SECURITIES PURCHASE AGREEMENT
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 10, 2010, by and among Akorn, Inc., a Louisiana corporation with headquarters located at 0000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxx 00000 (the “Company”), and Serum Institute of India Ltd., a Company incorporated under the laws of India, having its principal place of business at S. No. 212/2, Off Soli Poonawalla Road, Hadapsar, Xxxx - 000 000, Xxxxxxxxxxx, Xxxxx (“Investor”).
WHEREAS:
A. The Company and Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act.
B. Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that number of shares of the Common Stock, no par value per share, of the Company (the “Common Stock”), set forth opposite Investor’s name in column two (2) of Exhibit A (the “Common Shares”).
C. In connection with the purchase and sale of Common Stock, Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, a detachable warrant to purchase up to TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) worth of Common Stock on the terms and conditions set forth in the form of Warrant attached hereto as Exhibit C (the “Warrant”).
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 Investor agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the city of Chicago, Illinois or Lake Forest, Illinois, are authorized or required by law to remain closed.
“Closing” means the closing of the purchase and sale of the Common Shares and Warrant pursuant to Section 2.2 between the Company and Investor after satisfaction of the conditions to Closing set forth in Article V.
“Closing Date” means such date on which all of the Closing conditions set forth in Article V are satisfied or waived. The time of the Closing shall be 5:00 p.m., Chicago time on the Closing Date.
“Commission” has the meaning set forth in the recitals.
“Common Shares” has the meaning set forth in the recitals.
“Common Stock” has the meaning set forth in the recitals.
“Company Counsel” means Xxxxx Xxxx LLP, counsel to the Company.
“Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.
“DWAC Fees” means fees payable to the Transfer Agent’s Deposit Withdrawal Agent for the electronic transmission of shares of Common Stock by crediting the account of Investor’s broker with Depository Trust Company Fast Automated Securities Transfer through the Transfer Agent’s Deposit Withdrawal Agent Commission system.
“EJ Funds” means EJ Funds, LP, a Delaware limited partnership.
“Eligible Market” means any of the New York Stock Exchange, the NYSE Amex Equities, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market.
“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.
“8-K Filing” has the meaning set forth in Section 4.5.
“FINRA” has the meaning set forth in Section 3.2(k).
“Holders of Existing Rights” shall mean the Kapoor Trust, AEG Partners, LLC, former holders of the Series B Preferred Stock, former holders of the Series A Preferred Stock, current and former holders of warrants issued in connection with the Series B Preferred Stock, current and former holders of warrants issued in connection with the Series A Preferred Stock, the investors in the Company’s private offering pursuant to that certain Securities Purchase Agreement dated March 1, 2006, and Investor.
“Intellectual Property Rights” has the meaning set forth in Section 3.1(p).
“Kapoor Trust” means The Xxxx X. Xxxxxx Trust dated September 20, 1989.
“Knowledge of the Company”, “to the knowledge of the Company”, “to the Company’s knowledge” or any phrase of similar import shall be deemed to mean only to the actual knowledge, without investigation or inquiry, of either of Xxxxx Xxx, the Chief Executive Officer of the Company, or Xxxxxxx X. Xxxx, the Chief Financial Officer of the Company.
“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction, except for any Permitted Liens.
“Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, costs of preparation and reasonable attorneys’ fees.
“Material Adverse Effect” has the meaning set forth in Section 3.1(b).
“Material Permits” has the meaning set forth in Section 3.1(w).
“NASDAQ” means the NASDAQ Global Market.
“Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.
“Permitted Liens” means any Lien disclosed in or contemplated by the SEC Reports, and any Liens (i) in favor of EJ Funds LP or incurred in connection with the Senior Credit Agreement or the transactions associated therewith, and (ii) incurred in connection with, the Company’s mortgage agreement.
“Person” means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, or joint stock company.
“Proceeding” means any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition).
“Registrable Securities” means (i) the Common Shares, (ii) the Warrant, (iii) the Warrant Shares, and (iv) any other shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing;
“Registration Statement” has the meaning set forth in Section 6.1(a).
“Restricted Securities” means (i) the Common Shares, (ii) the Warrant, (iii) the Warrant Shares, and (iv) any other shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that such Restricted Securities shall cease to be Restricted Securities (x) upon any sale pursuant to a registration statement under the Securities Act, Section 4(1) of the Securities Act or Rule 144 under the Securities Act or (y) at such time as they become eligible for sale under Rule 144(b)(1) under the Securities Act.
“Restriction Period” has the meaning set forth in Section 4.1(c).
“Rule 144” and “Rule 415” means Rule 144 and Rule 415, respectively, promulgated by the Commission pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
“SEC Reports” has the meaning set forth in Section 3.1(g).
“Securities Act” has the meaning set forth in the recitals.
“Securities Laws” means the rules and regulations, existing on the date hereof, of the Securities Act and the Exchange Act, as amended.
“Senior Credit Agreement” shall mean that certain Amended and Restated Credit Agreement dated as of August 17, 2009 by and among the Company, Akorn (New Jersey), Inc., the financial institutions from time to time party thereto, as lenders, and EJ Funds LP, for itself, as a lender and as agent for all lenders, as amended as of January 13, 2010, as such Amended and Restated Credit Agreement may be further amended, or restated, supplemented or otherwise modified from time to time.
“Series A Preferred Stock” means the Company’s Series A 6% Participating Convertible Preferred Stock.
“Series B Preferred Stock” means the Company’s Series B 6% Participating Convertible Preferred Stock.
