Exhibit 10.2
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "AGREEMENT") is dated as of
September 24, 2004 by and among Intelligroup, Inc., a New Jersey corporation
(the "COMPANY"), and each purchaser identified on the signature page hereto
(each a "PURCHASER" and collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as
amended, the Company desires to issue and sell to each Purchaser, and each
Purchaser desires to purchase from the Company, common stock of the Company as
more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means any day other than Saturday, Sunday or a
federal holiday on which the offices of the Commission are not open.
"CLOSING" means the closing of the sale and purchase of the
Shares pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing.
"COMMISSION" and "SEC" each mean the Securities and Exchange
Commission.
"COMMON STOCK" means the common stock of the Company.
"COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.
"COMPANY COUNSEL" means Xxxxxx & Xxxxxxx LLP.
"COMPANY LOCAL COUNSEL" means Xxxxxxx Xxxxx LLP.
"CONVERTIBLE SECURITIES" means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for
Common Stock.
"CREDIT AGREEMENT" means that certain Amended and Restated
Revolving Credit Loan and Security Agreement among the Company,
Empower, Inc. and PNC Bank, National Association, dated May 31, 2000,
as amended to date.
"EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission, which shall
not be later than 270 days after the Closing Date; provided that the
Effective Date may be extended to 365 days after the Closing Date as
described herein if the Company is not listed on an Eligible Market.
"ELIGIBLE MARKET" means any of the New York Stock Exchange,
the American Stock Exchange, the Nasdaq National Market or the Nasdaq
Small Cap Market.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED STOCK" means the issuance of Common Stock (A) upon
exercise or conversion of any options or other securities described in
Schedule 3.1(f) (provided that such exercise or conversion occurs in
accordance with the terms thereof, without amendment or modification,
and that the applicable exercise or conversion price or ratio is
described in such schedule), (B) in connection with any grant of
options to employees, officers, directors or consultants of the Company
approved by the Board or compensation committee thereof, pursuant to a
stock option plan duly adopted by the Board or in respect of the
issuance of Common Stock upon exercise of any such options, (C) in
connection with a bona fide transaction under Rule 144A placed on a
firmly underwritten basis, (D) in connection with acquisitions,
strategic alliances or other similar business combinations approved by
the Board including at least one Investor Director, or (E) in
connection with any debt financing from a bank or similar financial
institution that is approved by the Board including at least one
Investor Director.
"LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"LOSSES" means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including, without
limitation, costs of preparation and reasonable attorneys' fees.
"OPTIONS" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"PERSON" means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or any court or other federal, state,
local or other governmental authority or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
2.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of
any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"PURCHASER COUNSEL" means Xxxxxx Godward LLP.
"REGISTRABLE SECURITIES" means any Common Stock issued or
issuable pursuant to the Transaction Documents, together with any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.
"REGISTRATION STATEMENT" means each registration statement
required to be filed under Article VI, including (in each case) the
Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"REQUIRED EFFECTIVENESS DATE" means the earliest of (i) the
270th day following the Closing Date, and (ii) the 5th Business Day
following the date the Company learns that no review of the
Registration Statement will be made by the staff of the Commission or
that the staff of the Commission has no further comments on the
Registration Statement and the Company may request acceleration of
effectiveness; provided that the time period in clause (i) shall be
extended, as necessary, up to the 365th day following the Closing Date
if the Company is not listed on an Eligible Market and the Board
determines in good faith that it would be materially detrimental to the
Company to have the Registration Statement declared effective for
reasons other than the potential effect on the share price of the
Common Stock.
"RIGHTS PLAN" means the Shareholder Protection Rights Plan
Agreement dated as of November 6, 1998 between Intelligroup, Inc. and
American Stock & Trust Company.
"RULE 144," "RULE 144A," "RULE 415," and "RULE 424" means Rule
144, Rule 144A, Rule 415 and Rule 424, respectively, promulgated by the
Commission pursuant to the Securities Act, as such Rules may be amended
from time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such Rule.
"SAIF" means SB Asia Infrastructure Fund, L.P.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means an aggregate of 17,647,058 shares of Common
Stock to be issued and sold to the Purchasers at the Closing.
3.
"SUBSIDIARY" means any Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar
interest that are required to be listed in Schedule 3.1(a).
"TRADING DAY" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (b) if the
Common Stock is not then listed or quoted and traded on any Eligible
Market, then a day on which trading occurs on the NASDAQ Small Cap
Market (or any successor thereto), or (c) if trading does not occur on
the NASDAQ Small Cap Market (or any successor thereto), any Business
Day.
"TRADING MARKET" means the NASDAQ National Market or any other
Eligible Market on which the Common Stock is then listed or quoted.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer
Agent Instructions and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"TRANSFER AGENT" means the Company's transfer agent.
"TRANSFER AGENT INSTRUCTIONS" means the Irrevocable Transfer
Agent Instructions, in the form of Exhibit C, executed by the Company
and delivered to and acknowledged in writing by the Transfer AGENT.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall purchase from the Company, the number of Shares at the
aggregate purchase price as indicated below such Purchaser's name on the
signature page of this Agreement. The Closing shall take place upon satisfaction
or waiver of all applicable conditions in Section 5 below, or at such other time
as the parties may mutually agree. The Closing shall occur at the offices of
Cooley Godward LLP, 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 or at such
other location as the parties may mutually agree. The purchase price of the
Shares shall be eighty-five cents ($0.85) per Share.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) one or more stock certificates, or such other evidence
of stock ownership as such Purchaser may reasonably request, free and
clear of all restrictive and other legends (except as expressly
provided in Section 4.1(b) hereof), evidencing the number of Shares
indicated below such Purchaser's name on the signature page of this
Agreement, registered in the name of such Purchaser; and
4.
