PURCHASE AGREEMENT
THIS
PURCHASE AGREEMENT (the “Agreement”) is made as of August 2, 2005, by and
between Delta Financial Corporation (the “Company”), a corporation organized
under the laws of the State of Delaware, with its principal offices at 0000
Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000, certain stockholders of
the
Company identified on Exhibit
A
hereto
(each a “Selling Stockholder” and collectively, the “Selling Stockholders”) and
the purchaser whose name and address is set forth on the signature page hereof
(the “Purchaser”).
IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company,
the Selling Stockholders and the Purchaser agree as follows:
SECTION
1. Sale
of the Shares.
Subject
to the terms and conditions of this Agreement, the Selling Stockholders propose
to sell an aggregate of up to 2,000,000 shares (the “Shares”) of common stock,
par value $0.01 per share (the “Common Stock”), of the Company owned by the
Selling Stockholders. The aggregate number of shares to be sold by each Selling
Stockholder is set forth on Exhibit A
hereto.
SECTION
2. Agreement
to Sell and Purchase the Shares.
At the
Closing (as defined in Section 3), each Selling Stockholder will sell to the
Purchaser, and the Purchaser will buy from each Selling Stockholder, upon the
terms and conditions hereinafter set forth, the number of Shares at the purchase
price set forth in Exhibit
B
hereto.
The
Company and the Selling Stockholders propose to enter into the same form of
purchase agreement with certain other investors (the “Other Purchasers”) and the
Selling Stockholders expect to complete sales of the Shares to them. The
Purchaser and the Other Purchasers are hereinafter sometimes collectively
referred to as the “Purchasers,” and this Agreement and the agreements executed
by the Other Purchasers are hereinafter sometimes collectively referred to
as
the “Agreements.” The term “Placement Agent” shall mean JMP Securities LLC,
which is acting as the placement agent in connection with the transactions
contemplated by this Agreement.
SECTION
3. Delivery
of the Shares at the Closing.
The
completion of the purchase and sale of the Shares (the “Closing”) shall occur at
the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 as soon as practicable and as agreed to by the parties
hereto, within three business days following the execution of the Agreements,
or
on such later date or at such different location as the Company, Selling
Stockholders and the Placement Agent shall agree in writing, but in any event
not prior to the date that the conditions for Closing set forth below have
been
satisfied or waived by the appropriate party (the “Closing Date”). The Purchaser
shall be notified by facsimile transmission or otherwise of the time of the
Closing.
At
the
Closing, the Selling Stockholders shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or, if so indicated
on the Stock Certificate Questionnaire attached hereto as Appendix I, in such
nominee name(s) as designated by the Purchaser, representing the number of
Shares set forth in Section 2 above and bearing an appropriate legend, as
described in Section 6(f) below, referring to the fact that the Shares
were
sold in reliance upon the exemption from registration under the Securities
Act
of
1933, as amended (the “Securities Act”), provided by Section 4(2) thereof. The
name(s) in which the stock certificates are to be registered are set forth
in
the Stock Certificate Questionnaire attached hereto as Appendix I. The Selling
Stockholders’ obligation to complete the purchase and sale of the Shares and
deliver such stock certificate(s) to the Purchaser at the Closing shall be
subject to the following conditions, any one or more of which may be waived
by
the Selling Stockholders: (a) receipt by the Selling Stockholders of same-day
funds in the full amount of the purchase price for the Shares being purchased
hereunder and (b) the accuracy in all material respects of the representations
and warranties made by the Purchasers (as if such representations and warranties
were made on the Closing Date) and the fulfillment of those undertakings of
the
Purchasers to be fulfilled prior to the Closing. The Purchaser’s obligation to
accept delivery of such stock certificate(s) and to pay for the Shares evidenced
thereby shall be subject to the following conditions, any one or more of which
may be waived by the Purchaser: (a) each of the representations and warranties
of the Company and the Selling Stockholders made herein shall be accurate as
of
the Closing Date; (b) the delivery to the Purchaser by counsel to the
Company of a favorable legal opinion in substantially the form attached hereto
as Exhibit
C
hereto;
(c) the fulfillment of those undertakings of the Company and the Selling
Stockholders to be fulfilled prior to Closing; and (d) the receipt by Purchaser
of a letter from KPMG LLP, independent public or certified public accountants
for the Company, dated the date hereof, addressed to the Placement Agent, in
form and substance satisfactory to the Placement Agent.
SECTION
4. Representations,
Warranties and Covenants of the Company.
The
Company hereby represents and warrants to, and covenants with the Purchaser
as
follows:
4.1 Purchase
Agreement.
The
Company has full legal right, corporate power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed, and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, except
as
(i) rights to indemnification hereunder may be limited by applicable law, and
(ii) the enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or affecting
the
rights and remedies of creditors or by general equitable
principles.
4.2 Authorization
of the Shares to Be Sold by the Selling Stockholders.
The
Shares to be purchased hereunder from the Selling Stockholders were duly
authorized, validly issued, and are fully paid, and non-assessable and will
conform in all material respects to the description thereof set forth in the
Private Placement Memorandum (defined below). No further approval or authority
of the stockholders or the Board of Directors of the Company will be required
for the sale of the Shares by the Selling Stockholders as contemplated herein.
4.3 Offering
Materials.
The
Company has not distributed and will not distribute prior to the Closing Date
any offering material in connection with the offering and sale of the Shares
other than the private placement memorandum dated August 1, 2005 (the “Private
Placement Memorandum”) or any amendment or supplement thereto. Neither the
Company nor any person acting on its behalf has in the past or will hereafter
take any action independent of the Placement Agent to sell, offer for sale
or
solicit offers to buy any securities of the Company that would result in the
offer or sale of the Shares, as contemplated by this Agreement, not being exempt
from the registration requirements of Section 5 of the Securities Act.
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4.4 No
Other Registration Rights.
No
holder of any security of the Company has any right (which has not been waived
or has not expired by reason of lapse of time following notification of the
Company’s intent to file the registration statement to be filed by it pursuant
to Section 8.1 (the “Registration Statement”)) to require the Company to
register the sale of any security owned by such stockholder under the Securities
Act in or in preference to the Registration Statement.
4.5 No
Material Adverse Change.
Subsequent to the respective dates as of which information is given in the
Private Placement Memorandum: (i) there has been no Material Adverse Change
(as
defined below), or any development that could reasonably be expected to result
in a Material Adverse Change; (ii) the Company and its subsidiaries, considered
as one entity, have not incurred any material liability or obligation, indirect,
direct, or contingent, nor entered into any material transaction or agreement
other than in the ordinary course of its business; (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company
or,
except for dividends paid to the Company or its other subsidiaries, any of
its
subsidiaries on any class of capital stock, or repurchase or redemption by
the
Company or any of its subsidiaries of any class of capital stock; and (iv)
the
Company and its subsidiaries have not sustained any material loss or
interference with their businesses or properties from fire, flood, windstorm,
accident or other calamity not covered by insurance. For purposes of this
Agreement, the term “Material Adverse Change” means any material adverse change
in the condition, financial or otherwise, or in the earnings, business or
results of operations, whether or not arising from transactions in the ordinary
course of business, of the Company and its subsidiaries, considered as one
entity or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority
or
ability of the Company to perform its obligations under this
Agreement.
4.6 Accountants.
The
firm of KMPG LLP, which has expressed its opinion with respect to the
consolidated financial statements contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2004, which is attached as an exhibit
to, and made a part of the Private Placement Memorandum, and that will be
incorporated by reference in the Registration Statement and the prospectus
that
forms a part thereof (the “Prospectus”), is an independent accountant as
required by the Securities Act and the rules and regulations promulgated
thereunder (the “Rules and Regulations”).
4.7 Preparation
of the Financial Statements.