“Shares” means shares of Common Stock.
“Subsidiary” means any Person in which the Company, directly or indirectly, owns a majority of the capital stock or similar interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).
“Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which trading occurs on the NASDAQ Global Market (or any successor thereto), or (c) if trading ceases to occur on the NASDAQ Global Market (or any successor thereto), any Business Day.
“Trading Market” means the NASDAQ Global Market or any other Eligible Market, or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted.
“Transaction Documents” means this Agreement, the Warrant, the schedules and exhibits attached hereto.
“Transfer Agent” means Computershare Investor Services LLC, or any successor transfer agent for the Company.
“Warrant” has the meaning set forth in the recitals.
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrant.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase Price. Investor hereby agrees to pay to the Company cash in an amount equal to TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) (the “Purchase Price”), in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to Investor by the Company for such purpose, in exchange for (i) the Common Shares, and (ii) the Warrant.
2.2 Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to Investor, and Investor shall purchase from the Company, the Common Shares and the Warrant. The Closing Date shall be the date on which all of the Closing conditions set forth in Article V are satisfied or waived. The Closing shall take place at the offices of Company Counsel or such other location as the parties shall mutually agree.
2.3 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered to Investor the following:
(i) one or more stock certificates (or facsimile copies thereof), with solely the restrictive legend provided in Section 4.1(b) hereof printed thereon, evidencing Common Shares registered in the name of Investor; and
(ii) a duly executed Warrant.
(b) At the Closing, Investor shall deliver or cause to be delivered to the Company the following:
(i) the Purchase Price;
(ii) a completed copy of Exhibit B-1, Stock Certificate Questionnaire; and
(iii) a completed and executed copy of Exhibit B-2, Certificate for Corporate, Partnership, Trust, Foundation and Joint Investors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to Investor as follows:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those listed in Exhibit 21.1 to the Company’s Pre-effective Amendment to Registration Statement on Form S-1 filed October 13, 2004 (Commission file No. 333-119168). All of the capital stock or comparable equity interests of each Subsidiary owned directly or indirectly by the Company are free and clear of any Lien and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (i) materially and adversely affect the legality, validity or enforceability of any Transaction Document, (ii) have or result in a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole on a consolidated basis, or (iii) materially and adversely impair the Company’s ability to perform fully on a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”).
(c) Authorization; Enforcement. The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been (or upon delivery will be) duly authorized by all necessary action on the part of the Company and no further consent or action is, or will be, required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law governing the availability of specific performance, injunctive relief and other equitable remedies.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents to which it is a party by the Company and the consummation by the Company of the transactions contemplated hereby and 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, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (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, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right (A) could not reasonably be expected to have a Material Adverse Effect or (B) is waived pre-Closing, or (iii) 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 and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject), or by which any property or asset of the Company or a Subsidiary is bound or affected, except to the extent that such violation could not reasonably be expected to have a Material Adverse Effect. The Common Shares, Warrant and Warrant Shares are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and shall not be subject to preemptive or similar rights of stockholders.
(e) Filings, Consents and Approvals. The Company is not 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) filings required pursuant to Section 4.5 of this Agreement, (ii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws, (iii) the waiver and consent from each of the EJ Funds and the Kapoor Trust set forth in ARTICLE V of this Agreement, and (iv) notice to certain Holders of Existing Rights.
(f) Capitalization. The capitalization of the Company as of September 30, 2009, is as set forth in the most recent applicable SEC Report, increased as set forth in the next sentence. The Company has not issued any capital stock since that date other than pursuant to (i) employee and director benefit plans disclosed in the SEC Reports, (ii) outstanding warrants, options or other securities disclosed in the SEC Reports, or (iii) transactions disclosed in the SEC Reports. The outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and are not subject to any enforceable preemptive rights or similar rights to subscribe for or purchase securities granted by law. Without limiting the foregoing, except as set forth in the SEC Reports, no preemptive right, co-sale right, right of first refusal, registration right, or other similar right exists with respect to the Common Shares, the Warrant, the Warrant Shares or the issuance and sale thereof. Upon delivery, no further approval or authorization of any stockholder, the Board of Directors of the Company or others will be required for the issuance and sale of the Common Shares and the Warrant, including under Trading Market rules. Except as disclosed in the SEC Reports, or in filings with the SEC under Sections 13 or 16 of the Exchange Act with respect to ownership of Company securities, there are no stockholders agreements, voting agreements or other similar agreements with respect to the Common Stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(g) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (the foregoing materials (together with any materials filed by the Company under the Exchange Act and the Securities Act, whether or not required) 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 the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the reports required to be filed by the Company under the Exchange Act for the twenty-four (24) months preceding the date hereof 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 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, year-end audit adjustments. Except as disclosed in the SEC Reports, since the date of the latest audited financial statements included within the SEC Reports, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a Material Adverse Effect, (ii) the Company has not altered its method of accounting or the identity of its auditors, (iii) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (except for repurchases by the Company of shares of capital stock held by employees, officers, directors, or consultants pursuant to an option of the Company to repurchase such shares upon the termination of employment or services), and (iv) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans.
(h) Absence of Litigation. Except as disclosed in the Company’s SEC Reports, there is no action, suit, claim, or proceeding, or, to the Company’s knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect.
(i) Compliance. Except as disclosed in the Company’s SEC Reports, neither the Company nor any Subsidiary, except in each case as could not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i) is in default under or in violation of (and no event has occurred that has not or will not have been waived prior to Closing that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound, which default has not been waived in writing, (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any law, statute, rule or regulation of any governmental or regulatory authority.