(ii)legal opinions of Company Counsel and Company Local
Counsel, in the form of Exhibit A, executed by such respective counsel
and delivered to the Purchasers; and
(iii) duly executed Transfer Agent Instructions
acknowledged by the Transfer Agent.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the purchase price for the Shares being purchased by
such Purchaser, in United States dollars and in immediately available funds,
by wire transfer to an account designated in writing by the Company for such
purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien,
and all the issued and outstanding shares of capital stock or comparable
equity interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and
the Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, would not or could not reasonably be
expected to, individually or in the aggregate, (i) materially adversely
affect the legality, validity or enforceability of any Transaction Document,
(ii) have or result in a material adverse effect on the results of
operations, assets, properties, liabilities (absolute, accrued, contingent or
otherwise), business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's
ability to perform fully on a timely basis its obligations under any of the
Transaction Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE
EFFECT").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the
5.
Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of
the Company and no further consent or action is required by the Company, its
Board of Directors or its stockholders. Each of the Transaction Documents has
been (or upon delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute, the valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles.
(d) No Conflicts. Except with respect to the applicable rules of the
Nasdaq Stock Market, the execution and delivery of the Transaction Documents,
the issuance and sale of the Shares and the consummation of the transactions
contemplated hereby and thereby will not (a) conflict with or constitute a
violation of or default (with the passage of time or otherwise) or give rise
to any right of termination, material amendment, cancellation or acceleration
or loss of any material rights under (i) any material contracts to which the
Company or any Subsidiary is a party (such contracts, the "MATERIAL
CONTRACTS"), (ii) the certificate of incorporation or the bylaws or any
similar organizational document of the Company or any Subsidiary or (iii) any
law, administrative regulation ordinance, writ, injunction, decree or order
of any court or governmental agency, arbitration panel or authority binding
upon the Company or any Subsidiary or either's property, or (b) result in the
creation or imposition (or the obligation to create or impose) of any
material lien, encumbrance, claim, security interest, pledge, charge or
restriction of any kind upon any of the properties or assets of the Company
or any Subsidiary, or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any Material Contract. No
consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency or
other governmental body in the United States is required for the execution
and delivery of the Transaction Documents and the valid issuance and sale of
the Shares to be sold pursuant to this Agreement, except for any securities
filings required to be made under federal or state securities laws.
(e) Issuance of the Shares. The Shares are duly authorized and, when
issued and paid for in accordance with the Transaction Documents, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens and shall not be subject to preemptive rights or similar rights of
stockholders.
(f) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in
compliance with all applicable securities laws. Except as disclosed in
Schedule 3.1(f), there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of
6.
Common Stock, or securities or rights convertible or exchangeable into shares
of Common Stock. There are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement
providing rights to security holders) and the issue and sale of the Shares
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchaser) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under such securities. To the knowledge of the
Company, except as specifically disclosed in Schedule 3.1(f), no Person or
group of related Persons beneficially owns (as determined pursuant to Rule
13d-3 under the Exchange Act), or has the right to acquire, by agreement with
or by obligation binding upon the Company, beneficial ownership of in excess
of 5% of the outstanding Common Stock, ignoring for such purposes any
limitation on the number of shares of Common Stock that may be owned at any
single time.
(g) SEC Reports; Financial Statements. Except for the report on Form
10-Q for the period ended June 30, 2004, the Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, since and including the
filing of the Company's report on Form 10-K for the year ended December 31,
2003 (the foregoing materials that have been filed as of or prior to the date
of this Agreement, together with any reports filed as of or prior to the date
of this Agreement on Form 8-K for the purpose of complying with Regulation FD
under the Exchange Act, are collectively referred to herein as the "SEC
REPORTS") on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension. Except as described on Schedule 3.1(g), as of their respective
dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Except as described in Schedule
3.1(g), the financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and
the rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Except as described in Schedule 3.1(g), such financial
statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the
periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included
as part of or specifically identified in the SEC Reports.
(h) Material Changes. Except as described in Schedule 3.1(h), since
December 31, 2003, except as specifically disclosed in the SEC Reports, (i)
there has been no event, occurrence or development that, individually or in
the aggregate, has had or that would reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) liabilities incurred in the
7.
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company's financial statements pursuant
to GAAP or required to be disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has
not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans.
(i) Contracts.
(i) Each of the Material Contracts has been filed as an exhibit
to the SEC Reports and other than the Material Contracts, neither the
Company nor any Subsidiary has any agreements, contracts and commitments
that are material to the Company and not made in the ordinary course of
business.
(ii) Except as described in Schedule 3.1(i), the Company does
not have any employment agreements, or any other similar agreements that
contain any severance or termination pay liabilities or obligations, that
are not filed as exhibits to the SEC Reports.
(iii) No purchase contract or commitment of the Company continues
for a period of more than twelve months and in excess of the normal,
ordinary and usual requirements of the Company's business.
(iv) Except as described in Schedule 3.1(i), the Company and
each Subsidiary is not in default under or in material violation of, nor
to the Company's knowledge, is there any valid basis for any claim of
default, under or material violation of, any Material Contract.
(v) Except as described in Schedule 3.1(i), the Company does
not have any debt obligations for borrowed money, including any guarantee
of or agreement to acquire any such debt obligation of others, or any
power of attorney outstanding or any obligation or liability (whether
absolute, accrued, contingent or otherwise) as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise with respect to the
obligation of any corporation, partnership, joint venture, association,
organization or other entity.
(vi) Except as described in Schedule 3.1(i), all agreements,
contracts and commitments required to be filed by the Company under the
Exchange Act or the Securities Act have been filed in a timely manner with
the Commission.
(vii) Except as described in Schedule 3.1(i), the Company and
each Subsidiary is not materially restricted by agreement from carrying on
its business anywhere in the world.
(j) Absence of Litigation. Except as described in Schedule 3.1(j),
there is no action, suit, claim, proceeding, inquiry or investigation before
or by any court, public
8.
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries that would individually or in the aggregate, have a
Material Adverse Effect.
(k) Compliance. Except as described in Schedule 3.1(k), neither the
Company nor any Subsidiary (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received written notice of a
claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or has
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except
in each case as would not, individually or in the aggregate, have or result
in a Material Adverse Effect.
(l) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to
the business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for Liens that do not materially affect the value of
such property and do not materially interfere with the use made, and proposed
to be made, of such property by the Company and the Subsidiaries. Any real
property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases, free and
clear of all Liens, of which the Company and the Subsidiaries are in
compliance.
