EXHIBIT 12 TO SCHEDULE 13D
This
Securities Purchase Agreement (this “Agreement”) is dated as of April __,
2004, by and among Exabyte Corporation, a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto
(each, including its successors and assigns, 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 (as defined below), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, desires to purchase from the Company in the aggregate, up to $25,000,000 million
of Preferred Stock and Warrants on the Closing Date.
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: (a)
capitalized terms that are not otherwise defined herein have the meanings given to such
terms in the Certificate of Designation (as defined herein), and (b) the following terms
have the meanings indicated in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section 3.1(j).
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“Actual
Minimum” means, as of any date, the maximum aggregate number of shares of Common
Stock then issued or potentially issuable in the future pursuant to the Transaction
Documents, including any Underlying Shares issuable upon exercise or conversion in full of
all Warrants and shares of Preferred Stock, ignoring any conversion or exercise limits set
forth therein, and assuming that any previously unconverted shares of Preferred Stock are
held until the third anniversary of the Closing Date and all dividends are paid in shares
of Common Stock until such third anniversary, subject to the limitation on the number of
shares of Common Stock issuable hereunder set forth in Section 5(a)(iii) of the
Certificate of Designation.
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“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. For the purposes of this
definition, “control” means the power to direct the management and policies of
such person or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment manager as
such Purchaser will be deemed to be an Affiliate of such Purchaser.
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“Certificate
of Designation” means the Certificate of Designation to be filed prior to the
Closing by the Company with the Secretary of State of Delaware, in the form of Exhibit
A attached hereto.
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“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.
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“Closing
Date” means the Trading Day when all of the Transaction Documents have been
executed and delivered by the applicable parties thereto, and all conditions precedent to
(i) each Purchaser’s obligations to pay the Subscription Amount have been satisfied
or waived and (ii) the Company’s obligations to deliver the Securities have been
satisfied or waived.
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“Commission”
means the Securities and Exchange Commission.
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“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any
securities into which such common stock shall hereinafter been reclassified into.
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“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which
would entitle the holder thereof to acquire at any time Common Stock, including without
limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
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“Company Counsel” means Holland & Xxxx LLP.
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“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently
herewith.
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“Effective
Date” means the date that the Registration Statement is first declared effective
by the Commission.
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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
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“Exempt Issuance” the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly adopted by
a majority of the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors established for such
purpose or otherwise issued in connection with employment, (b) securities upon the
exercise of or conversion of any Preferred Stock, any warrants issued to the original
holders of the Preferred Stock or any convertible securities, options or warrants issued
and outstanding on the date of this Agreement, provided that such securities have not been
amended since the date of this Agreement to increase the number of shares of Common Stock
issuable pursuant to such securities (but if the number is increased, this proviso will
only apply to the increased number, not the number outstanding on the date of this
Agreement), (c) securities issued pursuant to equipment financing, leasing arrangements,
commercial bank financings, corporate partnering arrangements, strategic transactions
(including joint ventures), acquisitions, mergers or technology transfer or development
arrangements, provided any such issuance shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities, (d) as a dividend or distribution on,
or reclassification of, other outstanding shares for which an adjustment to the Set Price
is made pursuant to Section 5(c)(ii) of the Certificate of Designation, (e) shares of
Common Stock or options to consultants or suppliers, provided the number of shares of
Common Stock or shares underlying options does not exceed, in the aggregate, 0.5 % of the
outstanding Common Stock in any 12 month period.
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“FW” means Xxxxxxx Xxxxxxxxx LLP with offices located at 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000-0000.
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“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).
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“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
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“Losses”
means any and all losses, claims, damages, liabilities, settlement costs and expenses,
including without limitation costs of preparation and reasonable attorneys’ fees.
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“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).
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“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind.
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“Preferred
Stock” means the up to 25,000 shares of the Company’s Series AA Convertible
Preferred Stock issued hereunder having the rights, preferences and privileges set forth
in the Certificate of Designation.
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“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.
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“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof,
among the Company and each Purchaser, in the form of Exhibit B.
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“Registration
Statement” means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Purchasers of the
Underlying Shares.