(j) No General Solicitation. Neither the Company, nor, to the Company’s knowledge, any of its affiliates, nor any Person acting on its or, to the Company’s knowledge, on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Shares and the Warrant.
(k) Private Placement. Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, 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 the Common Shares and Warrant to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(l) Form S-3 Eligibility. The Company is eligible to register the Common Shares for resale by Investor using Form S-3 promulgated under the Securities Act.
(m) Registration Rights. Except as disclosed in or contemplated by the SEC Reports, the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied or waived.
(n) Application of Takeover Protections. There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of its state of incorporation that is or could become applicable to Investor as a result of Investor and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s issuance of the Common Shares, Warrant and Warrant Shares and Investor’s ownership of the Common Shares, Warrant and Warrant Shares.
(o) Disclosure. The Company understands and confirms that Investor will rely on the representations of the Company in the Transaction Documents, the SEC Reports and other information, if any, produced by Investor’s investigation of the Company in effecting transactions in securities of the Company. All disclosure provided by the Company to Investor in the Transaction Documents regarding the Company, its Subsidiaries, the business of the Company and its Subsidiaries, and the transactions contemplated by the Transaction Documents, and any and all other information or documents furnished by or on the behalf of the Company to Investor, as of the date of this Agreement and as of the Closing Date, and the SEC Reports as a whole as of the time filed with the SEC, and any amendments or supplements thereto, as of their date and as of the Closing Date, are true and correct in all material respects and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, taken as a whole, in light of the circumstances under which they were made, not misleading. To the Knowledge of the Company, no event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that Investor has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in the Transaction Documents.
(p) 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 does not have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that any of such Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. All such Intellectual Property Rights are enforceable and, to the Company’s knowledge, there is no existing infringement by another Person of any of the Intellectual Property Rights.
(q) Insurance. The Company and the Subsidiaries are insured against such losses and risks and in such amounts as are prudent and customary in the businesses and location in which the Company and the Subsidiaries are engaged. To the Company’s knowledge, neither the Company nor any Subsidiary has been notified 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.
(r) Xxxxxxxx-Xxxxx Act. To the Company’s knowledge, 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.
(s) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens that do not, individually or in the aggregate, have or result in a Material Adverse Effect. 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 material compliance.
(t) 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 the Transaction Documents. The Investor 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 the Transaction Documents.
(u) Listing and Maintenance Requirements. The Company has not, in the twelve (12) months preceding the date hereof, received written notice from any Trading Market on which the Common Stock is or has been listed or quoted during such twelve (12) month period to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market.
(v) Acknowledgment Regarding Investor’s Purchase of Common Shares. Based upon the assumption that the transactions contemplated by this Agreement are consummated in all material respects in conformity with the Transaction Documents, the Company acknowledges and agrees that Investor is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that Investor is not 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 advice given by Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to Investor’s purchase of the Common Shares and Warrants. The Company further represents to Investor that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(w) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits does not, individually or in the aggregate, have or result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit.
(x) Broker; Agent. The Company shall pay for, and indemnify and hold harmless Investor from and against, all fees, commissions or other payments owing to any broker, finder or intermediary acting on behalf of the Company, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement.
(y) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.
(z) 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 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.
(aa) Accountants. The Company’s current independent registered public accounting firm is Ernst & Young LLP. To the Knowledge of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31, 2009.
(bb) Regulation M Compliance. The Company has not, and to the Knowledge of the Company no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Common Shares, the Warrant or Warrant Shares, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Common Shares, the Warrant or Warrant Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.
(cc) Internal Accounting Controls. The Company maintains a system of internal control over financial reporting (as such term is defined in the Exchange Act) sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, and (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability. The Company’s certifying officers are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act) for the Company and they have (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under their supervision, to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the periods since December 31, 2007 in which the Company’s filings under the Exchange Act have been prepared; (b) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in the Company’s filings under the Exchange Act their conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by such filings since December 31, 2007 under the Exchange Act based on such evaluation; and (c) since the last evaluation date referred to in (b) above, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal control over financial reporting, and no significant deficiencies or material weaknesses in internal controls over financial reporting have been identified.
3.2 Representations and Warranties of Investor. Investor hereby represents and warrants to the Company as follows:
(a) Organization; Authority. Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including the purchase by Investor of the Common Shares and Warrant hereunder, has been duly authorized by all necessary action on the part of Investor. This Agreement has been duly executed and delivered by Investor and constitutes the valid and binding obligation of Investor, enforceable against it in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law governing the availability of specific performance, injunctive relief and other equitable remedies.
(b) No Public Sale or Distribution; Investment Intent. Investor understands that none of the Common Shares nor the Warrant or Warrant Shares have been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act which depends, in part, on Investor’s intent in connection therewith. Investor represents that it is acquiring the Common Shares, Warrant and Warrant Shares in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and Investor does not have a present arrangement to effect any distribution of the Common Shares, Warrant or Warrant Shares to or through any person or entity.
(c) Investor Status. At the time Investor was offered the Common Shares, Warrant and Warrant Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.
(d) Experience of Investor. Investor, 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 Common Shares, Warrant and Warrant Shares, and has so evaluated the merits and risks of such investment. Investor is able to bear the economic risk of an investment in the Common Shares, Warrant and Warrant Shares and is able to afford a complete loss of such investment.