(m) Certain Fees. No brokerage or finder's fees or commissions are
or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement, and the
Company has not taken any action that would cause any Purchaser to be liable
for any such fees or commissions.
(n) Private Placement. Neither the Company nor any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to
buy the Shares by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any Person acting on the
Company's behalf has, directly or indirectly, at any time within the past six
months, made any offer or sale of any security or solicitation of any offer
to buy any security under circumstances that would (i) eliminate the
availability of the exemption from registration under Regulation D under the
Securities Act in connection with the offer and sale of the Shares as
contemplated hereby or (ii) cause the offering of the Shares pursuant to the
Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and regulations of
any Trading Market. The issuance and sale of the Shares hereunder does not
conflict with or violate any rules or regulations of any
9.
Trading Market. The Company is not, and is not an Affiliate of, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended. The Company is not a United States real property holding
corporation within the meaning of the Foreign Investment in Real Property Tax
Act of 1980.
(o) Listing and Maintenance Requirements. Except as described in
Schedule 3.1(o), the Company has not, in the two years preceding the date
hereof, received notice (written or oral) from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market.
(p) Registration Rights. The Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority that have not been satisfied or waived.
(q) Application of Takeover Protections. Except as described in
Schedule 3.1(p), there is no control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's charter documents or the
laws of its state of incorporation that is or could become applicable to any
of the Purchaser as a result of the Purchaser and the Company fulfilling
their obligations or exercising their rights under the Transaction Documents,
including, without limitation, as a result of the Company's issuance of the
Shares and the Purchaser's ownership of the Shares.
(r) Disclosure. The Company understands and confirms that each of
the Purchasers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosures provided to the
Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by
or on behalf of the Company are true and correct and do not contain any
untrue statement of a material fact or, to the best of the Company's
knowledge, omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2.
(s) Acknowledgment Regarding Purchasers' Purchase of Shares. The
Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm's length purchaser with respect to this Agreement
and the transactions contemplated hereby. The Company further acknowledges
that no Purchaser is acting as a financial advisor or fiduciary of the
Company or any other Purchaser (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice given
by any
10.
Purchaser or any of their respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is merely
incidental to such Purchaser's purchase of the Shares. The Company further
represents to each Purchaser that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
(t) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection
with their respective businesses and which the failure to so have would, or
could reasonably be expected to, have a Material Adverse Effect
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor
any Subsidiary has received written notice that, or has knowledge that, the
Intellectual Property Rights used by the Company or any Subsidiary conflicts
with, or violates or infringes upon, the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company is not aware of any claim or
potential claim against the Company or any Subsidiary regarding any of the
Intellectual Property Rights. The Company or any Subsidiary does not, in the
conduct of its business, infringe or conflict with any right or patent of any
third party, or any discovery, invention, product or process that is the
subject of a patent application filed by any third party, known to the
Company. The Company and each Subsidiary has taken reasonable steps to
protect the material intellectual property of the Company. The execution,
delivery and performance by the Company of this Agreement, and the
consummation of the transactions contemplated hereby, will not result in the
loss or impairment of, or give rise to any right of any third party to
terminate or materially alter, any of the Company's or any Subsidiary's
material rights to own any of its intellectual property or its material
rights under any agreements relating to such intellectual property, nor
require the consent of any governmental authority or third party in respect
of any such intellectual property.
(u) Employee Benefit Plans; Employee Matters. The consummation of
the transactions contemplated by this Agreement will not, alone or in
conjunction with any other possible event (including termination of
employment) (i) entitle any current or former employee or other service
provider of the Company or any Subsidiary to severance benefits or any other
payment, compensation or benefit (including forgiveness of indebtedness),
except as expressly provided by this Agreement or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation or benefit due any
such employee or service provider, alone or in conjunction with any other
possible event (including termination of employment). The Company and each
Subsidiary is in compliance in all material respects with all currently
applicable laws and regulations respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. To the Company's knowledge, no employees of the Company or
any Subsidiary are in violation of any term of any material employment
contract, patent disclosure agreement, noncompetition agreement or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or any Subsidiary because of the
nature of the business conducted or presently proposed to be conducted by the
Company or any Subsidiary or to the use of
11.
trade secrets or proprietary information of others. No key employee of the
Company or any Subsidiary has given written notice of resignation to the
Company or any Subsidiary and, to the Company's knowledge, no key employee
intends to terminate his or her employment with the Company or any
Subsidiary.
(v) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
the Company and the Subsidiaries are engaged. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
(w) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(x) Environmental Laws. Except as would not have a Material Adverse
Effect, the Company and each of the Subsidiaries is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or
regulation.
(y) Transactions With Affiliates and Employees. Except as set forth
in SEC Reports filed at least ten days prior to the date hereof, none of the
officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee
or partner.
(z) Internal Accounting Controls. Except as described in Schedule
3.1(z), the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
12.
3.2 Representations and Warranties of the Purchaser. Each Purchaser hereby,
as to itself only and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares hereunder has been duly authorized by all necessary action on the part
of such Purchaser. This Agreement has been duly executed and delivered by
such Purchaser and constitutes the valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Shares as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Shares or any part thereof,
without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of
all or any part of such Shares pursuant to an effective registration
statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty
by such Purchaser to hold the Shares for any period of time.
(c) Purchaser Status. At the time such Purchaser was offered the Shares
it was, and at the date hereof it is, an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Shares,
and has so evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the Shares and, at the
present time, is able to afford a complete loss of such investment.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Shares may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Shares other than (i) pursuant to an effective registration
statement, (ii) to the Company or (iii) pursuant to Rule 144(k), except as
otherwise set forth herein, the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its Transfer Agent,
13.
without any such legal opinion, any transfer of Shares by a Purchaser to an
Affiliate of such Purchaser, provided that no registration of such transfer
is required under the Securities Act. In addition, Purchaser shall not
knowingly transfer any Shares to a competitor of the Company.
(b) The Purchaser agree to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on any certificate evidencing
Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates evidencing Shares shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Shares is effective under the Securities Act, or (ii) following any sale
of such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for
sale under Rule 144(k), or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission).
The Company shall cause its counsel to issue the legal opinion included in
the Transfer Agent Instructions to the Transfer Agent on the Effective Date.