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“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
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“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act,
as such Rule 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.
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“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Preferred Stock, the Warrants and the Underlying Shares.
“Securities Act” means the Securities Act of 1933, as amended.
“Set Price” shall have the meaning ascribed to such term in the Certificate of
Designations.
“Stated
Value” means $1,000 per share of Preferred Stock.
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“Subscription
Amount” shall mean, as to each Purchaser, the amount to be paid for the Preferred
Stock purchased hereunder as specified below such Purchaser’s name on the signature
page of this Agreement, in United States Dollars.
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“Subsidiary”
means any subsidiary of the Company that is required to be listed in Schedule
3.1(a).
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“Trading Day” means any day during which the Trading Market shall be open for business.
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“Trading Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the American Stock Exchange, the New
York Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or the OTC
Bulletin Board.
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“Transaction Documents” means this Agreement, the Certificate of Designation, the Warrants,
the Registration Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
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“Underlying Shares” means the shares of Common Stock issuable upon conversion of the
Preferred Stock, upon exercise of the Warrants and issued and issuable in lieu of the cash
payment of dividends on the Preferred Stock.
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“VWAP”
means, for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the primary Trading Market as reported by Bloomberg Financial L.P. (based on a
Trading Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP function;
(b) if the Common Stock is not then listed or quoted on the Trading Market and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
the National Quotation Bureau Incorporated (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common
Stock so reported; or (c) in all other cases, the fair market value of a share of
Common Stock as determined by a nationally recognized-independent appraiser selected in
good faith by Purchasers holding a majority of the Stated Value of shares of Preferred
Stock then outstanding.
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“Warrants”
means the Common Stock Purchase Warrants, in the form of Exhibit C, delivered
to the Purchasers at the Closing in accordance with Section 2.2 hereof, which warrants
shall be exercisable immediately upon issuance for a term of 5 years
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“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1
Closing. On the Closing Date, each Purchaser shall purchase from the Company,
severally and not jointly with the other Purchasers, and the Company shall issue and sell
to each Purchaser, (a) shares of Preferred Stock with an aggregate Stated Value equal to
such Purchaser’s Subscription Amount; and (b) the Warrants as determined pursuant to
Section 2.2(a). As a condition to the obligations of all parties, the aggregate number of
shares of Preferred Stock sold hereunder shall be up to 25,000, and shall not be less than
15,000. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of FW or such other location as the parties shall mutually agree.
2.2
Conditions to Closing. The Closing is subject to the satisfaction or waiver by the
party to be benefited thereby of the following conditions:
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(a) The
Company shall have delivered or caused to be delivered to each Purchaser the
following: |
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(i) this
Agreement duly executed by the Company; |
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(ii) a
certificate evidencing a number of shares of Preferred Stock equal to such
Purchaser’s Subscription Amount divided by the Stated Value,
registered in the name of such Purchaser; |
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(iii) a Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 30% of such Purchaser’s Subscription
Amount divided by the Set Price on the date hereof, with an exercise price
equal to $1.00, subject to adjustment therein; |
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(iv) a
legal opinion of Company Counsel, in the form of Exhibit D attached
hereto, addressed to each Purchaser; and |
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(v) the
Registration Rights Agreement duly executed by the Company. |
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(b) At the Closing, each Purchaser shall have delivered or caused to be delivered to
the Company the following: |
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(i) this
Agreement duly executed by such Purchaser; |
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(ii) such
Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; and |
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(iii) the
Registration Rights Agreement duly executed by such Purchaser. |
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(c) The Company shall have received wire transfers (as
described in 2.2(b)(ii)) in the aggregate amount of a minimum of $15,000,000
from the Purchasers. |
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(d) All representations and warranties of the other party contained herein shall remain
true and correct as of the Closing Date and all covenants of the otherparty
shall have been performed if due prior to such date. |
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(e) There
is no Action which adversely affects or challenges any of the Transaction
Documents or the Securities. |
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(f) From the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material adverse change in,
any financial market which, in each case, in the reasonable judgment of each
Purchaser, makes it impracticable or inadvisable to purchase the shares of
Preferred Stock at the Closing. |
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(g) The consummation of the exchange of all of the Company’s Series H Preferred
Stock and Series I Preferred Stock for a number of shares of Preferred Stock
that is convertible into the same number of shares of Common Stock as the
Series H Preferred Stock and Series I Preferred Stock, plus any warrants
received by the Purchasers of the Preferred Stock on an equal per-share basis, and assuming for such purpose in the case of the Series I
Preferred Stock the accrual of all dividends on the exchanged Series I
Preferred Stock through December 31, 2004. |
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules shall be
deemed a part hereof, the Company hereby makes the representations and warranties set
forth below to each Purchaser:
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(a) Subsidiaries.