The
consolidated financial statements of the Company and the related notes contained
in its filings under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results
of
their operations, cash flows and changes in stockholders’ equity for the periods
therein specified. Such consolidated financial statements (including the related
notes) have been prepared in conformity with generally accepted accounting
principles (“GAAP”) applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included
in the Company’s Exchange Act Reports (as defined below).
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4.8 Incorporation
and Good Standing of the Company and its Subsidiaries.
Each of
the Company and its subsidiaries has been duly incorporated or formed and is
validly existing as a corporation, limited liability company, or trust, as
applicable, in good standing under the laws of the jurisdiction of its
incorporation or formation and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in its
filings with the Securities and Exchange Commission (the “Commission”) and, in
the case of the Company, to enter into and perform its obligations under this
Agreement. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation, limited liability company or trust, as applicable, to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or
in
the aggregate, result in a Material Adverse Change. All of the issued and
outstanding capital stock or limited liability company interests of each
subsidiary that has been organized as a corporation or a limited liability
company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance
or
claim.
4.9 Subsidiaries
of the Company.
The
Company does not own or control, directly or indirectly, any corporation,
limited liability company, trust, association or other entity other than the
subsidiaries listed in Exhibit
21.1
to the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004
and the subsidiaries listed on Exhibit
D
hereto
(the “List of the Additional Subsidiaries”).
4.10 No
Prohibition on Subsidiaries from Paying Dividends or Making Other
Distributions.
No
subsidiary of the Company is currently prohibited, directly or indirectly,
from
paying any dividends to the Company, from making any other distribution on
such
subsidiary’s capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other subsidiary of the
Company, except as disclosed in or contemplated by the Private Placement
Memorandum.
4.11 Capitalization
and Other Capital Stock Matters.
The
authorized, issued, and outstanding capital stock of the Company is as set
forth
in the balance sheets set forth in the Exchange Act Reports (other than for
subsequent issuances, if any, pursuant to employee benefit plans described
in
the Exchange Act Reports or upon exercise of outstanding options or warrants
described in the Exchange Act Reports). The Common Stock (including the shares
of Common Stock owned by the Selling Stockholders) conforms in all material
respects to the description thereof contained in the Company’s most recent Form
8-A filed under the Exchange Act and in the Exchange Act Reports. All of the
issued and outstanding shares of Common Stock (including the shares of Common
Stock owned by the Selling Stockholders) have been duly authorized and validly
issued, are fully paid and non-assessable and have been issued in compliance
with federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into, exchangeable or exercisable for, any capital stock
of the Company or any of its subsidiaries other than those accurately described
in the Exchange Act Reports. The description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Exchange Act Reports, accurately
and
fairly presents the information required to be shown with respect to such plans,
arrangements, options and rights.
4
4.12 Lock-Up
Agreements.
Each
director and executive officer of the Company and each Selling Stockholder
has
agreed to sign an agreement (the “Lock-Up Agreement”) substantially in the form
attached hereto as Exhibit
E
(the
“Form of Lock-up Agreement”). The Company has provided to counsel for the
Placement Agent true, accurate, and complete copies of all of the Lock-up
Agreements presently in effect or effected hereby. The Company hereby represents
and warrants that it will not release any of its executive officers, directors,
or other stockholders from any Lock-up Agreements currently existing or
hereafter effected without the prior written consent of the Placement Agent.
4.13 Agreement
Not To Offer Or Sell Additional Securities.
During
the period of ninety (90) days following the date of the Private Placement
Memorandum (the “Lock-Up Period”), the Company will not, without the prior
written consent of the Placement Agent (which consent may be withheld in its
sole discretion), (a) consent to the disposition of any shares held by a
stockholder or option holder which is a director or executive officer of the
Company or is a Selling Stockholder before the expiration of the Lock-up Period,
or (b) sell, offer, contract, or grant, directly or indirectly, any option
to
sell, pledge, transfer, or establish an open “put equivalent position” within
the meaning of Rule 16a-1(h) under the Exchange Act, otherwise dispose of,
transfer, or enter into any transaction which is designed to, or could be
expected to, result in the disposition (whether by actual disposition or
effective economic disposition due to cash settlement or otherwise by the
Company or any affiliate of the Company or any person in privity with the
Company or any affiliate of the Company), or otherwise dispose of any Securities
(as defined in Exhibit
E
attached
hereto) or any securities that relates to or derives any significant part of
its
value from the Shares; provided,
however,
that
the Company may issue (i) shares of restricted stock or options to purchase
its
Common Stock pursuant to any stock option plan, stock bonus, or other stock
plan
or arrangement approved by the Board of Directors of the Company and described
in the Private Placement Memorandum, or (ii) Common Stock upon the exercise
of
such options described in clause (i), but only if such shares, options, or
shares issued upon exercise of such options, cannot be sold, offered, disposed
of or otherwise transferred during the Lock-up Period without the prior written
consent of the Placement Agent (which consent may be withheld in its sole
discretion).
4.14 Stock
Exchange Listing.
The
Common Stock (including the Shares) is registered pursuant to Section 12(b)
of
the Exchange Act, and is listed on the American Stock Exchange (the
“AMEX”),
and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the AMEX nor has the Company received any
notification that the Commission or the AMEX is contemplating terminating such
registration or listing.
4.15 Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals
Required.
Neither
the Company nor any of its subsidiaries is in violation or default of any
provision of its charter, by-laws or other organizational documents or is in
breach of or default (or, with the giving of notice or lapse of time, would
be
in
5
default)
(“Default”) under any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other instrument to which the Company or any
of
its subsidiaries is a party or by which it or any of them may be bound, or
to
which any of the property or assets of the Company or any of its subsidiaries
is
subject, including, without limitation, any agreements pertaining to, relating
to or arising in connection with, any of the securitization transactions of
the
Company or any of its subsidiaries (each, an “Existing Instrument”), except for
such Defaults as would not, individually or in the aggregate, result in a
Material Adverse Change. The Company and its subsidiaries are in compliance
with
all statutes, laws, rules, regulations, judgments, orders and decrees of all
courts, regulatory bodies, administrative agencies, governmental bodies,
arbitrators or other authorities having jurisdiction over the Company or such
subsidiaries or any of their respective properties, as applicable, including,
without limitation, the provisions of the Xxxxxxxx-Xxxxx Act of 2002, as amended
(“Xxxxxxxx-Xxxxx Act”), and the rules and regulations of the National
Association of Securities Dealers, Inc. (“NASD”) and the AMEX, including the
corporate governance requirements thereof, except where such non-compliance
would not, individually or in the aggregate, result in a Material Adverse
Change.
4.17 No
Material Actions or Proceedings.
Except
as disclosed in or contemplated by the Private Placement Memorandum, there
is no
legal or governmental action, suit or proceeding pending or, to the knowledge
of
the Company, there are no inquiries or investigations, nor are there any legal
or governmental actions, suits or proceedings threatened (i) against or
affecting the Company or any of its subsidiaries, (ii) which has as the subject
thereof any officer or director of, or property owned or leased by, the Company
or any of its subsidiaries or (iii) relating to environmental or discrimination
matters, which in the case of clauses (i), (ii) or (iii) could reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated hereby. Neither the Company nor
any of its subsidiaries is a party to or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body that might be expected to
result in a Material Adverse Change.
6
4.18 Labor
Matters.
No
material labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is threatened or
imminent. The Company is not aware of any existing or imminent labor disturbance
by the employees of any of its third-party contractors, that might be expected
to result in a Material Adverse Change.
4.19 Intellectual
Property Rights.