At such time as a legend is no longer required for certain Shares, the
Company will no later than three Trading Days following the delivery by a
Purchaser to the Company or the Transfer Agent of a legended certificate
representing such Shares, deliver or cause to be delivered to such Purchaser
a certificate representing such Shares that is free from the restrictive
legends set forth above. The Company may not make any notation on its records
or give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section. For so long as any
Purchaser owns Shares, the Company will not effect or publicly announce its
intention to effect any exchange, recapitalization or other transaction that
effectively requires or rewards physical delivery of certificates evidencing
the Common Stock.
(c) The Company acknowledges and agrees that a Purchaser may from time
to time pledge or grant a security interest in some or all of the Shares in
connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Shares and, if required under the terms of such
agreement, loan or arrangement, such Purchaser may transfer pledged or
secured Shares to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of the
pledgee, secured party or
14.
pledgor shall be required in connection therewith. Further, no notice shall
be required of such pledge. At the appropriate Purchaser's expense, the
Company will execute and deliver such required documentation as a pledgee or
secured party of Shares may reasonably request in connection with a pledge or
transfer of the Shares, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.
4.2 Furnishing of Information. Beginning with the filing of the 10-K for the
year ending December 31, 2004, for as long as any Purchaser owns Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. Upon the request of
any Purchaser, the Company shall deliver to such Purchaser a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. On and after the filing of the 10-K for the year ending
December 31, 2004, for as long as any Purchaser owns Shares, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to the Purchaser and make publicly available in accordance with paragraph (c) of
Rule 144 such information as is required for the Purchaser to sell the Shares
under Rule 144. The Company further covenants that on and after the filing of
the 10-K for the year ending December 31, 2004, it will take such further action
as any holder of Shares may reasonably request to satisfy the provisions of Rule
144 applicable to the issuer of securities relating to transactions for the sale
of securities pursuant to Rule 144.
4.3 Integration. The Company shall not, and shall use its commercially
reasonable best efforts to ensure that no Affiliate of the Company shall, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares to the
Purchaser, or that would be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of any Trading Market.
4.4 Reservation of Shares. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full
under the Transaction Documents. In the event that at any time the then
authorized shares of Common Stock are insufficient for the Company to satisfy
its obligations in full under the Transaction Documents, the Company shall
promptly take such actions as may be required to increase the number of
authorized shares.
4.5 Subsequent Placements.
(a) For so long as Purchasers and/or their Affiliates hold at least 10%
of the outstanding Common Stock (the "SUBSEQUENT PLACEMENT PERIOD"), the
Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or the Subsidiaries'
equity or equity equivalent securities, including without limitation any
debt, preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or exchangeable
or exercisable for Common Stock or Common Stock Equivalents (any such offer,
sale, grant, disposition or announcement being
15.
referred to as a "SUBSEQUENT PLACEMENT") unless the Company shall have first
complied with this Section 4.5(a).
(i) The Company shall deliver to each Purchaser a written notice
(the "OFFER") of any proposed or intended issuance or sale or exchange of
the securities being offered in a Subsequent Placement (the "OFFERED
SECURITIES"), which Offer shall (w) identify and describe the Offered
Securities, (x) describe the price and other terms upon which they are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (y) identify the Persons or
entities (if known) to which or with which the Offered Securities are to
be offered, issued, sold or exchanged and (z) offer to issue and sell to
or exchange with Purchaser on the same terms as those set forth in the
Subsequent Placement a portion of the Offered Securities based on such
Purchaser's pro rata percentage holdings of the outstanding Common Stock
at the time of the Offer (the "BASIC AMOUNT"), and with respect to each
Purchaser that elects to purchase its Basic Amount, any additional portion
of the Offered Securities attributable to the Basic Amounts of other
Purchasers as such Purchaser shall indicate it will purchase or acquire
should the other Purchasers subscribe for less than their Basic Amounts
(the "UNDERSUBSCRIPTION AMOUNT").
(ii) To accept an Offer, in whole or in part, a Purchaser must
deliver a written notice to the Company within ten (10) Trading Day(s)
after receipt of the Offer, setting forth the portion of the Purchaser's
Basic Amount that such Purchaser elects to purchase and, if such Purchaser
shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that such Purchaser elects to purchase (in either case,
the "NOTICE OF ACCEPTANCE"). If the Basic Amounts subscribed for by all
Purchaser are less than the total of all of the Basic Amounts, then the
Purchaser who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for;
provided, however, that if the Undersubscription Amounts subscribed for
exceed the difference between the total of all the Basic Amounts and the
Basic Amounts subscribed for (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"),
the Purchaser who has subscribed for any Undersubscription Amount shall be
entitled to purchase on that portion of the Available Undersubscription
Amount as the Basic Amount of such Purchaser bears to the total Basic
Amounts of all Purchaser that have subscribed for Undersubscription
Amounts, subject to rounding by the Board to the extent its deems
reasonably necessary.
(iii) The Company shall have sixty (60) Trading Days from the
expiration of the period set forth in Section 4.5(a)(ii) above to issue,
sell or exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Purchaser (the "REFUSED
SECURITIES"), but only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not materially more
favorable to the acquiring Person or Persons or materially less favorable
to the Company than those set forth in the Offer.
(iv) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the
terms specified in
16.
Section 4.5(a)(iii) above), then Purchaser may, at its sole option and in
its sole discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall be not less
than the number or amount of the Offered Securities that the Purchaser
elected to purchase pursuant to Section 4.5(a)(ii) above multiplied by a
fraction, (i) the numerator of which shall be the number or amount of
Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Purchaser
pursuant to Section 4.5(a)(ii) above prior to such reduction) and (ii) the
denominator of which shall be the original amount of the Offered
Securities. In the event that any Purchaser so elects to reduce the number
or amount of Offered Securities specified in its Notice of Acceptance, the
Company may not issue, sell or exchange more than the reduced number or
amount of the Offered Securities unless and until such securities have
again been offered to the Purchaser in accordance with Section 4.5(a)(i)
above.