All of the direct and indirect subsidiaries of the Companyare set forth on Schedule
3.1(a). The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any Liens,
and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights to subscribe for or purchase securities. If the Company has
no subsidiaries, then references in the Transaction Documents to the
Subsidiaries will be disregarded. |
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(b) Organization
and Qualification. Each of the Company and the Subsidiaries is an entity
duly incorporated or otherwise 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 or default 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 conduct 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, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on
the Company’s ability to perform in any material respect on a timely basis
its obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or qualification. |
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(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 or
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
or 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 other than
Required Approvals. Each of the Transaction Documents has been (or upon
delivery will be) duly executed by the Company and, 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, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights
and remedies generally and general principles of equity. Neither the Company
nor any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents except where such violation could not, individually or in the
aggregate, constitute a Material Adverse Effect. |
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(d) No
Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the
consummation by the Company of the other transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, result in the creation of any
Lien upon any of the properties or assets of the Company or any Subsidiary, or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected, or (iv) conflict with or
violate the terms of any agreement by which the Company or any Subsidiary is
bound or to which any property or asset of the Company or any Subsidiary is
bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect. |
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(e) Filings,
Consents and Approvals. Neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filings required under Section 4.9, (ii) the
filing with the Commission of the Registration Statement, (iii) the
application(s) to each applicable Trading Market for the listing of the
Underlying Shares for trading thereon in the time and manner required thereby,
(iv) the filing with the Commission of a Form D pursuant to Commission
Regulation D, and (v) applicable Blue Sky filings (collectively, the “Required
Approvals”). |
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(f) Issuance
of the Securities. The Securities are duly authorized and, when issued and
paid for in accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens.
The Company has reserved from its duly authorized capital stock a number of
shares of Common Stock for issuance of the Underlying Shares at least equal to
the Actual Minimum on the date hereof. |
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(g) Capitalization.
The capitalization of the Company is as described in the Company’s most
recent periodic report filed with the Commission. The Company has not issued
any capital stock since such filing other than pursuant to the exercise of
employee stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plan and pursuant to the conversion or exercise of
outstanding Common Stock Equivalents outstanding. No Person has any right of
first refusal, preemptive right, right of participation, or any similar right
to participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities, 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 exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. The issue and sale of the Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for
the issuance and sale of the shares of Preferred Stock. Except as disclosed in
the SEC Reports, there are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to
which the Company is a party or, to the knowledge of the Company, between or
among any of the Company’s stockholders. |
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(h) SEC
Reports; Financial Statements. 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, for the two years preceding the
date hereof (or such shorter period as the Company was required by law to file
such material) (the foregoing materials, including the exhibits thereto, being
collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, 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. |
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(i) Material
Changes. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in the SEC Reports,
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the 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. The Company does not have pending before the Commission any
request for confidential treatment of information. |
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(j) Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act. |
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(k) Labor
Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which
could reasonably be expected to result in a Material Adverse Effect. |
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(l) Compliance.
Neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
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 applicable to its
business except in each case as could not have a Material Adverse Effect. |
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(m) 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 could not, individually or in the aggregate, have or reasonably be
expected to 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. |
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(n) 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 as 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 and Liens for the payment of federal, state
or other taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance. |
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(o) 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 as described in the SEC Reports and which the failure to so have
could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary 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 of others. |
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(p) 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. To the best of Company’s knowledge, such
insurance contracts and policies are accurate and complete. 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. |
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(q) Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, 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, in each
case in excess of $60,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company. |
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(r) Xxxxxxxx-Xxxxx;
Internal Accounting Controls. The Company is in material compliance with
all provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as
of the Closing Date. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange
Act, as the case may be, is being prepared. The Company’s certifying
officers have evaluated the effectiveness of the Company’s controls and
procedures as of the date prior to the filing date of the most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in
Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company’s
knowledge, in other factors that could significantly affect the Company’s
internal controls. |
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(s) 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. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by this Agreement. |
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(t) Private
Placement. Assuming the accuracy of the Purchasers representations and
warranties set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Securities by the Company to the
Purchasers as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Trading Market. |
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(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately
after receipt of payment for the shares of Preferred Stock, will not be or be
an Affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act. |
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(v) Registration
Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company. |
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(w) Listing
and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(g) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the 12 months preceding
the date hereof, received notice 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.
The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. |
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(x) Application
of Takeover Protections. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company’s Certificate of Incorporation (or similar charter documents) or
the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Securities and
the Purchasers’ ownership of the Securities. |
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(y) Disclosure.
Other than the terms of the Transaction Documents, the Company confirms that,
neither the Company nor any other Person acting on its behalf has provided any
of the Purchasers or their agents or counsel with any information that
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure 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 with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading. 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 hereof. |
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(z) No
Integrated Offering. Neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of Securities to be
integrated with prior offerings by the Company in a manner that would cause
exemptions from registration provided under the Securities Act to be
unavailable or which could violate any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
the Trading Market. |
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(aa) Solvency/Indebtedness.
Based on the financial condition of the Company as of the Closing Date,
immediately after the Closing: (i) the fair saleable market value of the Company’s
assets, tangible and intangible, including without limitation Intellectual
Property Rights, exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature; (ii) the Company’s assets do
not constitute unreasonably small capital to carry on its business for the
current fiscal year as now conducted and as proposed to be conducted including
its capital needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash,
would be sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
The SEC Reports set forth as of the dates thereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for borrowed
money or amounts owed in excess of $50,000 (other than trade accounts payable
incurred in the ordinary course of business), (b) all guaranties, endorsements
and other contingent obligations in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company’s balance sheet
(or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess
of $50,000 due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect to any
Indebtedness. |
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(bb) Intentionally
Omitted. |
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(cc) Tax
Status. The Company and each of its Subsidiaries has made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim. The Company has not
executed a waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, statue or local tax. None of
the Company’s tax returns is presently being audited by any taxing
authority. |
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(dd) No
General Solicitation or Advertising in Regard to this Transaction. Neither
the Company nor, to the knowledge of the Company, any of its directors or
officers (i) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with
respect to the sale of the Preferred Stock or the Warrants, or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Preferred Stock,
the Underlying Shares or the Warrants under the Securities Act or made any
“directed selling efforts” as defined in Rule 902 of Regulation S. |
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(ee) Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any corrupt funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended. |
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(ff) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges
and agrees that the Purchasers are acting solely in the capacity of arm’s
length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Purchaser is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Purchaser or any of their respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is
merely incidental to the Purchasers’ purchase of the Securities. The
Company further represents to each Purchaser that the Company’s decision
to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives. |
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(gg) Seniority.
As of the date of the Closing, no other equity of the Company is senior to the
Preferred Stock in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise. |
3.2
Representations and Warranties of the Purchasers1.1 . Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof and as of
the Closing Date to the Company as follows:
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(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
full right, 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 thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or similar
action on the part of such Purchaser. Each Transaction Document to which it is
party has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law. |
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(b) Investment
Intent. Such Purchaser understands that the Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling
such Securities or any part thereof, has no present intention of distributing
any of such Securities and has no arrangement or understanding with any other
persons regarding the distribution of such Securities (this representation and
warranty not limiting such Purchaser’s right to sell the Securities
pursuant to the Registration Statement or otherwise in compliance with
applicable federal and state securities laws). Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Such Purchaser
does not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities. |
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(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and
at the date hereof it is, and on each date on which it exercises any Warrants,
it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act. |
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(d) Experience
of such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford
a complete loss of such investment. |
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(e) General
Solicitation. Such Purchaser is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement. |
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(f) Restrictions
on Short Sales. The Purchaser represents and warrants that, during the
period beginning on the date on which X.X. Xxxxxxxxx, Towbin, a financial
advisor to the Company, first contacted such Purchaser regarding a transaction
contemplated by this Agreement (and involving the Company) and ending on the
Closing Date, neither it nor any Affiliate (as defined below) of such Purchaser
has engaged in any “short sales” (as such term is defined in Rule
3b-3 promulgated under the Exchange Act) of the Common Stock. The Purchaser
further agrees that neither Purchaser nor any Affiliate of such Purchaser shall
engage in any “short sales” of the Common Stock on or before the
Closing Date. The restrictions in this Section 4(m) shall not apply to any
Affiliate of the Purchaser to the extent that such Affiliate is acting in the
capacity of a broker-dealer executing unsolicited third party transactions. |
ARTICLE IV
OTHER AGREEMENTS OF THE
PARTIES
4.1
Transfer Restrictions.