The
Company and its subsidiaries own or possess sufficient trademarks, trade names,
patent rights, patents, know-how, collaborative research agreements, inventions,
servicemarks, copyrights, licenses, approvals, trade secrets and other similar
rights (collectively, “Intellectual Property Rights”) necessary to conduct their
businesses as now conducted, as proposed to be conducted, as described in or
contemplated by the Private Placement Memorandum, and any respective amendments
or supplements thereto. The expiration of any of such Intellectual Property
Rights would not be reasonably expected to result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of,
and
has no knowledge of, any infringement of or conflict with asserted rights of
the
Company by others with respect to any Intellectual Property Rights, other than
with respect to any infringement that would not reasonably be expected to result
in a Material Adverse Change. There is no claim being made against the Company
or any of its subsidiaries regarding any kind of Intellectual Property Right.
The Company and its subsidiaries do not, in the conduct of their business as
now
or proposed to be conducted as described in the Private Placement Memorandum,
infringe or conflict with any right or patent of any third party, or any
discovery, invention, product, or process which is the subject of a patent
application filed by any third party, known to the Company or any of its
subsidiaries, which such infringement or conflict is reasonably likely to result
in a Material Adverse Change.
4.20 All
Necessary Permits, etc.
The
Company and each subsidiary possess such valid and current certificates,
authorizations, licenses or permits issued by the appropriate state, federal,
or
foreign regulatory agencies or bodies necessary to conduct their respective
businesses, including, without limitation, all certificates, authorizations,
licenses or permits required for the making of loans and lending operations,
and
(i) any such certificate, authorization, license or permit is not subject to
any
qualifications or limitations which would prohibit the Company or any of its
subsidiaries from conducting their respective businesses, (ii) all applicable
fees have been paid for any such certificate, authorization, license or permit,
except for such fees which if not paid would not in any way prevent or prohibit
the Company or any of its subsidiaries from conducting their respective
businesses in accordance with all applicable laws, (iii) no fines or penalties
are outstanding for any failure to timely obtain, or any non-compliance with
any
such certificate, authorization, license or permit, except for such fines or
penalties that would not reasonably be likely to result in a Material Adverse
Change, and (iv) neither the Company nor any subsidiary has received any notice
of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization, license or permit, which revocation,
modification or non-compliance, individually or in the aggregate, would result
in a Material Adverse Change.
4.21 Title
to Properties.
The
Company and each of its subsidiaries has good and marketable title to all the
properties and assets reflected as owned in the financial statements included
in
the Private Placement Memorandum, in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects
of
any kind, except as described in the Private Placement Memorandum. The real
property, improvements, equipment and personal property held under lease by
the
Company or any subsidiary are held under valid and enforceable leases, with
such
exceptions as are not material and do not materially interfere with the use
made
or proposed to be made of such real property, improvements, equipment or
personal property by the Company or such subsidiary.
7
4.22 Tax
Law Compliance.
The
Company and its subsidiaries have filed all necessary federal, state and foreign
income and franchise tax returns or have duly requested extensions thereof
and
have paid all taxes required to be paid by any of them and, if due and payable,
any related or similar assessment, fine, or penalty levied against any of them,
except for any such tax, assessment, fine or penalty that is being contested
in
good faith and by appropriate proceedings and for which adequate reserves have
been provided. The Company and its subsidiaries have made adequate charges,
accruals and reserves in the applicable financial statements in respect of
all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company and its subsidiaries have not been
finally determined. The Company has no knowledge of any tax deficiency that
has
been or might be asserted or threatened against the Company.
4.23 No
Transfer Taxes or Other Fees.
There
are no transfer taxes or other similar fees or charges under Federal law or
the
laws of any state, or any political subdivision thereof, required to be paid
in
connection with the execution and delivery of this Agreement or sale by the
Selling Stockholders of the Shares.
4.24 Company
Not an “Investment Company”.
The
Company is not, and after receipt of payment for the Shares giving effect to
the
transactions contemplated hereby will not be, an “investment company,” or an
entity “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
4.25 Insurance.
Each of
the Company and its subsidiaries are insured by recognized, financially sound
and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for their businesses and otherwise reasonably prudent including,
but
not limited to, policies covering real and personal property owned or leased
by
the Company and its subsidiaries against theft, damage, destruction, acts of
vandalism, earthquakes, general liability and Directors’ and Officers’
liability, all of which insurance is in full force and effect. The Company
and
each of its subsidiaries expect they will be able, and will use their best
efforts, (i) to renew its existing insurance coverage as and when such policies
expire, or (ii) to obtain comparable coverage from similar institutions as
may
be necessary or appropriate to conduct its business as now conducted and at
a
cost that would not result in a Material Adverse Change. Neither of the Company
nor any subsidiary has been rejected from obtaining any type of insurance
coverage which it has sought or for which it has applied.
4.26 No
Price Stabilization or Manipulation.
The
Company has not taken and will not take, directly or indirectly, any action
which was designed to, or that might be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock to facilitate
the
sale or resale of the Shares.
8
4.27 Non-Public
Information.
The
Company has not disclosed to the Purchaser, whether in the Private Placement
Memorandum or otherwise, information that would constitute material non-public
information as of the Closing Date.
4.28 Use
of
Purchaser Name.
Except
as may be required by applicable law or regulation, the Company shall not use
the Purchaser’s name or the name of any of its affiliates in any advertisement,
announcement, press release or other similar public communication unless it
has
received the prior written consent of the Purchaser for the specific use
contemplated or as otherwise required by applicable law or
regulation.
4.29 Related
Party Transactions.
There
are no business relationships or related-party transactions involving the
Company or any subsidiary or any other person required to be described in the
Exchange Act Reports which have not been described as required.
4.30 Exchange
Act and Xxxxxxxx-Xxxxx Act Compliance.
Since
December , 31, 2004, the Company has filed all Exchange Act Reports required
to
be filed by it with the Commission pursuant to the reporting requirements of
the
Exchange Act. The Exchange Act Reports, at the time they were or hereafter
are
filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act and the Xxxxxxxx-Xxxxx Act, including
Section 402 related to loans, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
4.31 Contracts.
Except
as disclosed in the Company’s Exchange Act Reports, the Company and its
subsidiaries have no material contracts. Any contracts described in the
Company’s Exchange Act Reports that are material to the Company and its
subsidiaries, taken as a whole, are in full force and effect on the date
hereof.
4.32 Company’s
Accounting System.
The
Company and each of its subsidiaries maintain a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is
taken with respect to any differences.
4.33 No
Unlawful Contributions or Other Payments.
Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any employee or agent of the Company or any subsidiary acting on behalf of
the
Company or any of its subsidiaries, has made any contribution or other payment
to any official of, or candidate for, any federal, state or foreign office
in
violation of any law or of the character required to be disclosed in the
Company’s Exchange Act Reports.
4.34 Compliance
with Environmental Laws.
Except
as would not, individually or in the aggregate, result in a Material Adverse
Change, (i) the Company and its
9
subsidiaries
are in compliance with all federal, state, local or foreign law or regulation
relating to pollution or protection of human health or the environment
(including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or
wildlife, including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, the “Materials of Environmental Concern”), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, the “Environmental Laws”), which includes, but is not limited to,
compliance with any permits or other governmental authorizations required for
the operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or compliance with the terms and conditions
thereof, and neither the Company nor any of its subsidiaries has received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law; (ii) there is no claim, action or
cause of action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources damages,
property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment,
of
any Material of Environmental Concern at any location owned, leased or operated
by the Company or any of its subsidiaries, now or in the past (collectively,
the
“Environmental Claims”), pending or threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal
of
any Material of Environmental Concern, that would reasonably be expected to
result in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company
or
any of its subsidiaries has retained or assumed either contractually or by
operation of law. The Company is not currently aware that it will be required
to
make future material capital expenditures to comply with Environmental
Laws.
4.35 ERISA
Compliance.