(v) Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Purchasers shall acquire from
the Company, and the Company shall issue to the Purchasers, the number or
amount of Offered Securities specified in the Notices of Acceptance, as
reduced pursuant to Section 4.5(a)(iv) above if the Purchasers have so
elected, upon the terms and conditions specified in the Offer. The
purchase by the Purchasers of any Offered Securities is subject in all
cases to the preparation, execution and delivery by the Company and the
Purchaser of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Purchaser and their
respective counsel.
(vi) Any Offered Securities not acquired by the Purchaser or
other Persons in accordance with Section 4.5(a)(iii) above may not be
issued, sold or exchanged until they are again offered to the Purchaser
under the procedures specified in this Agreement.
(b) The restrictions contained in paragraph (a) of this Section
shall not apply to Excluded Stock.
4.6 Securities Laws Disclosure; Publicity. The Company shall, on the
Closing Date, issue a press release acceptable to the Purchasers disclosing all
material terms of the transactions contemplated hereby. The Company shall, on or
before the Business Day following the Closing Date, file a Current Report on
Form 8-K with the Commission (the "8-K FILING") describing the terms of the
transactions contemplated by the Transaction Documents and including as exhibits
to such Current Report on Form 8-K this Agreement, in the form required by the
Exchange Act. Thereafter, the Company shall timely file any filings and notices
required by the Commission or applicable law with respect to the transactions
contemplated hereby and provide copies thereof to the Purchasers promptly after
filing. Except with respect to the 8-K Filing and the press release referenced
above (a copy of which will be provided to the Purchasers for their review as
early as practicable prior to its filing), the Company shall, at least two
Trading Days prior to the filing or dissemination of any disclosure required by
this paragraph, provide a copy thereof to the Purchasers for their review. The
Company and the Purchasers shall consult with each other in issuing any press
releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or Trading Market
with respect
17.
to the transactions contemplated hereby, and neither party shall
issue any such press release or otherwise make any such public statement, filing
or other communication without the prior consent of the other, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchaser with prior notice of such
disclosure. Subject to the foregoing, neither the Company nor any Purchaser
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Purchaser, to make any press
release or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and
(ii) as is required by applicable law and regulations (provided that in the case
of clause (i) Purchaser shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release). Each press
release disseminated during the 12 months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading
4.7 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Shares hereunder for working capital purposes and, unless otherwise
approved in writing by SAIF or pursuant to the Credit Agreement, provided that
the Credit Agreement shall have been amended pursuant to an amendment thereto
approved by SAIF prior to the Closing, not for the satisfaction of any portion
of the Company's debt (other than payment of trade payables and accrued expenses
in the ordinary course of the Company's business and consistent with prior
practices), to redeem any Company equity or equity-equivalent securities or to
settle any litigation outstanding on the Closing Date.
4.8 Inspection Rights. Purchasers shall have the right to visit and
inspect any of the properties of the Company or any of its subsidiaries at such
reasonable times and as often as may be reasonably requested; provided, however,
that the Company shall not be obligated under this Section 4.8 with respect to
information which the Board determines in good faith is confidential or
attorney-client privileged and should not, therefore, be disclosed.
4.9 Reports. So long as Purchasers and/or their Affiliates continue to
hold at least 10% of the outstanding Common Stock, the Company shall provide
Purchasers with all materials submitted to the Board at the same time and in the
same manner as such materials are provided to the directors.
4.10 Board Representation.
(a) From and after the Closing until Purchasers and their Affiliates
no longer hold at least 10% of the outstanding Common Stock, Purchasers shall
have the right to designate one (1) member of the Board; from and after the
Closing until Purchasers and their
18.
Affiliates no longer hold at least 15% of the outstanding Common Stock,
Purchasers shall have the right to designate a second member of the Board;
from and after the Closing until Purchasers and their Affiliates no longer
hold at least 20% of the outstanding Common Stock, Purchasers shall have the
right to designate a third member of the Board; from and after the Closing
until Purchasers and their Affiliates no longer hold at least 40% of the
outstanding Common Stock, Purchasers shall have the right to designate a
fourth member of the Board; and from and after the Closing until Purchasers
and their Affiliates no longer hold at least 50% of the outstanding Common
Stock, Purchasers shall have the right to designate a fifth member of the
Board (collectively, the "INVESTOR DIRECTORS"). The Company shall recommend
the election of the Investor Directors at each meeting of shareholders where
the election of directors is considered and shall use its best efforts to
cause the Investor Directors to be elected and re-elected to the Board.
Purchasers shall have the right to remove or replace any of the Investor
Directors by giving notice to such Investor Director and the Company, and the
Company shall use its best efforts to effect the removal or replacement of
any such Investor Director. Unless prohibited by applicable law, Investors
shall have the right to have two Investor Directors, as determined by
Purchasers, be members of each committee of the Board, and the Company shall
use its best efforts to appoint and maintain such Investor Directors on each
committee of the Board, as requested by Purchasers. Any Investor Director who
is not a member of a committee of the Board shall have the right to attend
all meetings of such committee as a non-voting observer.
(b) Subject to any limitations imposed by applicable law, the
Investor Directors shall be entitled to the same perquisites, including stock
options, reimbursement of expenses and other similar rights in connection
with such person's membership on the Board, as every other non-employee
member of the Board.
(c) At the Closing, unless otherwise approved by the Company and
Purchasers, the authorized number of members of the Board shall be nine (9).
From and after the Closing until Purchasers and their Affiliates no longer
own at least 15% of the outstanding Common Stock, the Board shall include the
Company's Chief Executive Officer and the remaining directors shall be
independent directors not affiliated with management.
4.11 Restrictive Covenants. For so long as Purchasers and their
Affiliates continue to hold at least 15% of the outstanding Common Stock,
without the prior written consent of Purchasers, the Company shall not (and
shall cause its respective Subsidiaries not to):
(a) purchase or redeem any securities of the Company other than pro
rata from all stockholders pursuant to a tender offer;
(b) sell, transfer or otherwise dispose of all or substantially all
of the Company's assets or take any action which results in the holders of
the Common Stock prior to the transaction owning less than 80% of the voting
power of the Company's capital stock after the transaction;
(c) take any action that may result in the Common Stock ceasing to
be registered pursuant to Section 12 of the Exchange Act;
19.