(e) Access to Information. Investor acknowledges that it has been provided and has carefully reviewed the Company’s SEC Reports, including without limitation the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, June 30 and September 30, 2009, Forms 8-K filed during 2009 and 2010, including amendments to such filings, and the additional risk factors specific to the Common Stock, and all other information regarding the Company which Investor has requested or desired to know and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Shares, Warrant and the Warrant Shares and the merits and risks of investing in the Common Shares, Warrant and the Warrant Shares; (ii) access to information (other than material non-public information) about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of Investor or its representatives or counsel shall modify, amend or affect Investor’s right to rely on the truth and accuracy of the Company’s representations and warranties contained in the Transaction Documents. Investor acknowledges and agrees that the Company does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in the Transaction Documents.
(f) No Governmental Review. Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Common Shares, Warrant or the Warrant Shares or the fairness or suitability of the investment in the Common Shares, Warrant or the Warrant Shares, nor have such authorities passed upon or endorsed the merits of the offering of the Common Shares, Warrant and the Warrant Shares.
(g) No Conflicts. The execution, delivery and performance by Investor of this Agreement and the consummation by Investor of the transactions contemplated hereby and thereby do not, and will not, (i) result in a violation of the certificate or articles of incorporation, Bylaws or other organizational or charter documents of Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of (with or without notice, lapse of time or both), any agreement, indenture or instrument to which Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree or other restriction of any court or government authority (including federal and state securities laws) applicable to Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of Investor to consummate the transactions contemplated hereby.
(h) Illegal Transactions. Neither Investor nor any person acting on its behalf or at its direction has engaged in any purchase or sale of Common Stock (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act) during the five (5) Trading Days immediately preceding the date of this Agreement.
(i) No Legal, Tax or Investment Advice. Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to Investor in connection with the purchase of the Common Shares, Warrant and Warrant Shares constitutes legal, tax or investment advice. Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Common Shares, Warrant and Warrant Shares. Investor further acknowledges that Company Counsel has acted solely as legal counsel to the Company in connection with the transactions contemplated by this Agreement and that Company Counsel has not acted as counsel for Investor in connection therewith.
(j) Private Placement. Investor represents that no Common Shares, Warrant or Warrant Shares were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith Investor did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit or generally available; or (B) attend any seminar, meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.
(k) No Broker; Agent. Investor represents and warrants that Investor is not (a) a broker or dealer admitted to membership in the Financial Industry Regulatory Authority (“FINRA”), (b) a controlling stockholder of a FINRA member, or (c) a person associated with a member of FINRA. Investor represents and warrants that it has not engaged, consented to nor authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. Investor shall indemnify and hold harmless the Company from and against all fees, commissions or other payments owing to any such person or firm acting on behalf of Investor hereunder.
(l) No Right to Nominate Director. By signing this Agreement, Investor hereby relinquishes any and all right that it and any of its affiliates have to appoint a nominee for election to the Company’s board of directors pursuant to Section 4.11 of the Securities Purchase Agreement dated September 13, 2006 by and between the Company and Investor. Investor hereby represents and warrants that, except as referenced in the previous sentence, neither Investor nor any of its affiliates has any other right to appoint a nominee for election to the Company’s board of directors, and Investor’s only right with respect to the board of directors of the Company is the observation right conferred to Investor under Section 4.11 hereof.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Investor covenants that the Restricted Securities will only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities laws. In connection with any transfer of Restricted Securities other than pursuant to an effective registration statement or to the Company, or pursuant to Rule 144(b)(1) except as otherwise set forth herein, the Company requires the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act.
(b) Investor agrees that each certificate representing Restricted Securities shall bear a legend substantially in the following form (the “Legend”) for only so long as is required by this Section 4.1(b):
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
Certificates representing Restricted Securities shall no longer be required to bear the Legend or any other legend (i) after a transfer pursuant to a registration statement that is effective under the Securities Act covering the resale of such Restricted Securities, (ii) following any sale of such Restricted Securities pursuant to Rule 144, (iii) if such Restricted Securities are eligible for sale under Rule 144(b)(1), (iv) if such legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the Commission) in an opinion of (x) Company Counsel, or (y) counsel to Investor, the form and substance of which opinion shall be reasonably satisfactory to the Company, or (v) as otherwise set forth in Section 4.1(c) below.
(c) On the basis of, and subject to, compliance by Investor with the covenants set forth in Section 4.1(a) above and elsewhere in this Agreement, following 180 days after (i) with respect to the Common Shares, the date hereof, and (ii) with respect to the Warrant, the date the Warrant is exercised and Warrantholder pays in full to the Company the exercise price (the “Restriction Period”), the Company shall as soon as practicable (but not later than five (5) Business Days) after surrender of legended certificates by Investor to the Company and notice of such surrender has been provided by Investor pursuant to Section 7.3 below cause certificates evidencing Restricted Securities to be replaced with certificates which do not bear the Legend or any other restrictive legend, and all certificates representing Common Shares, Warrants and Warrant Shares issued subsequent to the lapse of the Restriction Period pursuant to the Transaction Documents shall not bear the Legend or any other restrictive legend. The Company shall use commercially reasonable efforts to work with the transfer agent to provide Investor certificates for blocks of 100,000 shares, and to provide Investor electronic credit of the securities after removal of the legend. Investor acknowledges that the removal of the Legend from Restricted Securities is predicated upon the Company’s reliance on Investor’s compliance with its covenants in Section 4.1(a) above and elsewhere in this Agreement. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1, provided, however, if the Investor exercises its observer right under Section 4.11, but solely during the time period when such right is being exercised, the Registrable Securities may be sold only during the Company’s “open trading window,” as that term is defined under the Company’s Xxxxxxx Xxxxxxx Policy, and subject, further, to any stop orders provided by the Company.