The
Company and its subsidiaries and any “employee benefit plan” (as defined under
the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, “ERISA”))
established or maintained by the Company, its subsidiaries, or their “ERISA
Affiliates” (as hereinafter defined) are in compliance in all material respects
with ERISA. “ERISA Affiliate” means, with respect to the Company or a
subsidiary, any member of any group of organizations described in Sections
414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and
the regulations and published interpretations thereunder (collectively, the
“Code”) of which the Company or such subsidiary is a member. No “reportable
event” (as defined under ERISA) has occurred or is expected to occur with
respect to any “employee benefit plan” established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their
ERISA
Affiliates, if such “employee benefit plan” were terminated, would have any
“amount of unfunded benefit liabilities” (as defined under
10
ERISA).
None of the Company, its subsidiaries or any of their ERISA Affiliates has
incurred or expects to incur any material liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any “employee benefit plan”
or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit
plan” established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified
and
nothing has occurred, whether by action or failure to act, which would
reasonably be expected to cause the loss of such qualification.
4.36 Form
S-3 Eligibility.
The
Company satisfies the requirements for use of Form S-3 for registration of
the
resale of the Shares as contemplated herein. There exist no facts or
circumstances (including, without limitation, any required approvals or waivers
or any circumstances that may delay or prevent the obtaining of accountant’s
consents) that could reasonably be expected to prohibit or delay the preparation
or initial filing of the Registration Statement that will be available for
the
resale of the Shares by each of the Purchasers.
4.37 Commodity
Exchange Act.
The
Company will not, and will not permit any of its subsidiaries to, invest in
futures contracts, options on futures contracts or options on commodities unless
such entities are exempt from the registration requirements of the Commodity
Exchange Act, as amended, and the rules and regulations promulgated thereunder
(the “Commodity Exchange Act”) or otherwise comply with the Commodity Exchange
Act.
4.38 Taxable
Mortgage Pool.
Neither
the Company, any of its subsidiaries nor any of their assets will be treated
as
a taxable mortgage pool.
4.39 Investment
and Risk-Adjusted Capital Guidelines.
The
Company is, and at all times has been, in compliance with its investment and
risk-adjusted capital guidelines to the extent applicable.
4.40 Off-Balance
Sheet Arrangements.
There
is no transaction, arrangement or other relationship between the Company and/or
any of its subsidiaries and an unconsolidated or other off-balance sheet entity
that is required to be disclosed by the Company in its Exchange Act filings
and
is not so disclosed or that would otherwise be reasonably likely to result
in a
Material Adverse Change. There are no such transactions, arrangements or other
relationships with the Company or any of its subsidiaries that may create
contingencies or liabilities that are not otherwise disclosed by the Company
in
its Exchange Act filings.
4.41 Offering.
Subject
to the accuracy of the Selling Stockholders’ representations in Section 5 of
this Agreement and the Purchaser’s representations in Section 6 of this
Agreement, the sale of the Shares in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section
5
of the Securities Act and from the qualification or registration requirements
of
all applicable state securities laws.
4.42 No
Integration.
Neither
the Company, nor any of its affiliates, nor, to the Company’s knowledge, any
person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security
that
would cause this offering of the Shares to be integrated with prior offerings
by
the Company for purposes of the Securities Act or any applicable stockholder
approval provisions nor will the Company or any of its Subsidiaries take any
action or steps that would cause the offering of the Shares to be integrated
with other offerings.
11
4.43 Committees.
The
members of the Audit Committee, Compensation Committee and Governance and
Nominating Committee of the Board of Directors of the Company are “independent
directors” within the meaning of the listing standards and rules of the AMEX,
and with respect to the Audit Committee, the Commission, (ii) all of the members
of the Audit Committee are financially literate within the meaning of the
listing standards and rules of the AMEX and (iii) at least one member of the
Audit Committee is an “audit committee financial expert,” within the meaning of
Item 401(h) of Regulation S-K.
4.44 Disclosure
Controls and Procedures.
The
principal executive officer and principal financial officer are responsible
for
establishing and maintaining disclosure controls and procedures (as defined
in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have
(i) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under their supervision,
to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to them by others within those
entities, particularly during the periods in which the Annual Report on Form
10-K for the year ended December 31, 2004 and the Quarterly Report on Form
10-Q
for the quarter ended March 31, 2005 that are incorporated by reference in
the
Private Placement Memorandum were being prepared, (ii) evaluated the
effectiveness of the Company’s disclosure controls and procedures and presented
in the Annual Report on Form 10-K for the year ended December 31, 2004 and
the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 that are
incorporated by reference in the Private Placement Memorandum their conclusions
about the effectiveness of the disclosure controls and procedures as of the
end
of the applicable periods based on such evaluation and (iii) disclosed
in
the Annual Report on Form 10-K for the year ended December 31, 2004 and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 that are
incorporated by reference in the Private Placement Memorandum whether any change
in the Company’s internal control over financial reporting that occurred during
the applicable periods that has materially affected, or is reasonably likely
to
materially affect, the Company’s internal control over financial
reporting.
4.45 No
Fiduciary Duty.
The
Placement Agent and the Purchaser are acting as principals and not as an agent
or fiduciary of the Company or the Selling Stockholders and the Company’s and
Selling Stockholder’s engagement of the Placement Agent in connection with the
offering of the Shares is as independent contractors and not in any other
capacity. Furthermore, each of the Company and the Selling Stockholders agrees
that it is solely responsible for independently making its own judgments in
connection with the offering of the Shares (irrespective of whether the
Placement Agent or the Purchaser has advised or are currently advising the
Company or the Selling Stockholders on related or other matters).
4.46 Additional
Information.
The
information contained in the following documents (the materials identified
in
clauses a, b, c, d, e, f and g below are referred to herein as the “Exchange Act
Reports”), copies of which the Placement Agent has furnished to the Purchaser,
or will furnish prior to the Closing, was or will be true and correct in all
material respects as of their respective final dates:
12
(a) the
Company’s Annual Report on Form 10-K for the year ended December 31, 2004;
(b) the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2005;
(c) the
Company’s Definitive Proxy Statement on Schedule 14A filed on April 22,
2005;
(d) the
Company’s Current Report on Form 8-K furnished to the Commission on July 27,
2005;
(e) all
other
documents, if any, filed by the Company with the Commission since December
31,
2004 pursuant to the reporting requirements of the Exchange Act;
and
(f) the
Private Placement Memorandum, including all addenda and exhibits thereto (other
than the Purchase Agreement and the Appendices).
4.47 Finder’s
Fees.
The
Company has not incurred any liability for any finder’s fees or similar payments
in connection with the transactions contemplated by this Agreement.
4.48 Certificate.
At the
Closing, the Company will deliver to Purchaser a certificate executed by the
chief executive officer and the chief financial or accounting officer of the
Company (solely in their capacities as such), dated as of the Closing Date,
in
substantially the form attached hereto as Exhibit
F
hereto,
to the effect that the representations and warranties of the Company set forth
in this Section 4 are true and correct as of the date of this Agreement and
as
of the Closing Date and that the Company has complied with all the agreements
and satisfied all the conditions herein on its part to be performed or satisfied
on or prior to such Closing Date.
4.49 Legal
Opinion.
As a
condition to the Purchaser’s obligation to purchase the Shares, at the Closing,
Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, shall have delivered its
favorable opinion in the form attached as Exhibit
C
hereto.
SECTION
5. Representations,
Warranties and Covenants of the Selling Stockholders.
Each
Selling Stockholder, severally and not on behalf of or with respect to the
Company or any other Selling Stockholder, represents, warrants and covenants
with the Purchaser as follows:
5.1 The
Purchase Agreement.
This
Agreement has been duly authorized, executed and delivered by or on behalf
of
such Selling Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
13
5.2 Title
to and Delivery of the Shares to Be Sold.
Such
Selling Stockholder has, and on the Closing Date will have, good and valid
title
to all of the Shares which may be sold by such Selling Stockholder pursuant
to
this Agreement on such date. Delivery of the Shares which are sold by such
Selling Stockholder pursuant to this Agreement will pass good and valid title
to
such Shares, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or other claim.