(d) amend the Company's articles of incorporation or bylaws;
(e) issue any equity securities senior to the Common Stock
(including as to liquidation, dividends or participation in earnings);
(f) issue any common stock or securities convertible into or
exercisable for Common Stock other than to employees, directors or other
service providers pursuant to plans approved by the Board;
(g) liquidate or dissolve the Company;
(h) declare or pay any dividends;
(i) change the authorized number of directors; or
(j) agree to do any of the foregoing.
4.12 Rights Plan Termination. The Rights Plan and all rights provided
thereunder shall be terminated by the Board as of the Closing.
4.13 Indemnity; Insurance. The Company shall provide the Investor
Directors with mandatory indemnity agreements that indemnify the Investor
Directors to the fullest extent permitted by applicable law. The Company shall
maintain directors and officers liability insurance reasonably acceptable to
Purchasers, and for purposes of this covenant, Purchasers acknowledge that the
Company's current directors and officers liability insurance is reasonably
acceptable to Purchasers.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchaser. The
obligation of Purchasers to acquire Shares at the Closing is subject to the
satisfaction or waiver by Purchasers, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though
made on and as of such date.
(b) Performance. The Company and each other Purchaser shall have
performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to
be performed, satisfied or complied with by it at or prior to the Closing.
(c) Board Approval. The Board shall have taken all necessary actions
to approve the Transaction Documents and the sale of the Shares in accordance
with applicable laws, including the New Jersey Shareholders Protection Act,
as applicable.
20.
(d) Waiver of Default. The Company shall have received a written
agreement executed by PNC Bank, National Association, which includes a waiver
of any and all defaults by the Company and any Subsidiary under the Credit
Agreement, amending the Credit Agreement in a form satisfactory to
Purchasers.
(e) Legal Opinion. Purchasers shall have received legal opinions
from Company Counsel and Company Local Counsel addressed to the Purchasers in
substantially the forms attached hereto as Exhibit A, and a legal opinion
under New Jersey law, in a form reasonably satisfactory to Purchasers, that
the Rights Plan has been validly terminated or expired with no Person having
rights thereunder.
(f) Rights Plan Termination. The Rights Plan and all rights provided
thereunder shall have been terminated or shall have expired, and no Person
shall have any Rights granted thereunder.
(g) Severance Agreements. Purchasers shall be reasonably satisfied
that the Company and its Subsidiaries shall not have any obligation to pay
severance to employees as a result of the Closing or the execution of this
Agreement.
(h) Board Representation. Xxxx Xxxxxxxxxx, Xxxxx Xxxx, Xxxxxxx Xxxxx
and two designees of Purchasers shall have been appointed to the Board
concurrent with the Closing.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though
made on and as of such date; and
(b) Performance. The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchaser at or prior to the Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Registration.
(a) As promptly as possible, and in any event on or prior to April
15, 2005 (the "FILING DEADLINE"), the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3 (except if the Company
is not then eligible to register for resale the Registrable Securities on
Form S-3, in which case such registration shall be on Form S-1 or another
appropriate form in accordance herewith as the Purchaser may consent) and
shall contain
21.
(except if otherwise directed by the Purchaser) the "Plan of Distribution"
attached hereto as Exhibit B.
(b) The Company shall use its best efforts to cause the Registration
Statement to be declared effective by the Commission as promptly as possible
after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until such time as
all Shares can be sold under Rule 144 in any consecutive 180-day period or
such earlier date when all Registrable Securities covered by such
Registration Statement have been sold (the "EFFECTIVENESS PERIOD").
(c) The Company shall notify Purchaser in writing promptly (and in
any event within one Trading Day) after receiving notification from the
Commission that the Registration Statement has been declared effective.
(d) Upon the occurrence of any Event (as defined below) and on every
monthly anniversary thereof until the applicable Event is cured, as partial
relief for the damages suffered therefrom by each Purchaser (which remedy
shall not be exclusive of any other remedies available under this Agreement,
at law or in equity), the Company shall pay to each Purchaser an amount in
cash, as liquidated damages and not as a penalty, equal to 2.0% of such
Purchaser's aggregate purchase price hereunder, upon the occurrence of the
Event, and 1.0% of such Purchaser's aggregate purchase price hereunder, upon
the last business day of each successive ten-day period thereafter, until all
such Events have been cured. The payments to which a Purchaser shall be
entitled pursuant to this Section 6.1(d) are referred to herein as "EVENT
PAYMENTS." Any Event Payments payable pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event. In the event the Company fails to make Event Payments in a timely
manner, such Event Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full.
For such purposes, each of the following shall constitute an "EVENT":
(i) the Registration Statement is not filed on or prior to the
Filing Deadline or is not declared effective on or prior to the Required
Effectiveness Date, provided that if the Registration Statement is not
timely filed or declared effective due solely to Purchaser's failure to
provide required information reasonably requested by the Company, the
Event described above shall be tolled accordingly until such failure is
cured;
(ii) after the Effective Date, a Purchaser is not permitted to
sell Registrable Securities under the Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) for any
reason for five or more Trading Days (whether or not consecutive), except
as permitted by Section 6.1(e) below;
(iii) after the Effective Date, unless waived in writing by
Purchasers, any Registrable Securities covered by such Registration
Statement are not listed on an Eligible Market;
22.
(iv) after the Effective Date, unless waived in writing by
Purchasers, the Common Stock is not listed or quoted, or is suspended from
trading, on an Eligible Market for a period of three Trading Days (which
need not be consecutive Trading Days).