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(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an Affiliate of a Purchaser or in connection with a pledge as contemplated
in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion and shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. |
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(b) Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities: |
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[NEITHER]
THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] [CONVERTIBLE]] HAVE 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 AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND
THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. |
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ON
THE FRONT SIDE OF THE PREFERRED STOCK: |
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THIS
CERTIFICATE MAY REPRESENT LESS SHARES OF PREFERRED STOCK THAN SHOWN ON THE FACE OF THIS
CERTIFICATE BECAUSE CONVERSIONS OF SHARES OF THE PREFERRED STOCK MAY OCCUR WITHOUT
REVISION OR CANCELLATION OF THIS CERTIFICATE. INFORMATION REGARDING SHARES OF THE
PREFERRED STOCK WHICH HAVE BEEN CONVERTED MAY BE OBTAINED FROM THE COMPANY. |
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The
Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to
a bona fide margin agreement with a registered broker-dealer or grant a security interest
in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be
bound by the provisions of this Agreement and the Registration Rights Agreement and, if
required under the terms of such arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of
the Securities Act to appropriately amend the list of Selling Stockholders thereunder. |
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(c) Certificates
evidencing Underlying Shares of a Holder shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) while a registration
statement (including the Registration Statement) covering the resale of such
Underlying Shares is effective under the Securities Act, or (ii) following any
sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
Underlying 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 a legal opinion
to the Company’s transfer agent promptly after the Effective Date if
required by the Company’s transfer agent to effect the removal of the
legend hereunder. If all or any shares of Preferred Stock or any portion of a
Warrant is converted or exercised (as applicable) at a time when there is an
effective registration statement to cover the resale of the Underlying Shares,
or if such Underlying Shares may be sold under Rule 144(k) or if such legend is
not otherwise required under applicable requirements of the Securities Act
(including judicial interpretations thereof) then such Underlying Shares shall
be issued free of all legends. The Company agrees that following the Effective
Date or at such time as such legend is no longer required under this Section
4.1(c), it will, no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a certificate
representing Securities issued with a restrictive legend (such date, the
“Legend Removal Date”), deliver or cause to be delivered to
such Purchaser a certificate representing such Underlying Shares that is free
from all restrictive and other legends. The Company may deliver any certificate
or certificates required to be delivered for Underlying Shares electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions, and the corporation shall be deemed
to have satisfied its delivery obligations if the certificates for the
Underlying Shares are made available through such clearing agent on or prior to
the Legend Removal Date. 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. |
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(d) In
addition to such Purchaser’s other available remedies, the Company shall
pay to a Purchaser, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Underlying Shares (based on the VWAP on the date
such Securities are submitted to the Company’s transfer agent) delivered
for removal of the restrictive legend and subject to this Section 4.1(c), $10
per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after
such damages have begun to accrue) for each Trading Day after the Legend
Removal Date until such certificate is delivered. Nothing herein shall limit
such Purchaser’s right to pursue actual damages for the Company’s
failure to deliver certificates representing any Securities as required by the
Transaction Documents, and such Purchaser shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief. Notwithstanding
anything herein to the contrary, in the event a Purchaser is entitled to
collect liquidated damages hereunder and liquidated damages pursuant to
Sections 5(b)(ii) and/or (iii) of the Certificate of Designation, the Purchaser
shall be limited to collect, at its option, of such remedies, only one such
remedy on any given occasion. |
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(e) Each
Purchaser, severally and not jointly with the other Purchasers, agrees that the
removal of the restrictive legend from certificates representing Securities as
set forth in this Section 4.1 is predicated upon the Company’s reliance
that the Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus
delivery requirements, or an exemption therefrom. |
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(f) Until
the 18th month anniversary of the Effective Date, the Company shall
not undertake a reverse or forward stock split or reclassification of the
Common Stock without the prior written consent of the Purchasers holding a
majority in interest of the shares of Preferred Stock. |
4.2
Furnishing of Information. As long as any Purchaser owns Securities, the Company
covenants to use commercially reasonable efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any Purchaser, the Company shall deliver to such Purchaser a written certification of a
duly authorized officer as to whether it has complied with the preceding sentence. As long
as any Purchaser owns Registrable Securities (as defined in the Registration Rights
Agreement), if the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to each Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for each Purchaser to sell the Securities under
Rule 144. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144.