5.3 Delivery
of Shares.
Upon
the Purchaser’s acquiring possession of the Shares to be sold by such Selling
Stockholder and paying the purchase price therefore pursuant to this Agreement,
the Purchaser (assuming that no such Purchaser has notice of any “adverse
claim”, within the meaning of Section 8-105 of the New York Uniform Commercial
Code, to such Shares) will acquire their respective interests in such Shares
(including, without limitation, all rights that such Selling Stockholder had
or
has the power to transfer in such Shares) free and clear of any adverse claim
within the meaning of Section 8-102 of the New York Uniform Commercial
Code.
5.4 No
Further Consents, Authorization or Approvals.
No
consent, approval or waiver is required under any instrument or agreement to
which such Selling Stockholder is a party or by which it is bound or under
which
it is entitled to any right or benefit, in connection with the offering, sale
or
purchase by the Purchaser of any of the Shares which may be sold by such Selling
Stockholder under this Agreement or the consummation by such Selling Stockholder
of any of the other transactions contemplated hereby.
5.5 Non-Contravention;
No Further Authorizations or Approvals Required.
The
execution and delivery by such Selling Stockholder of, and the performance
by
such Selling Stockholder of its obligations under, this Agreement will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the trust agreement or
other organizational documents of such Selling Stockholder or any other
agreement or instrument to which such Selling Stockholder is a party or by
which
it is bound or under which it is entitled to any right or benefit, any provision
of applicable law or any judgment, order, decree or regulation applicable to
such Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the consummation by such Selling Stockholder of the
transactions contemplated in this Agreement, except such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the NASD.
5.6 No
Registration or Other Similar Rights.
Such
Selling Stockholder does not have any registration or other similar rights
to
have any equity or debt securities registered for sale by the Company under
the
Registration Statement required to be filed under this Agreement.
5.7 No
Preemptive, Co-Sale or Other Rights.
Such
Selling Stockholder does not have, or has waived prior to the date hereof,
any
preemptive right, co-sale right, right of first refusal or other similar right
to purchase any of the Shares that are to be sold by any of the other Selling
Stockholders to the Purchaser and the Other Purchasers pursuant to this
Agreement. Such Selling Stockholder does not own any warrants, options or
similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those described in the Company’s Exchange Act
Reports.
14
5.8 Stabilization.
Such
Selling Stockholder has not taken and will not take, directly or indirectly,
any
action designed to cause or result in, or which constitutes or which might
be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock or any security of the Company to facilitate the sale or resale
of
the Shares.
5.9 Material
Information.
On the
date of the Private Placement Memorandum, and on the Closing Date, the
information with respect to such Selling Stockholder included therein did not
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 not misleading.
5.10 Confirmation
of the Company’s Representations and Warranties.
Each of
the Selling Stockholders represents on its own behalf that it has no reason
to
believe that the representations and warranties of the Company contained in
Section 4 hereof are not true and correct, is familiar with the Private
Placement Memorandum and has no knowledge of any material fact, condition,
or
information not disclosed in the Private Placement Memorandum which has had
or
may have a Material Adverse Change and is not prompted to sell shares of Common
Stock by any information concerning the Company or its subsidiaries which is
not
set forth in the Private Placement Memorandum.
5.11 Distribution
of Offering Materials by the Selling Stockholders.
Such
Selling Stockholder has not distributed and will not distribute, prior to the
Closing Date, any offering material in connection with the offering and sale
of
the Shares.
5.12 Certificate.
At the
Closing, such Selling Stockholder will deliver to the Placement Agent or counsel
to the Placement Agent a certificate executed by such Selling Stockholder,
dated
the Closing Date, in substantially the form attached hereto as Exhibit
G
hereto,
to the effect that the representations and warranties of such Selling
Stockholder set forth in this Section 5 are true and correct in all
material respects as of the date of this Agreement and as of the Closing Date,
and that such Selling Stockholder has complied with all the agreements and
satisfied all the conditions herein on his or its part to be performed or
satisfied on or prior to such Closing Date.
5.13 No
Transfer Taxes or Other Fees.
There
are no transfer taxes or other similar fees or charges under federal law or
the
laws of any state, or any political subdivision thereof, required to be paid
in
connection with such Selling Stockholder’s execution and delivery of this
Agreement or the sale by such Selling Stockholder of the Shares.
SECTION
6. Representations,
Warranties and Covenants of the Purchaser.
(a)
The
Purchaser represents and warrants to, and covenants with, the Company and the
Selling Stockholders that: (i) the Purchaser is knowledgeable, sophisticated
and
experienced in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved
in
the purchase of the Shares, including investments in securities issued by the
Company and comparable entities, and has
15
requested,
received, reviewed and considered all information it deems relevant in making
an
informed decision to purchase the Shares; (ii) the Purchaser is acquiring the
number of Shares set forth in Exhibit
B
in the
ordinary course of its business and for its own account for investment only
and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares (this representation and warranty not limiting the Purchaser’s right to
sell pursuant to the Registration Statement or in compliance with the Securities
Act and the Rules and Regulations); (iii) the Purchaser will not, directly
or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of
the
Shares, nor will the Purchaser engage in any short sale that results in a
disposition of any of the Shares by the Purchaser, except in compliance with
the
Securities Act, the Exchange Act, the Rules and Regulations and any applicable
state securities laws; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part
of
Appendix I, for use in preparation of the Registration Statement, and the
answers thereto are true and correct as of the date hereof and will be true
and
correct as of the effective date of the Registration Statement, and the
Purchaser will notify the Company immediately if any material change in any
such
information provided in the Registration Statement Questionnaire occurs prior
to
the sale by it of all the Shares; (v) the Purchaser has, in connection with
its
decision to purchase the number of Shares set forth in Exhibit
B,
relied
solely upon the Private Placement Memorandum and the documents included or
incorporated by reference therein and the representations and warranties of
the
Company and the Selling Stockholders contained herein; (vi) the Purchaser has
had an opportunity to discuss this investment with representatives of the
Company and ask questions of them; and (vii) the Purchaser is an “accredited
investor” within the meaning of Rule 501(a) of Regulation D promulgated under
the Securities Act.
(b) The
Purchaser understands that the Shares are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of the
Securities Act, the Rules and Regulations and state securities laws and that
the
Company and the Selling Stockholders are relying upon the truth and accuracy
of,
and the Purchaser’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility
of
the Purchaser to acquire the Shares.
(c) For
the
benefit of the Company and the Selling Stockholders, the Purchaser previously
agreed orally with the Placement Agent to keep confidential all information
concerning this private placement. The Purchaser understands that the federal
securities laws may impose restrictions on trading based on information
regarding this offering. In addition, the Purchaser hereby acknowledges that
unauthorized disclosure of information regarding this offering may result in
a
violation of Regulation FD. This obligation will terminate upon the Company’s
issuance of one or more press releases describing this offering. In addition
to
the above, the Purchaser shall maintain in confidence the receipt and content
of
any notice of a Suspension (as defined in Section 6(h) below). The foregoing
agreements shall not apply to any information that is or becomes publicly
available through no fault of the Purchaser, or that the Purchaser is legally
required to disclose; provided,
however,
that if
the Purchaser is requested or ordered to disclose any such information pursuant
to any court or other government order or any other applicable legal procedure,
it shall provide the Company with prompt notice of any such request or order
in
time sufficient to enable the Company to seek an appropriate protective
order.
16
(d) The
Purchaser understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of the Purchaser’s investment,
and the Purchaser has full cognizance of and understands all of the risk factors
related to the Purchaser’s purchase of the Shares, including, but not limited
to, those set forth under the caption “Risk Factors” in the Private Placement
Memorandum. The Purchaser understands that the market price of the Common Stock
has been volatile and that no representation is being made as to the future
value or trading volume of the Common Stock. The Purchaser has the ability
to
bear the economic risks of an investment in the Shares.