4.2 Furnishing of Information.
(a) As long as Investor owns Common Shares or the Warrant or Warrant Shares, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and 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. As long as the Investor owns Common Shares or the Warrant or Warrant Shares, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Investor and make publicly available in accordance with Rule 144 such information as is required for the Investor to sell the Common Shares, Warrant or Warrant Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Common Shares, Warrant or Warrant Shares may reasonably request, to the extent required from time to time to enable such Person to sell such Common Shares, Warrant or Warrant Shares without registration under the Securities Act within the requirements of the exemption provided by Rule 144.
(b) At any time during the period commencing from the lapse of the Restriction Period and ending at such time that all of the Common Shares, Warrants and Warrant Shares may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) (other than any reason resulting from the actions or inactions of the Investor) then, the Company shall pay to Investor, in cash, as liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Common Shares, Warrants and Warrant Shares, an amount in cash equal to one percent (1.0%) of the aggregate Purchase Price of any Restricted Securities then owned on the day of a Public Information Failure and that on every thirtieth (30th) day (pro rated for periods totaling less than thirty (30) days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for Investor to transfer the Common Shares, Warrants and Warrant Shares pursuant to Rule 144. The payments to which Investor shall be entitled pursuant to this Section 4.2(b) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.0% per month (prorated for partial months) until paid in full. All pro rated calculations made pursuant to this paragraph shall be based upon the actual number of days in such pro rated month. In no event shall the Company be obligated to pay aggregate Public Information Failure Payments in an amount greater than the dollar amount equal to 6% of the total Purchase Price. For the avoidance of doubt, the parties hereto agree that the Public Information Failure Payments set forth in this Section 4.2(b) relate solely to the Common Shares, Warrants and Warrant Shares to be issued under this agreement. As liquidated damages, the remedies provided in this Section 4.2(b) shall be the exclusive remedy available under this Agreement for the Public Information Failure, and Investor shall have no right to pursue any other remedies at law or in equity. Notwithstanding the foregoing, the Company and the Investor hereby acknowledge that (i) the Investor’s right to receive Public Information Failure Payments in cash is subordinate to the Company’s obligations under the Senior Credit Agreement as in effect on the date hereof; (ii) the Company cannot make any Public Information Failure Payments in cash to the Investor pursuant to this Section without (x) the prior written consent of the lenders under the Senior Credit Agreement or (y) unless the Company’s obligations under the Senior Credit Agreement are satisfied; and (iii) the foregoing does not in any way limit or restrict Investor's right that the Registration Statement be filed in accordance with Section 6.1.
4.3 Integration. The Company shall not, and shall use its commercially reasonably efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Common Shares or Warrant in a manner that would require the registration under the Securities Act of the sale of the Common Shares or Warrant to Investor or that would be integrated with the offer or sale of the Common Shares or Warrant for purposes of the rules and regulations of any Trading Market.
4.4 Reservation of Common Shares. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents, in such amount as may be required to fulfill its obligations in full under the Transaction Documents. In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations in full under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number of authorized shares.
4.5 Securities Laws Disclosure; Publicity. On the Closing Date, or earlier if required to comply with applicable securities laws, including the requirements of Form 8-K, the Company shall file a Current Report on Form 8-K with the Commission (the “8-K Filing”) describing the terms of the transactions contemplated by the Transaction Documents and including as exhibits to such Current Report on Form 8-K this Agreement. The Company and Investor shall consult with each other in issuing any press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency with respect to the transactions contemplated hereby. Notwithstanding any other provision of this Agreement, the Company may make any securities filings regarding the transactions contemplated hereby, including the name of Investor, to the extent the Company reasonably believes the same to be prudent in connection with its disclosure obligations, its past practices and as otherwise required by law or any securities exchange upon which the Company’s securities may be listed.
4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the Common Shares for general corporate purposes, including capital improvements.
4.7 Certain Existing Rights. Investor hereby acknowledges that the Company has previously granted certain rights to the Holders of Existing Rights, including, among other rights, registration rights, preemptive rights, anti-dilution rights, rights to acquire Common Stock and rights to receive dividends (in cash or Common Stock), as disclosed in the SEC Reports. Investor hereby agrees that, notwithstanding any other representations, warranties, covenants or agreements set forth in the Transaction Documents, none of the existing rights of any of the Holders of Existing Rights shall breach, negate or conflict with any of the representations, warranties, covenants or agreements set forth in the Transaction Documents. Investor further agrees that the Company, in its sole discretion, has the right to renegotiate, settle, payoff or retire any of the existing rights or obligations to the Holders of Existing Rights and that such actions shall not breach, negate or conflict with any of the representations, warranties, covenants or agreements set forth in the Transaction Documents.
4.8 Market Stand-Off. Investor agrees that until the 8-K Filing is filed, or should have been filed, with the Commission in accordance with Section 4.5, Investor shall not, directly or indirectly, through related parties or otherwise, sell or purchase or otherwise deal in or with any equity security of the Company. Notwithstanding the forgoing, Investor further agrees that during the Restriction Period Investor shall not sell or otherwise dispose or deal in the Common Shares, Warrant and Warrant Shares.