4.3
Integration. The Company shall not sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the Securities to
the Purchasers or that would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
4.4
Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a press release or file a
Current Report on Form 8-K, in each case reasonably acceptable to each Purchaser
disclosing the material terms of the transactions contemplated hereby. The Company and
each Purchaser shall consult with each other in issuing any press releases with respect to
the transactions contemplated hereby, and neither the Company nor any Purchaser shall
issue any such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the Company, which
consent shall not unreasonably be withheld, 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 or 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 (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure permitted under subclause (i) or (ii).
4.5
Shareholders Rights Plan. No claim will be made or has been made by the Company or,
to the knowledge of the Company, any other Person that any Purchaser is an “Acquiring
Person” under any shareholders rights plan or similar plan or arrangement in effect
or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the Purchasers.
4.6
Non-Public Information. The Company covenants and agrees that neither it nor any
other Person acting on its behalf will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and confirms that
each Purchaser shall be relying on the foregoing representations in effecting transactions
in securities of the Company.
4.7
Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and not for the satisfaction of any
portion of the Company’s debt (other than payment of trade payables, payments under
existing memoranda of understanding between the Company and certain of its suppliers and
related notes payable, capital lease obligations, and accrued expenses in the ordinary
course of the Company’s business and prior practices), to redeem any Company equity
or equity-equivalent securities or to settle any outstanding litigation.
4.8
Reimbursement. If any Purchaser becomes involved in any capacity in any Proceeding
by or against any Person who is a stockholder of the Company, other than a Purchaser
(except as a result of sales, pledges, margin sales and similar transactions by such
Purchaser to or with any stockholder), solely as a result of such Purchaser’s
acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the Company
under this paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of the Purchasers
who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of the Company, the Purchasers
and any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Company or any Person asserting claims on behalf
of or in right of the Company solely as a result of acquiring the Securities under this
Agreement.
4.9
Indemnification of Purchasers. Subject to the provisions of this Section 4.9, the
Company will indemnify and hold the Purchasers and their directors, officers,
shareholders, partners, employees and agents (each, a “Purchaser Party”)
harmless from any and all out-of-pocket losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of investigation
that any such Purchaser Party may suffer or incur as a result of or relating to (a) any
breach of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser, or any of them or their respective Affiliates, by any
stockholder of the Company who is not a Purchaser or an Affiliate of a Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents (unless such
action is based upon a breach of such Purchaser’s representation, warranties or
covenants under the Transaction Documents or any agreements or understandings such
Purchaser may have with any such stockholder or any violations by the Purchaser of state
or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing. Any
Purchaser Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Purchaser Party except to the extent that (i) the employment thereof
has been specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel or (iii) in
such action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the position of
such Purchaser Party. The Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by an Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is attributable to
any Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by the Purchasers in this Agreement or in the other Transaction Documents.