(e) Notwithstanding anything in this Agreement to the contrary, the
Company may, by written notice to the Purchasers, suspend sales under a
Registration Statement after the Effective Date thereof and/or require that
the Purchaser immediately cease the sale of shares of Common Stock pursuant
thereto and/or defer the filing of any subsequent Registration Statement if
(i) the Company is engaged in a material merger, acquisition or sale and the
Board determines in good faith, by appropriate resolutions, that, as a result
of such sales activity it would be materially detrimental to the Company
(other than relating solely to the price of the Common Stock), (ii) the SEC
or any other federal or state governmental authority issues any stop order
suspending the effectiveness of the Registration Statement or initiates any
proceedings for that purpose; or (iii) there is an event or circumstance that
necessitates the making of any changes in the Registration Statement or
related Prospectus, or any document incorporated or deemed to be incorporated
therein by reference, so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of a related
Prospectus, it will not contain any untrue statement of a material fact or
any omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Upon receipt of such notice,
Purchaser shall immediately discontinue any sales of Registrable Securities
pursuant to such registration until such Purchaser has received copies of a
supplemented or amended Prospectus or until such Purchaser is advised in
writing by the Company that the then-current Prospectus may be used and has
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus. In no
event, however, shall this right be exercised to suspend sales beyond the
period during which (in the good faith determination of the Board) the
failure to require such suspension would be materially detrimental to the
Company. Furthermore, in no event may the Company exercise its rights
hereunder for a period of more than 30 days in any twelve-month period.
Immediately after the end of any suspension period under this Section 6.1(e),
the Company shall take all necessary actions (including filing any required
supplemental prospectus) to restore the effectiveness of the applicable
Registration Statement and the ability of the Purchaser to publicly resell
their Registrable Securities pursuant to such effective Registration
Statement.
(f) The Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities.
6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
23.
(a) Not less than five Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall (i)
furnish to Purchasers and Purchaser Counsel copies of all such documents
proposed to be filed, which documents (other than those incorporated or
deemed to be incorporated by reference) will be subject to the review of such
Purchaser and Purchaser Counsel, and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of Purchaser
Counsel, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file a Registration Statement or any
such Prospectus or any amendments or supplements thereto to which Purchaser
holding a majority of the Registrable Securities shall reasonably object.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible to any comments
received from the Commission with respect to the Registration Statement or
any amendment thereto and as promptly as reasonably possible provide the
Purchasers true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange
Act with respect to the disposition of all Registrable Securities covered by
the Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Purchaser thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify each Purchaser of Registrable Securities to be sold and
Purchaser Counsel as promptly as reasonably possible, and (if requested by
any such Person) confirm such notice in writing no later than one Trading Day
thereafter, of any of the following events: (i) the Commission notifies the
Company whether there will be a "review" of any Registration Statement; (ii)
the Commission comments in writing on any Registration Statement (in which
case the Company shall deliver to Purchaser a copy of such comments and of
all written responses thereto); (iii) any Registration Statement or any
post-effective amendment is declared effective; (iv) the Commission or any
other Federal or state governmental authority requests any amendment or
supplement to any Registration Statement or Prospectus or requests additional
information related thereto; (v) the Commission issues any stop order
suspending the effectiveness of any Registration Statement or initiates any
Proceedings for that purpose; (vi) the Company receives notice of any
suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or
threat of any Proceeding for such purpose; or (vii) the financial statements
included in any Registration Statement become ineligible for inclusion
therein or any statement made in any Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by reference
is untrue in any material
24.
respect or any revision to a Registration Statement, Prospectus or other
document is required so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, at the earliest practicable moment.
(e) Furnish to Purchasers and Purchaser Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(f) Promptly deliver to Purchasers and Purchaser's Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers in
connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto.
(g) (i) In the time and manner required by each Trading Market, prepare
and file with such Trading Market an additional shares listing application
covering all of the Registrable Securities; (ii) take all steps necessary to
cause such Registrable Securities to be approved for listing on each Trading
Market as soon as possible thereafter; (iii) provide to the Purchasers
evidence of such listing; and (iv) maintain the listing of such Registrable
Securities on each such Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the selling Purchaser
and each applicable Purchaser Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky
laws of such jurisdictions within the United States as any Purchaser requests
in writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise subject.
(i) Cooperate with the Purchasers to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
delivered to a transferee
25.
pursuant to a Registration Statement, which certificates shall be free, to
the extent permitted by this Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered
in such names as any such Purchaser may request, or, if requested by a
Purchaser, provide for the Registrable Securities to be held electronically
if permitted by applicable laws and regulations.
(j) Upon the occurrence of any event described in Section 6.2(c)(vii),
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will 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
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Cooperate with any due diligence investigation undertaken by the
Purchaser in connection with the sale of Registrable Securities, including
without limitation by making available any documents and information;
provided that the Company will not deliver or make available to any Purchaser
material, nonpublic information unless such Purchaser specifically requests
in advance to receive material, nonpublic information in writing.
(l) If holders of a majority of the Registrable Securities being
offered pursuant to a Registration Statement select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, by providing customary legal opinions, comfort letters and
indemnification and contribution obligations.
(m) Comply with all applicable rules and regulations of the Commission.
6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
expenses of counsel for the Company and up to $10,000 in the aggregate for fees
and expenses of Purchaser Counsel related to this Article VI, (e) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, and (f) all
listing fees to be paid by the Company to the Trading Market.
6.4 Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each
Purchaser, the officers,
26.
directors, partners, members, agents, brokers (including brokers who offer
and sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Purchaser
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use
therein, or to the extent that such information relates to such Purchaser or
such Purchaser's proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Purchaser
expressly for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto or (ii) the use by
such Purchaser of an outdated or defective Prospectus (or any Prospectus
after such Purchaser receives notice of an event contemplated by Section
6.1(e)) after the Company has notified such Purchaser in writing that the
Prospectus is outdated or defective or of an event contemplated by Section
6.1(e) and prior to the receipt by such Purchaser of the Advice contemplated
in Section 6.5. The Company shall notify the Purchasers promptly of the
institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Purchaser. Each Purchaser shall, severally and
not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from
and against all Losses (as determined by a court of competent jurisdiction in
a final judgment not subject to appeal or review) arising solely out of any
untrue statement of a material fact contained in the Registration Statement,
any Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of any omission of a material fact required to
be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading to the extent,
but only to the extent, that such untrue statement or omission is contained
in any information so furnished in writing by such Purchaser to the Company
specifically for inclusion in such Registration Statement or such Prospectus
or to the extent that (i) such untrue statements or omissions are based
solely upon information regarding such Purchaser furnished in writing to the
Company by such Purchaser expressly for use therein, or to the extent that
such information relates to such Purchaser or such Purchaser's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement
27.
thereto or (ii) the use by such Purchaser of an outdated or defective
Prospectus (or any Prospectus after such Purchaser receives notice of an
event contemplated by Section 6.1(e)) after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective or of an
event contemplated by Section 6.1(e) and prior to the receipt by such
Purchaser of the Advice contemplated in Section 6.5. In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds received by such Purchaser upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment
of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such Indemnified Party and such counsel shall be
at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified
28.