(e) The
Purchaser understands that no United States federal or state agency or any
other
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Shares.
(f) The
Purchaser understands that, until such time as the Registration Statement has
been declared effective or the Shares may be sold pursuant to Rule 144 under
the
Securities Act without any restriction as to the number of securities as of
a
particular date that can then be immediately sold, the Shares will bear a
restrictive legend in substantially the following form:
“THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH
ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND OTHER JURISDICTIONS,
AND
IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH
OTHER APPLICABLE LAWS.”
(g) The
Purchaser’s principal executive offices are in the jurisdiction set forth below
the Purchaser’s name on the signature pages hereto.
(h) The
Purchaser hereby covenants with the Company not to make any sale of the Shares
under the Registration Statement without complying with the provisions of this
Agreement and without effectively causing the prospectus delivery requirement
under the Securities Act to be satisfied, and the Purchaser acknowledges and
agrees
17
that
such
Shares are not transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Shares is accompanied by a
separate Purchaser’s Certificate of Subsequent Sale: (i) in the form of Appendix
II hereto, (ii) executed by an officer of, or other authorized person designated
by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold
in
accordance with the Registration Statement, the Securities Act and any
applicable state securities or Blue Sky laws and (B) the requirement of
delivering a current prospectus has been satisfied. The Purchaser acknowledges
that there may occasionally be times when the Company must suspend the use
of
the Prospectus forming a part of the Registration Statement (a “Suspension”)
until such time as an amendment to the Registration Statement has been filed
by
the Company and declared effective by the Commission, or until such time as
the
Company has filed an appropriate report with the Commission pursuant to the
Exchange Act. The Purchaser hereby covenants that it will not sell any Shares
pursuant to said Prospectus during the period commencing at the time at which
the Company gives the Purchaser written notice of the Suspension of the use
of
said Prospectus and ending at the time the Company gives the Purchaser written
notice that the Purchaser may thereafter effect sales pursuant to said
Prospectus. Notwithstanding the foregoing, the Company agrees that no suspension
shall be for a period of longer than 60 days during any 365-day period. The
Purchaser further covenants to notify the Company promptly of the sale of all
of
its Shares.
(i) The
Purchaser further represents and warrants to, and covenants with, the Company
and the Selling Stockholders that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, (ii) the making
and
performance of this Agreement by the Purchaser and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Purchaser or conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice or the passage
of time or both, a default under any material agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to
which
the Purchaser is a party, or any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Purchaser, (iii) no consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required on the part of
the
Purchaser for the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, (iv) upon the execution
and
delivery of this Agreement, this Agreement shall constitute a legal, valid
and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered
in
a proceeding in equity or at law) and except to the extent enforcement of the
indemnification provisions set forth in Section 8.3 of this Agreement may be
limited by federal or state securities laws or the public policy underlying
such
laws, and (v) to the Purchaser’s knowledge there is not in effect any order
enjoining or restraining the Purchaser from entering into or engaging in any
of
the transactions contemplated by this Agreement, except (solely in the case
of
clauses (ii), (iii), (iv) and (v) of the paragraph) for such violations and
defaults as would not reasonably be expected to have a material adverse effect
on the transactions contemplated by this Agreement.
18
SECTION
7. Survival
of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement or by
the
Placement Agent, all covenants and agreements made by the Company, the Selling
Stockholders and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor. All representations and warranties made by the Company, the Selling
Stockholders and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive for a period of one year following
the
later of the execution of this Agreement, the delivery to the Purchaser of
the
Shares being purchased and the payment therefor.
SECTION
8. Registration
of the Shares; Compliance with the Securities Act.
8.1
Registration
Procedures and Expenses.
The
Company shall:
(a) as
soon
as practicable, but in no event later than ten (10) business days following
the
Closing Date, prepare and file with the Commission the Registration Statement
on
Form S-3 relating to the sale of the Shares by the Purchaser and the Other
Purchasers from time to time on AMEX or the facilities of any national
securities exchange on which the Common Stock is then traded or in
privately-negotiated transactions;
(b) provide
a
draft copy of the Registration Statement to the Purchaser for its review and
comment prior to filing the Registration Statement with the
Commission;
(c) notify
the Purchaser promptly upon being informed whether the staff or the Commission
intends to review or not review the Registration Statement;
(d) file
a
request for acceleration of the Registration Statement with the Commission
within three (3) business
days after the date the Company receives notice from the staff of the Commission
that the Commission does not intend to review the Registration Statement or
has
completed such review;
(e) use
its
best efforts, subject to receipt of necessary information from the Purchasers,
to cause the Commission to declare the Registration Statement effective as
soon
as reasonably practicable and in any event within sixty (60) days after the
Closing Date (the “Effectiveness Target Date”);
(f) use
its
best efforts to promptly prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective
until
the earliest of (i) two years after the effective date of the Registration
Statement, or (ii) such time as the Shares become eligible for resale by
non-affiliates of the Company pursuant to Rule 144(k) under the Securities
Act;
(g) furnish
to the Purchaser with respect to the Shares registered under the Registration
Statement (and to each underwriter, if any, of such Shares) such number of
copies of prospectuses and such other documents as the Purchaser may reasonably
request, in order to facilitate the public sale or other disposition of all
or
any of the Shares by the Purchaser;
19
(h) file
documents required of the Company for normal Blue Sky clearance in states
specified in writing by the Purchaser; provided,
however,
that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified
or
has not so consented;
(i) bear
all
expenses in connection with the procedures in paragraphs (a) through (h) of
this
Section 8.1 and the registration of the Shares pursuant to the Registration
Statement, other than fees and expenses, if any, of counsel or other advisers
to
the Purchaser or the Other Purchasers or underwriting discounts, brokerage
fees
and commissions incurred by the Purchaser or the Other Purchasers, if
any;
(j) file
a
Form D with respect to the Shares as required under Regulation D and to provide
a copy thereof to the Purchaser promptly after filing;
(k) issue
a
press release describing the transactions contemplated by this Agreement on
or
prior to the Closing Date; and
(l) make
available, while the Registration Statement is effective and available for
resale, its Chief Executive Officer, Chief Financial Officer or other
appropriate representatives for questions regarding information which the
Purchaser may reasonably request in order to fulfill any due diligence
obligation on its part.
If
the
Commission does not declare the Registration Statement effective by the
Effectiveness Target Date, the Company shall become obligated to pay to the
Purchaser an amount in cash, as liquidated damages and not as a penalty,
equivalent to 1% of the aggregate purchase price paid by the Purchaser for
any
Shares then held by the Purchaser or its affiliates for each full month that
effectiveness is delayed beyond the Effectiveness Target Date (pro-rated on
a
daily basis for partial months). The Company shall pay in full any liquidated
damages pursuant to this Section 8.1 within 30 days after the date on which
the
Company becomes obligated to pay such damages.
The
Company understands that the Purchaser disclaims being an underwriter of the
Shares, but the Purchaser being deemed an underwriter shall not relieve the
Company of any obligations it has hereunder. A draft of the proposed
Registration Statement is included in the Private Placement Memorandum and
a
questionnaire related thereto to be completed by the Purchaser is attached
hereto as Appendix I.
8.2 Transfer
of Shares After Registration.
The
Purchaser agrees that it will not effect any disposition of the Shares or its
right to purchase the Shares that would constitute a sale within the meaning
of
the Securities Act or pursuant to any applicable state securities laws, except
as contemplated in the Registration Statement referred to in Section 8.1 or
as
otherwise permitted by law, and that it will promptly notify the Company of
any
changes in the information set forth in the Registration Statement regarding
the
Purchaser or its plan of distribution (other than changes in the number of
Shares held by the Purchaser).