4.9 Prohibited Transactions. Investor will not use any of the Common Shares or Warrant Shares acquired pursuant to this Agreement to cover any short position in the Common Stock of the Company if doing so would be in violation of applicable Securities Laws. Investor will comply with all applicable Securities Laws in the holding and sale of the Common Shares, Warrant or Warrant Shares.
4.10 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Common Shares and Warrant as required under Regulation D and to provide a copy thereof, promptly upon request of the Investor. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Common Shares and Warrant for, sale to the Investor at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Investor.
4.11 Observer Right. As long as Investor owns (i) not less than one million (1,000,000) Common Shares, (ii) the Warrant and the Warrant is exercisable for not less than one million (1,000,000) Warrant Shares, or (iii) not less than one million (1,000,000) Warrant Shares, Investor shall have the right, exercisable in its sole discretion and in accordance with the terms hereof by providing written notice to the Company of Investor’s exercise of such right at any time and from time to time, to attend all meetings of the Company’s Board of Directors and all committees thereof in a nonvoting observer capacity and, if such right is exercised, the Company shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that the representative chosen by the Investor will require the Company’s consent, such consent not to be unreasonably withheld, provided further, that prior to attending any Board meetings or receiving any Board materials, such representative shall enter into a non-disclosure agreement with the Company in substantially the form attached hereto as Exhibit D agreeing to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, if Investor or its representative is a competitor of the Company or for other similar reasons. Investor’s representative may participate in discussions of matters brought to the Board of Directors and all committees thereof.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of Investor. The obligation of Investor to acquire Common Shares and Warrant at the Closing is subject to the satisfaction or waiver by Investor, at or before the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and
(b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing, including delivery of the items set forth in Section 2.3(a).
(c) Kapoor Trust Waiver. The Company shall have received a waiver, the form and substance of which shall be reasonably satisfactory to Investor, from the Kapoor Trust to this Agreement and the transactions contemplated hereby.
(d) No Material Adverse Effect. There shall have been no Material Adverse Effect since the date hereof.
(e) Trading. From the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the primary Trading Market on which the Common Stock is listed or quoted (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 L.P. shall not have been suspended or materially limited, nor shall a general 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 Investor, makes it impracticable or inadvisable to purchase the Common Shares and Warrant at the Closing.
5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Common Shares and Warrant at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and
(b) Performance. Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by Investor at or prior to the Closing, including delivery of the items set forth in Section 2.3(b).
(c) Kapoor Trust Waiver. The Company shall have received a waiver, the form and substance of which shall be reasonably satisfactory to Investor, from the Kapoor Trust to this Agreement and the transactions contemplated hereby.
ARTICLE VI
DELIVERY OF FREELY TRADABLE SECURITIES
6.1 Delivery of Freely Tradable Securities.
(a) In the event the Company is unable to deliver a certificate or certificates for the Common Shares or Warrant Shares free and clear of all restrictive legends within five (5) Business Days following the last day of the applicable Restriction Period, then the Company shall, upon the request of the Investor, prepare and file with the Commission a “Shelf” Registration Statement (the “Registration Statement”) covering the resale of all Common Shares for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Common Shares and Warrant Shares on Form S-3, in which case such registration shall be on another appropriate form in accordance with the Securities Act and the Exchange Act and as consented to by Investor).
(b) The Company shall use its commercially reasonable best efforts to cause the Registration Statement to be filed with the Commission as promptly as possible, but in no case more than ten (10) days following the last day of the Restriction Period. The Company shall use its commercially reasonable best efforts to cause the Registration Statement to be declared effective by the Commission as promptly as possible, but in no case more than sixty (60) days following the filing of the Registration Statement. The Company shall use its commercially reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of the date that all Common Shares and Warrant Shares covered by such Registration Statement have been sold or can be sold publicly under Rule 144(b)(1) (the “Effectiveness Period”). The Company shall have no liability hereunder for a failure to meet the deadlines set forth herein if such failure is caused by a delay resulting from the actions or inactions of the Investor.
(c) The Company shall notify Investor in writing promptly (and in any event within two (2) Trading Days) after receiving notification from the Commission that the Registration Statement has been declared effective.
(d) Notwithstanding anything else herein, the Company shall have no liability hereunder for a failure to meet the deadlines if the Company is involved in (i) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (ii) a merger or consolidation of the Company or a sale of more than one-half of the assets of the Company in one or a series of related transactions, unless following such transaction or series of transactions, the holders of the Company’s securities prior to the first such transaction continue to hold at least 50% of the voting rights and equity interests of the surviving entity or acquirer.
(e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading Days of continuous effectiveness of the initial Registration Statement filed and declared effective pursuant to this Agreement, the Company may, by written notice to Investor and without liability hereunder, suspend sales under a Registration Statement after the Effective Date thereof and/or require that Investor immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a material merger, acquisition or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintain a Registration Statement at such time and (B) it is in the best interests of the Company to defer proceeding with such registration at such time. Upon receipt of such notice, Investor shall immediately discontinue any sales of Registrable Securities pursuant to such registration until Investor has received copies of a supplemented or amended Prospectus or until Investor is advised in writing by the Company that the then-current Prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. The Company’s rights under this Section 6.1(e) may be exercised for a period of no more than 20 days at a time and not more than three times in any 12-month period without penalty or damages for such suspension. Immediately after the end of any suspension period under this Section 6.1(e), the Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and the ability of Investor to publicly resell their Registrable Securities pursuant to such effective Registration Statement.