4.10 Reservation and Listing of Securities.
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(a) 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. |
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(b) If,
on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than 130% of (i) the Actual Minimum on such
date, minus (ii) the number of shares of Common Stock previously issued
pursuant to the Transaction Documents, then the Board of Directors of the
Company shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the Actual Minimum at such time
(minus the number of shares of Common Stock previously issued pursuant to the
Transaction Documents), as soon as possible and in any event not later than the
75th day after such date; provided that the Company will not be required at any
time to authorize a number of shares of Common Stock greater than the maximum
remaining number of shares of Common Stock that could possibly be issued after
such time pursuant to the Transaction Documents. |
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(c) The
Company shall: (i) to the extent required for Underlying Shares to be listed
by, or traded on, the Trading Market for the Common Stock, in the time and
manner required by the Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of
Common Stock at least equal to the Actual Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common Stock
to be approved for listing on the Trading Market as soon as possible
thereafter, (iii) provide to each Purchaser evidence of such listing, and (iv)
use reasonable efforts to maintain the listing of such Common Stock on such
Trading Market or another Trading Market. |
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(d) If,
on any date, the Company is listed on a different Trading Market, then the
Company shall take the necessary actions to list all of the Underlying Shares
and Warrant Shares on such Trading Market as soon as reasonably possible. |
4.11
Conversion and Exercise Procedures. The form of Election to Purchase included in
the Warrants and the forms of Conversion Notice included in the Certificate of Designation
set forth the totality of the procedures required in order to exercise the Warrants or
convert the Preferred Stock. No additional legal opinion or other information or
instructions shall be necessary to enable each Purchaser to exercise their Warrants or
convert their Preferred Stock. The Company shall honor exercises of the Warrants and
conversions of the Preferred Stock and shall deliver Underlying Shares in accordance with
the terms, conditions and time periods set forth in the Transaction Documents. The Company
acknowledges that the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction Documents,
including its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution or any
claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.
4.12
Equal Treatment of Purchasers. No consideration shall be offered or paid to any
person to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of the parties
to the Transaction Documents. For clarification purposes, this provision constitutes a
separate right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended to require the Company to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.
4.13
Participation in Future Financing. For as long as the Preferred Stock remains
outstanding, upon any financing by the Company of its Common Stock or Common Stock
Equivalents pursuant to any exemption from the registration requirements of the Securities
Act for a non-public offering (a “Subsequent Financing”), each Purchaser
shall have the right to participate in such Subsequent Financing in the ratio determined
by the outstanding Stated Value of Preferred Stock then held by such Purchaser divided by
the outstanding Stated Value of all of the Preferred Stock held by the Purchasers. At
least 10 Trading Days prior to the closing of the Subsequent Financing, the Company shall
deliver to each Purchaser a written notice of its intention to effect a Subsequent
Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it
wants to review the details of such financing (such additional notice, a
“Subsequent Financing Notice”). Upon the request of a Purchaser, and only
upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than 1 Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or similar document
relating thereto. If by 6:30 p.m. (New York City time) on the 10th Trading Day
after all of the Purchasers have received the Pre-Notice, notifications of the Purchasers
of their willingness to participate in the Subsequent Financing (or to cause their
designees to provide) is, in the aggregate, less than the total amount of the Subsequent
Financing, then the Company may effect the remaining portion of such Subsequent Financing
on the terms and to the Persons set forth in the Subsequent Financing Notice. If the
Company receives no notice from a Purchaser as of such 10th Trading Day, such
Purchaser shall be deemed to have notified the Company that it does not elect to
participate. The Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation set forth above in
this Section 4.13, if the Subsequent Financing subject to the initial Subsequent Financing
Notice is not consummated for any reason on the terms set forth in such Subsequent
Financing Notice within 60 Trading Days after the date of the initial Subsequent Financing
Notice. Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an
Exempt Issuance.
4.14
Future Financings. From the date hereof until 90 days after the Effective Date,
other than as contemplated by this Agreement, neither the Company nor any Subsidiary (with
respect to Common Stock Equivalents) shall issue or sell any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock. Notwithstanding
anything herein to the contrary, the 90 day period set forth in this Section 4.14 shall be
extended for the number of Trading Days during such period in which (i) trading in the
Common Stock is suspended by any Trading Market, or (ii) following the Effective Date, the
Registration Statement is not effective or the prospectus included in the Registration
Statement may not be used by each Purchaser for the resale of the Underlying Shares.