20
8.3 Indemnification.
(a) For
the purpose of this Section 8.3:
(i) the
term
“Purchaser/Affiliate” shall mean any affiliate of the Purchaser, including a
transferee who is an affiliate of the Purchaser, and any person who controls
the
Purchaser or any affiliate of the Purchaser within the meaning of Section 15
of
the Securities Act or Section 20 of the Exchange Act; and
(ii) the
term
“Registration Statement” shall include any preliminary prospectus, final
prospectus, exhibit, supplement or amendment included in or relating to, and
any
document incorporated by reference in, the Registration Statement referred
to in
Section 8.1.
(b) The
Company agrees to indemnify and hold harmless the Purchaser and each
Purchaser/Affiliate against any losses, claims, damages, liabilities or
expenses, joint or several, to which the Purchaser or Purchaser/Affiliate may
become subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including the Prospectus, financial
statements and schedules, and all other documents filed as a part thereof,
as
amended at the time of effectiveness of the Registration Statement, including
any information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules
and Regulations of the Securities Act, or the Prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
of the Securities Act, or filed as part of the Registration Statement at the
time of effectiveness if no Rule 424(b) filing is required under the Securities
Act, or any subsequent amendment or supplement thereto, or arise out of or
are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not misleading
or
in the Prospectus or any amendment or supplement thereto not misleading in
light
of the circumstances under which they were made, not misleading, or arise out
of
or are based in whole or in part on any inaccuracy in the representations or
warranties of the Company contained in this Agreement or in any writing
delivered pursuant to this Agreement, or any failure of the Company to perform
its obligations hereunder or under law, and will promptly reimburse each such
Purchaser and each such Purchaser/Affiliate for any legal and other expenses
as
such expenses are reasonably incurred by such Purchaser or such
Purchaser/Affiliate in connection with investigating, defending or preparing
to
defend, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided,
however,
that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (i)
an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein, (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 6(h) or 8.2 hereof respecting the sale of
the
Shares, (iii) the inaccuracy of any representation made by such Purchaser
herein, or (iv) any statement or omission in any Prospectus that is corrected
in
any subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
21
(c) Each
Purchaser will severally, but not jointly, indemnify and hold harmless the
Company and each Selling Stockholder, each of the Company’s directors, each of
the Company’s officers who signed the Registration Statement, and each person,
if any, who controls the Company or any Selling Stockholder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any losses, claims, damages, liabilities or expenses to which the Company,
each
of its directors, each of its officers who signed the Registration Statement,
any Selling Stockholder or any of their respective controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including
in
settlement of any litigation, if such settlement is effected with the prior
written consent of such Purchaser) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any failure to comply with the covenants
and
agreements contained in Sections 6(h) or 8.2 hereof respecting the sale of
the
Shares, (ii) the inaccuracy of any representation made by such Purchaser herein,
or (iii) any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to
state therein a material fact required to be stated therein or necessary to
make
the statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or supplement
thereto not misleading in light of the circumstances under which they were
made,
in each case to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company by
or
on behalf of any Purchaser expressly for use therein, and will reimburse the
Company and the Selling Stockholders, each of the Company’s directors, each of
the Company’s officers who signed the Registration Statement or controlling
person of the Company or a Selling Stockholder for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
(d) Each
Selling Stockholder will jointly and severally indemnify and hold harmless
each
Purchaser, each Purchaser/Affiliate, the Company, each of its directors and
each
of its officers who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Purchaser, each Purchaser/Affiliate, the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the Securities Act,
the Exchange Act, or any other federal or state statutory law or regulation,
or
at common law or otherwise (including in settlement of any claim or litigation,
if such settlement is effected with the written consent of such Selling
Stockholder) insofar as such losses, claims, damages, liabilities or expenses
(or action in respect thereof as contemplated below) arise out of, or are based
upon (i) any material failure to comply with the covenants and agreements of
such Selling Stockholder contained in the Agreements or (ii) the material
inaccuracy of any representation made by such Selling Stockholder in the
22
Agreements
or (iii) any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any amendment
or supplement thereto not misleading or in the Prospectus or any amendment
or
supplement thereto not misleading in light of the circumstances under which
they
were made, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder expressly for use therein;
provided,
however,
that
the Selling Stockholder will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon (i) in whole or in part the inaccuracy of any representations or warranties
made by such Purchaser herein, (ii) the failure of such Purchaser to comply
with
the covenants and agreements contained in Sections 6(h) or 8.2 hereof respecting
the sale of the Shares, or (iii) any statement or omission in any Prospectus
or
any amendment or supplement thereto that is corrected in any subsequent
Prospectus or any amendment or supplement thereto that was delivered to the
Purchaser prior to the pertinent sale or sales by the Purchaser.
(e) If
and to
the extent that the Company shall have sustained any indemnification liability
under Section 8.3(a) hereof or otherwise under law and such liability shall
have
resulted from the failure of any of the Selling Stockholders to promptly notify
the Company in writing, until the earlier of (i) two years from the effective
date of the Registration Statement or (ii) the sale of all of the Shares, of
any
events or circumstances of which any of the Selling Stockholders becomes aware,
after their conducting reasonable due inquiry (other than matters publicly
known
or actually known by the Company), that (x) materially adversely affects or
limits the legal or other ability of any of the Selling Stockholders to perform
any of its material obligations under any written agreements between any of
the
Selling Stockholders and the Company and (y) the failure of which to be included
in the Private Placement Memorandum and/or the Registration Statement, as such
shall have been supplemented or amended, would result in an untrue statement
of
material fact or the omission to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading
in
light of the circumstances under which they were made, the Selling Stockholders
shall, jointly and severally, indemnify and hold harmless the Company from
such
liability and pay or reimburse the Company for any related costs.
(f) Promptly
after receipt by an indemnified party under this Section 8.3 of notice of the
threat or commencement of any action, such indemnified party will, if a claim
in
respect thereof is to be made against an indemnifying party under this Section
8.3, promptly notify the indemnifying party in writing thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability
which
it may have to any indemnified party for contribution or otherwise under the
indemnity agreement contained in this Section 8.3 to the extent it is not
prejudiced as a result of such failure. In case any such action is brought
against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however,
if the
defendants in any such action include both the
23
indemnified
party and the indemnifying party and the indemnified party, based upon the
advice of such indemnified party’s counsel, shall have reasonably concluded that
there may be a conflict of interest between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action
or
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval
by
the indemnified party of counsel, the indemnifying party will not be liable
to
such indemnified party under this Section 8.3 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to such indemnifying party, representing the indemnified
parties who are parties to such action (including indemnified parties under
Agreements with Other Purchasers), plus local counsel, if appropriate) or (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. The indemnifying party shall not be liable for any
settlement of any action without its written consent; provided that such consent
shall not be unreasonably withheld or delayed.
(g) If
the
indemnification provided for in this Section 8.3 is required by its terms but
is
for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party under paragraphs (a), (b), (c) or (d) of this
Section 8.3 in respect to any losses, claims, damages, liabilities or expenses
referred to herein, then each applicable indemnifying party shall contribute
to
the amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, each Selling Stockholder and the Purchaser from the placement of the
Common Stock contemplated by this Agreement or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion
as is
appropriate to reflect not only the relative benefits referred to in clause
(i)
above but the relative fault of the Company, each Selling Stockholder and the
Purchaser in connection with the statements or omissions or inaccuracies in
the
representations and warranties in this Agreement that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and each Selling Stockholder, respectively, on the one hand and each
Purchaser on the other shall be deemed to be in the same proportion as the
amount paid by such Purchaser to each Selling Stockholder pursuant to this
Agreement for the Shares purchased by such Purchaser that were sold pursuant
to
the Registration Statement bears to the difference (the “Difference”) between
the amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such
sale.