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 6.4(a)
or (b) is unavailable to an Indemnified Party (by reasons other than the
specified exclusions to indemnification), then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 6.4(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section was available
to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 6.4(d), no
Purchaser shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such
Purchaser from the sale of the Registrable Securities subject to the
Proceeding 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. 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 indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Section 6.1(e)
or Sections 6.2(c)(v), (vi) or (vii), such Purchaser will discontinue
disposition of such Registrable Securities under the Registration Statement
until such Purchaser's receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement contemplated by Section 6.2(j), or until
it is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
29.
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
6.6 No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Purchaser in such capacity pursuant hereto) may
include securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.
6.7 Piggy-Back Registrations.
(a) The Company shall notify all holders of Registrable Securities then
outstanding ("HOLDERS" and each a "HOLDER") in writing at least 15 days prior
to the filing of any registration statement under the Securities Act for
purposes of a public offering of securities of the Company (including, but
not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding Special Registration Statements) and
shall afford each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Holder.
Each Holder desiring to include in any such registration statement all or any
part of the Registrable Securities held by it shall, within 15 days after the
above-described notice from the Company, so notify the Company in writing.
Such notice shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
(b) If the registration statement under which the Company gives notice
under this Section 6.7 is for an underwritten public offering, the Company
shall so advise the Holders of Registrable Securities then outstanding. In
such event, the right of any such Holder to be included in a registration
pursuant to this Section 6.7 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of shares
that may be included in the underwriting shall be allocated: first, to the
Company; second, to the Holders on a pro rata basis based on the total number
of Registrable Securities held by the Holders; and third, to any stockholders
of the Company (other than a Holder) on a pro rata basis; provided, however,
that: (i) if the Registration Statement was filed at the request of a
stockholder (other than a Holder) for the purpose of registering the resale
of securities held by such stockholder pursuant to a "demand" right then such
allocation shall be: first, to such stockholder; and second, to the Company
and the Holders on a pro rata basis; and (ii) except as set forth in clause
(i), no such reduction shall reduce the amount of securities of the selling
Holders included in the registration unless all stockholders of the Company
exercising
30.
piggyback registration rights in such registration are subject to such
reduction. In no event will shares of any other selling stockholder of the
Company be included in such registration that would reduce the number of
shares that may be included by Holders without the written consent of Holders
of not less than a majority of the Registrable Securities proposed to be sold
in the offering. If any participating Holder disapproves of the terms of any
such underwriting, such participating Holder may elect to withdraw therefrom
by written notice to the Company and the underwriter, delivered at least ten
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder that is a
partnership or corporation, the partners, retired partners and stockholders
of such Holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing
person shall be deemed to be a single "Holder," and any pro rata reduction
with respect to such "Holder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(c) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 6.7 prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. At the Closing, the Company shall pay to SAIF an
aggregate of $75,000 for their legal fees and expenses incurred in connection
with the preparation and negotiation of the Transaction Documents. In lieu of
the foregoing payment, SAIF may retain such amount at the Closing or require the
Company, upon written notice provided to the Company prior to the Closing, to
pay such amount directly to Xxxxxx Godward LLP. Except as expressly set forth in
the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of the Shares.
7.2 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Purchaser such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents. Notwithstanding anything to the contrary
herein, the Shares may be assigned to any Person in connection with a bona fide
margin account or other loan or financing arrangement secured by such Shares.
7.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective
31.
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
prior to 5:00 p.m. (New York City time) on a Trading Day, (b) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section on a day that is
not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading
Day, (c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The addresses and
facsimile numbers for such notices and communications are those set forth on the
signature pages hereof, or such other address or facsimile number as may be
designated in writing hereafter, in the same manner, by such Person.
7.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding a majority of the Shares or, in the case
of a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.
7.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement (other than the rights under Sections 4.5, 4.6
and 4.8 through 4.11) to any Person to whom such Purchaser assigns or transfers
any Shares, provided such transferee agrees in writing to be bound, with respect
to the transferred Shares, by the provisions hereof that apply to the
"Purchasers." Notwithstanding anything to the contrary herein, Shares may be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Shares.
7.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Indemnified Party is an intended third
party beneficiary of Section 6.4 and (in each case) may enforce the provisions
of such Section directly against the parties with obligations thereunder.
7.8 Governing Law; Venue; Waiver of Jury Trail. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the state of New York. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE
BOROUGH OF MANHATTAN, IN THE STATE OF NEW YORK FOR THE
32.
ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER,
IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT,
ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH
SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED
MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Shares.
7.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
7.13 Replacement of Securities. If any certificate or instrument
evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Shares.
33.
7.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
7.15 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or any Purchaser enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
7.16 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
[Signature pages follow]
34.
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
INTELLIGROUP, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxxxxxxx
Title: Chief Executive Officer
Address for Notice:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.:
Attn: Legal Department
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
SB ASIA INFRASTRUCTURE FUND, L.P.
By: /s/ Xxxxxx X. Xxx
-------------------------------------
Name: Xxxxxx X. Xxx
Title:
Purchase Price: $9,999,999.25
Number of Shares to be acquired at Closing:
11,764,705
Address for Notice:
Two Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (650)
Attn: Xxxx Xxxxxxxxxx
With a copy to: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx and Xxxxx Xxxxx
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
VENTURE TECH ASSETS LTD.
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Director
Purchase Price: $5,000,000.05
Number of Shares to be acquired at Closing:
5,882,353
Address for Notice:
00/000 Xxxxxxxxx Xxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Facsimile No.:
Telephone No.:
Attn:
With a copy to: Cooley Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx and Xxxxx Xxxxx
Exhibits:
A Opinions of Company Counsel and Local Company Counsel
B Plan of Distribution
C Transfer Agent Instructions
EXHIBIT A
OPINIONS OF COMPANY COUNSEL AND LOCAL COMPANY COUNSEL