Notwithstanding anything to the contrary herein, this Section 4.14 shall not apply in
respect of an Exempt Issuance. In addition to the limitations set forth herein, from the
date hereof until such time as no Purchaser holds any of the Securities, the Company shall
be prohibited from effecting or enter into an agreement to effect any Subsequent Financing
involving any security which is not a Junior Security as defined in the Certificate of
Designation, or any “Variable Rate Transaction” or an “MFN
Transaction” (each as defined below). The term “Variable Rate
Transaction” shall mean a transaction in which the Company issues or sells (i)
any debt or equity securities that are convertible into, exchangeable or exercisable for,
or include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the
Common Stock. The term “MFN Transaction” shall mean a transaction in
which the Company issues or sells any securities in a capital raising transaction or
series of related transactions which grants to an investor the right to receive additional
shares based upon future transactions of the Company on terms more favorable than those
granted to such investor in such offering.
4.15
Short Selling. Each Purchaser, severally and not jointly with the other Purchasers,
understands and acknowledges that the Commission currently takes the position that
coverage of short sales of shares of the Common Stock “against the box” with the
Underlying Shares purchased hereunder prior to the Effective Date is a violation of
Section 5 of the Securities Act, as set forth in Item 65, Section 5 under Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by
the Office of Chief Counsel, Division of Corporate Finance. Accordingly, each Purchaser
hereby agrees not to use any of the Underlying Shares to cover any short sales prior to
the Effective Date. Additionally, each Purchaser, severally and not jointly with the other
Purchasers, agrees to comply with Regulation M under the federal securities laws.
ARTICLE V
MISCELLANEOUS
5.1
Fees and Expenses. At the Closing, the Company shall reimburse Midsummer Capital,
LLC $40,000 for its legal fees and expenses (less any amounts previously paid). The
Company shall deliver, prior to the Closing, a completed and executed copy of the Closing
Statement, attached hereto as Annex A. Except as otherwise set forth in this
Agreement, 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 stamp and other taxes and duties levied in connection
with the sale of the Securities.
5.2
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.
5.3
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 on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified on the signature page prior
to 5:30 p.m. (New York City time) on a Trading Day and an electronic confirmation of
delivery is received by the sender, (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 5:30
p.m. (New York City time) on any Trading Day, (c) three Trading Days 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 for
such notices and communications are those set forth on the signature pages hereof, or such
other address as may be designated in writing hereafter, in the same manner, by such
Person.
5.4
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 Purchasers
holding at least 75% of the shares of Preferred Stock purchased pursuant to this Agreement
(and specifically not including shares of Preferred Stock issued in exchange for other
securities of the Company) then outstanding (and if no shares of Preferred Stock are
outstanding, based on unexercised Warrant Shares then held by such Purchasers) 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.
5.5
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.
5.6
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 each Purchaser. Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any Securities,
provided such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the “Purchasers”.
5.7
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 as
otherwise set forth in Section 4.9.
5.8
Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or inconvenient venue for such proceeding. 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
parties hereby waive all rights to a trial by jury. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.9
Survival. The representations and warranties contained herein shall survive the
Closing and the delivery, exercise and/or conversion of the Securities, as applicable.
5.10
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.
5.11
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.
5.12
Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.
5.13
Remedies. In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of each Purchaser 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.
5.14
Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises
its rights thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any other person under
any law (including, without limitation, any bankruptcy law, 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.
5.15
Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser under any Transaction Document.
Nothing contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a presumption that
the Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each Purchaser
shall be entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, Purchasers and their respective
counsel have chosen to communicate with the Company through FW. FW does not represent all
of the Purchasers but only Midsummer Investment Ltd. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience of the
Company and not because it was required or requested to do so by the Purchasers.
5.16
Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing obligation
of the Company and shall not terminate until all unpaid partial liquidated damages and
other amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due and payable
shall have been canceled.
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated
above.
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EXABYTE CORPORATION
By:___________________________________
Name:
Title:
With a copy to (which shall not constitute notice):
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Address for Notice:
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