The relative fault of the Company and each Selling Stockholder, respectively,
on
the one hand, and each Purchaser on the other shall be determined by reference
to, among other things, whether the untrue or alleged statement of a material
fact or the omission or alleged omission to
24
state
a
material fact or the inaccurate or the alleged inaccurate representation and/or
warranty relates to information supplied by the Company, by such Selling
Stockholder or by such Purchaser and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to
include, subject to the limitations set forth in paragraph (f) of this Section
8.3, any legal or other fees or expenses reasonably incurred by such party
in
connection with investigating or defending any action or claim. The provisions
set forth in paragraph (f) of this Section 8.3 with respect to the notice of
the
threat or commencement of any threat or action shall apply if a claim for
contribution is to be made under this paragraph (g); provided,
however,
that no
additional notice shall be required with respect to any threat or action for
which notice has been given under paragraph (f) for purposes of indemnification.
The Company, the Selling Stockholders and each Purchaser agree that it would
not
be just and equitable if contribution pursuant to this Section 8.3 were
determined solely by pro rata
allocation (even if the Purchaser were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in this paragraph. Notwithstanding the
provisions of this Section 8.3, no Purchaser shall be required to contribute
any
amount in excess of the amount by which the Difference exceeds the amount of
any
damages that such Purchaser has otherwise been required to pay by reason of
such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provision of this Section 8.3, no Selling Stockholder
shall be required to contribute any amount in excess of the gross proceeds
received by such Selling Stockholder for the sales of Shares under the
Agreement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Purchasers’ obligations to contribute pursuant to this Section 8.3 are several
and not joint. The Selling Stockholders’ obligations to contribute pursuant to
this Section 8.3 are joint and several.
8.4 Termination
of Conditions and Obligations.
The
conditions precedent imposed by Section 6 or this Section 8 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the effective date
of
the Registration Statement covering such Shares or at such time as an opinion
of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
8.5 Information
Available.
So long
as the Registration Statement is effective covering the resale of Shares owned
by the Purchaser, the Company will furnish to the Purchaser:
(a) other
than any such reports or communications filed with the Commission pursuant
to
the Commission’s XXXXX system, as soon as practicable after available (but in
the case of the Annual Report to the Stockholders, within 150 days after the
end
of each fiscal year of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited
in
accordance with GAAP by a national independent registered public accounting
firm), (ii) if not included in substance in the Annual Report to Stockholders,
upon the request of Purchaser, its Annual Report on Form 10-K, (iii) upon
request of Purchaser, its quarterly reports on Form 10-Q, and (iv) a full copy
of the particular Registration Statement covering the Shares (the foregoing,
in
each case, excluding exhibits); and
25
(b) upon
the
reasonable request of the Purchaser, a reasonable number of copies of the
Prospectuses, and any supplements thereto, to supply to any other party
requiring such Prospectuses.
The
Company, upon the reasonable request of the Purchaser and with prior notice,
will be available to the Purchaser or a representative thereof at the Company’s
headquarters to discuss information relevant for disclosure in the Registration
Statement covering the Shares and will otherwise cooperate with any Purchaser
conducting an investigation for the purpose of reducing or eliminating such
Purchaser’s exposure to liability under the Securities Act, including the
reasonable production of information at the Company’s headquarters, subject to
appropriate confidentiality limitations.
SECTION
9. Broker’s
Fee.
The
Purchaser acknowledges that the Selling Stockholders intend to pay to the
Placement Agent a fee in respect of the sale of the Shares to the Purchaser.
Each of the parties hereto hereby represents that, on the basis of any actions
and agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Shares to the Purchaser. The
Purchaser and the Selling Stockholders hereby agree that the Purchaser shall
not
be responsible for such fee.
SECTION
10. Expenses.
The
Selling Stockholders agree to reimburse the Company for 50% of the Company’s
aggregate expenses incurred to effect the transactions contemplated hereby,
including the expenses that the Company is obligated to pay pursuant to Section
8.1(i).
SECTION
11. Notices.
All
notices, requests, consents and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given: (i) upon
delivery to the party to be notified; (ii) when received by confirmed facsimile
or e-mail; or (iii) one business day after deposit with a nationally recognized
overnight carrier, specifying next business day delivery, with written
verification of receipt. All communications shall be sent to the Company and
the
Purchaser as follows or at such other addresses as the Company or the Purchaser
may designate upon ten days’ advance written notice to the other party:
|
(a)
|
if
to the Company, to:
|
Delta
Financial Corporation
0000
Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxx,
Xxx Xxxx 00000
Attention:
Xxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
26
with
a
copy to:
Xxxxxxxx
& Xxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxxxx, Esq.
Facsimile:
(000) 000-0000
|
(b)
|
if
to the Placement Agent, to:
|
JMP
Securities LLC
Xxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxx, Xx.
Facsimile:
(000) 000-0000
with
a
copy to:
O’Melveny
& Xxxxx LLP, Suite 0000
Xxxxxxxxxxx
Xxxxxx Xxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx X. Xxxxx, Esq.
Facsimile:
(000) 000-0000
|
(c)
|
if
to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been
furnished to the Company in
writing.
|
|
(d)
|
if
to a Selling Stockholder, at the address set forth in Exhibit
A
hereto.
|
SECTION
12. Changes.
This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company, the Selling Stockholders and the Purchaser.
No
provision hereunder may be waived other than in a written instrument executed
by
a waiving party.
SECTION
13. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
SECTION
14. Severability.
In case
any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
SECTION
15. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York and the federal law of the United States of America.
27
SECTION
16. Counterparts.
This
Agreement may be executed (including, without limitation, by facsimile signature
or by delivery by portable document format (“PDF”)) in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered
(including by facsimile) to the other parties.
SECTION
17. Entire
Agreement.
This
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, none of the Company, any
Selling Stockholder or the Purchaser makes any representation, warranty,
covenant or undertaking with respect to such matters.
SECTION
18. Assignment.
This
Agreement is made solely for the benefit of and is binding upon the Purchaser,
the Selling Stockholders and the Company and to the extent provided in Section
8.3, any person controlling the Company, the Selling Stockholder or the
Purchaser, the officers and directors of the Company, and their respective
executors, administrators, successors and assigns, and subject to the provisions
of Section 8.3, no other person shall acquire or have any right under or by
virtue of this Agreement. The term “successors and assigns” shall not include
any subsequent purchaser, as such purchaser, of the Shares sold to the Purchaser
pursuant to this Agreement.
[Signature
Page Follows]
28
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their duly authorized representatives as of the day and year first above
written.
| DELTA FINANCIAL CORPORATION | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
| XXXX XXXXXX | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
| XXXXXX X.XXXXXX 2001 FAMILY TRUST | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
| XXXX X. XXXXXX 2001 FAMILY TRUST | ||
| |
|
|
| By: | ||
| Name: | ||
| Title: | ||
Appendix
II-1
|
Print
or Type:
|
Name
of Purchaser (Individual or Institution):
|
|
Name
of Individual representing Purchaser
(if
an Institution):
|
|
|
Title
of Individual representing Purchaser (if an Institution):
|
|
|
Signature
by:
|
Individual
Purchaser or Individual representing Purchaser:
|
|
Address:
|
|
|
Telephone:
|
|
|
Telecopier:
|
|
|
E-Mail:
|
|
|
Jurisdiction
of principal executive offices:
|
2
EXHIBIT
A
Selling
Stockholders
|
Name
and Address
|
Aggregate
Number
of
Shares to be sold
|
|
Xxxx
Xxxxxx
c/o
Delta Financial Corporation
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
|
350,000
|
|
Xxxxxx
X. Xxxxxx - 2001 Family Trust
c/o
Delta Financial Corporation
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
|
650,000
|
|
Xxxx
X. Xxxxxx - 2001 Family Trust
c/o
Delta Financial Corporation
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
|
1,000,000
|
A-1
