended and Restated Registration Rights
Agreement, by and among Ascendia Brands, Inc., Prencen LLC and Prencen Lending
LLC.
Senior Secured Convertible Note in the principal amount of $91,000,000 issued by
Ascendia Brands, Inc. to Prencen Lending LLC as of August 2, 2006.
Amended and Restated Security Agreement, dated as of August 2, 2006, by and
among Ascendia Brands, Inc., Hermes Acquisition Company I LLC, Lander
Intangibles Corporation, Lander Co., Inc., Ascendia Real Estate LLC and Lander
Co. Canada Limited in favor of Prencen Lending LLC, in its capacity as the agent
for the lenders (the "Security Agreement").
Amended and Restated Pledge and Security Agreement, dated as of August 2, 2006,
by and among Ascendia Brands, Inc., Ascendia Brands Co., Inc., Hermes
Acquisition Company I LLC, Lander Intangibles Corporation, Lander Co., Inc.,
Ascendia Real Estate LLC and Lander Co. Canada Limited in favor of Prencen
Lending LLC, in its capacity as collateral agent for the lenders (the "Pledge
Agreement").
Joinder Agreement, dated as of August 2, 2006, to the Security Agreement by and
among Ascendia Brands, Inc., Ascendia Brands Co., Inc., Hermes Acquisition
Company I LLC, Lander Intangibles Corporation, Lander Co., Inc., Ascendia Real
Estate LLC and Lander Co. Canada Limited in favor of Prencen Lending LLC, in its
capacity as collateral agent for the lenders.
Joinder Agreement, dated as of August 2, 2006, to the Pledge Agreement by and
among Ascendia Brands, Inc., Ascendia Brands Co., Inc., Hermes Acquisition
Company I LLC, Lander Intangibles Corporation, Lander Co., Inc., Ascendia Real
Estate LLC and Lander Co. Canada Limited in favor of Prencen Lending LLC, in its
capacity as collateral agent for the lenders.
Amended and Restated Guaranty, dated as of August 2, 2006, by Hermes Acquisition
Company I LLC, Lander Intangibles Corporation, Lander Co., Inc., Ascendia Real
Estate LLC and Lander Co. Canada Limited in favor of Prencen Lending LLC, in its
capacity as collateral agent for the lenders (the "Amended and Restated
Guaranty").
Guaranty, dated as of August 2, 2006, by Ascendia Brands Co., Inc. in favor of
Prencen Lending LLC, in its capacity as collateral agent for the lenders (the
"Guaranty").
Second Amended and Restated Registration Rights Agreement, dated as of December
27, 2006, by and among Ascendia Brands, Inc., Prencen LLC and Prencen Lending
LLC.
Amendment Agreement, dated as December 30, 2006, by and among Ascendia Brands,
Inc., Prencen LLC and Prencen Lending LLC.
Amended and Restated Senior Secured Convertible Note in the principal amount of
$91,000,000 issued by Ascendia Brands, Inc. to Prencen Lending LLC as of August
2, 2006, and amended and restated as of December 30, 2006.
First Amendment and Reaffirmation (Security Agreement), dated as of December 30,
2006, by and among Ascendia Brands, Inc., Hermes Acquisition Company I LLC,
Lander Intangibles Corporation, Lander Co., Inc., Ascendia Real Estate LLC,
Ascendia Brands Co., Inc., and Prencen Lending LLC, as collateral agent for the
lenders.
First Amendment and Reaffirmation (Pledge Agreement), dated as of December 30,
2006, by and among Ascendia Brands, Inc., Hermes Acquisition Company I LLC,
Lander Intangibles Corporation, Lander Co., Inc., Ascendia Real Estate LLC,
Ascendia Brands Co., Inc., and Prencen Lending LLC, as collateral agent for the
lenders.
First Amendment and Reaffirmation (Amended and Restated Guaranty), dated as of
December 30, 2006, by and among Hermes Acquisition Company I LLC, Lander
Intangibles Corporation, Lander Co., Inc., Ascendia Real Estate LLC, Lander Co.
Canada Limited, and Prencen Lending LLC, as collateral agent for the lenders.
First Amendment and Reaffirmation (Guaranty), dated as of December 30,
2006, by and between Ascendia Brands Co., Inc., and Prencen Lending LLC,
as collateral agent for the lenders.
EXHIBITS
Exhibit A-1 Form of Series A Warrants
Exhibit A-2 Form of Series B Warrants
Exhibit B Form of Notes
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Security Agreement
Exhibit E-1 Form of Domestic Guarantees
Exhibit E-2 Form of Canadian Guarantee
Exhibit F Form of Intercreditor Agreement
Exhibit G Form of Transaction Stockholder Consent
Exhibit H Form of Irrevocable Transfer Agent Instructions
Exhibit I Form of Outside Company Counsel Opinion
Exhibit J Form of Secretary's Certificate
Exhibit K Form of Officer's Certificate
Exhibit L Form of Voting Agreement