6.2 Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), furnish to Investor copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of Investor. The Company shall reflect in each such document when so filed with the Commission such comments as Investor may reasonably propose. Notwithstanding any other provision of this Agreement, the Company will have no obligation to deliver or make available to Investor any Registration Statement or Prospectus containing any material, nonpublic information unless Investor specifically consents in advance to receive such material, nonpublic information in writing and Investor has executed an agreement to keep such material, nonpublic information confidential and refrain from trading in any Company security for so long as such information remains material, nonpublic information.
(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible, and in any event within 10 Trading Days (except to the extent that the Company reasonably requires additional time to respond to accounting comments), to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and as promptly as reasonably possible provide Investor true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by Investor set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify Investor as promptly as reasonably possible, and (if requested by Investor confirm such notice in writing no later than two Trading Days thereafter, of any of the following events: (i) any Registration Statement or any post-effective amendment is declared effective; (ii) the Commission or any other Federal or state governmental authority requests any amendment or supplement to any Registration Statement or Prospectus or requests additional information related thereto; (iii) the Commission issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (iv) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (v) the financial statements included in any Registration Statement become ineligible for inclusion therein or any statement made in any Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or any revision to a Registration Statement, Prospectus or other document is required so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(d) Use its commercially reasonable best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible.
(e) If requested by Investor, provide Investor, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission.
(f) Promptly deliver to Investor, without charge, a reasonable number of copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as Investor may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by Investor in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.
(g) (i) In the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Registrable Securities to be approved for listing on each Trading Market as soon as possible thereafter; (iii) provide to Investor evidence of such listing; and (iv) during the Effectiveness Period, maintain the listing of such Registrable Securities on each such Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities, use its commercially reasonable best efforts to register or qualify or cooperate with Investor in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
(i) Cooperate with Investor to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and under law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as Investor may reasonably request.
(j) Upon the occurrence of any event described in Section 6.2(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(k) Cooperate with any reasonable due diligence investigation undertaken by Investor in connection with the sale of Registrable Securities, including, without limitation, by making available documents and information; provided that the Company shall have no obligation to deliver or make available to Investor material, nonpublic information.
(l) Comply with all rules and regulations of the Commission applicable to the registration of the Registrable Securities.
6.3 Expenses.
(a) Registration Expenses. The Company shall pay all fees and expenses incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the Commission, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company and up to an aggregate of $5,000 for fees and disbursements of counsel to Investor, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.
(b) Selling Expenses. All underwriting discounts and selling commissions applicable to the sale of Registrable Securities and the aggregate fees and expenses of legal counsel for Investor relating to the sale of securities registered by or on behalf of Investor shall be borne by Investor.
6.4 Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless Investor, the officers, directors, partners, members, agents and employees of Investor, each Person who controls Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding Investor furnished in writing to the Company by Investor for use therein, or to the extent that such information relates to Investor or Investor’s proposed method of distribution of Registrable Securities, or (B) in the case of an occurrence of an event of the type specified in Section 6.2(c)(iii)-(v), the use by Investor of an outdated or defective Prospectus after the Company has notified Investor in writing that the Prospectus is outdated or defective and prior to the receipt by Investor of the Advice contemplated in Section 6.5. The Company shall notify Investor promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. Notwithstanding the foregoing, the Company shall not be liable to Investor under this Section 6.4(a) to the extent that Losses giving rise to an indemnification obligation hereunder are the result of fraud committed by Investor.
(b) Indemnification by Investor. Investor shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished by Investor to the Company specifically for inclusion in such Registration Statement or such Prospectus or to the extent that (i) such untrue statements or omissions are based solely upon information regarding Investor furnished to the Company by Investor expressly for use therein, or to the extent that such information relates to Investor or Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by Investor expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section 6.2(c)(iii)-(v), the use by Investor of an outdated or defective Prospectus after the Company has notified Investor in writing that the Prospectus is outdated or defective and prior to the receipt by Investor of the Advice contemplated in Section 6.5. In no event shall the liability of the Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation except in the event of fraud by such Investor and such fraud gave rise in whole or in part to such Losses. Notwithstanding the foregoing, Investor shall not be liable under this Section 6.4(b) to the extent that Losses giving rise to such indemnification obligation are the result of fraud committed by the Company.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding after prompt notice of such proceeding pursuant to the preceding paragraph; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to immediately exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party (i) shall have no obligation to pay such expenses should the Indemnified Party fail to provide prompt notice of a claim for indemnification under this Section and (ii) may require an Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), Investor shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by Investor from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the event of fraud by Investor and such fraud gave rise in whole or in part to such Losses. In addition, no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.
6.5 Dispositions. Investor agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. Investor further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(iii), (iv) or (v), Investor will discontinue disposition of such Registrable Securities under the Registration Statement until Investor’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 6.2(j), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
6.6 No Piggyback on Registrations. Except as disclosed in or contemplated by the SEC Reports, neither the Company nor any of its security holders (other than Investor in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its security holders.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to Investor written notice of such determination and if, within ten (10) days after receipt of such notice, Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities Investor requests to be registered.
6.8 No Restraint on Registration. Investor shall have no right to take any action to restrain, enjoin or otherwise delay any registration pursuant to this Agreement as a result of any controversy that may arise with respect to the interpretation or implementation of this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, DWAC Fees (provided the Transfer Agent is participating in the Depository Trust Company Fast Automated Securities Transfer program), stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Common Shares, Warrant and Warrant Shares.
7.2 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to Investor such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.
7.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 7.3 prior to 6:30 p.m. (Chicago time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 7.3 on a day that is not a Trading Day or later than 6:30 p.m. (Chicago time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses and facsimile numbers for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.
7.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.
7.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Investor. Subject to the other terms and provisions herein, Investor may assign its rights under this Agreement to any Person to whom Investor assigns or transfers any Common Shares, provided such transferee agrees in writing to be bound, with respect to the transferred Common Shares, by the provisions hereof that apply to Investor and the assignor shall remain liable for the continued performance of all its obligations under this Agreement. Notwithstanding anything to the contrary herein, Common Shares may be assigned to any Person in connection with a bona fide margin account or other loan or financing arrangement secured by such Common Shares.
7.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Sections directly against the parties with obligations thereunder.
7.8 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF LOUISIANA SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. THE COMPANY AND INVESTOR HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN ILLINOIS FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
7.9 Survival. The representations and warranties contained herein shall survive until the Closing for a period of one (1) year. All covenants in this Agreement shall survive the Closing indefinitely (or for such shorter period as may be expressly set forth herein).
7.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
7.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
7.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever Investor exercises a right, election, demand or option owed to Investor by the Company under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided (including any applicable cure period), then, prior to the performance by the Company of the Company’s related obligation, Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
7.13 Replacement of Common Shares. If any certificate or instrument evidencing any Common Shares, Warrant or Warrant Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith, including a customary and reasonable bond, 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 certificates.
7.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, Investor and the Company will be entitled to seek 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 (other than in connection with any action for temporary restraining order) the defense that a remedy at law would be adequate.
7.15 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event.
[signature pages follow]
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.
|
The Company:
AKORN, INC.
By: _____________________________________ Name: Xxxxxxx X. Xxxx Title: Chief Financial Officer |
Investor:
SERUM INSTITUTE OF INDIA LTD.
By: _____________________________________ Name: Xx Xxxxx Xxxx Poonawalla Title: Chairman & Managing Director |
|
Address for Notice:
0000 Xxxx Xxxxx Xxxxx Xxxx Xxxxxx, Xxxxxxxx 00000 |
Address for Notice:
000/0 Xxx Xxxx Xxxxxxxxxx Xxxx Xxxxxxxx, Xxxx 000000 Xxxxx |
|
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000 Attn: Chief Financial Officer |
Facsimile No.: 00 00 00000000
Telephone No.: 00 00 00000000 Attn: Chairman |
|
With a copy to: Xxxxx Xxxx LLP
Facsimile: (000) 000-0000 Telephone: (000) 000-0000 Attn: Xxx Xxxxxxxx, Esq |
With a copy to: Xxxxxxxx Xxxxxxx
Company Secretary, Serum Institute of India Facsimile No.: 00 00 00000000 Telephone No.: 00 00 00000000 Attn: Company Secretary |
Exhibits:
A Schedule of Common Shares
B Instruction
Sheet For Investor
C Form of Warrant
D Non-Disclosure
Agreement
Exhibit A
Schedule of Common Shares
|
Investor |
Common Shares |
|
Serum Institute
of India |
1,838,235 |
Exhibit B
INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Securities Purchase Agreement)
A. Complete the following items in the Securities Purchase Agreement:
1. Complete and execute the Signature Page.
The Agreement must be executed by an individual authorized to bind Investor.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate Questionnaire;
3. Exhibit B-2 - Investor Certificate:
Provide the information requested by the Certificate for Corporate, Partnership, Trust, Foundation and Joint Investors (B-2).
4. Return, via facsimile, the signed Securities Purchase Agreement including the properly completed Exhibits B-1 and B-2, to:
| Xxxxx Xxxx LLP | |
| 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 | |
| Xxxxxxx, XX 00000 | |
| Facsimile: (000) 000-0000 | |
| Telephone: (000) 000-0000 | |
| E-mail: xxx.xxxxxxxx@xxxxxxxxx.xxx | |
| Attn: Xxx Xxxxxxxx |
5. After completing instruction number four (4) above, deliver the original signed Securities Purchase Agreement including the properly completed Exhibits B-1 and B-2 to:
| Xxxxx Xxxx LLP | |
| 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 | |
| Xxxxxxx, XX 00000 | |
| Facsimile: (000) 000-0000 | |
| Telephone: (000) 000-0000 | |
| E-mail: xxx.xxxxxxxx@xxxxxxxxx.xxx | |
| Attn: Xxx Xxxxxxxx |
B. Instructions regarding the transfer of funds for the purchase of Shares will be sent via facsimile or email to Investor by the Company at a later date.
Exhibit B-1
AKORN, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Please provide us with the following information and either type or write clearly and legibly:
| 1. The exact name that the Common Shares are to be registered in (this is the name that will appear on the stock certificate(s)). You may use a nominee name if appropriate: |
Serum Institute of India Limited |
| 2. The relationship between Investor and the Registered Holder listed in response to item 1 above: |
Not Applicable |
|
3. The mailing address, telephone and telecopy number of the Registered Holder listed in response to item 1 above: |
000/0 Xxx Xxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxx – 411 028, INDIA Telephone – 00 00 00000000 |
| 4. The Tax Identification Number of the Registered Holder listed in response to item 1 above: |
Not Applicable |
Exhibit B-2
AKORN, INC.
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION
AND JOINT INVESTORS
If the investor is a corporation, partnership, trust, pension plan, foundation, joint Investor (other than a married couple) or other entity, an authorized officer, partner, or trustee must complete, date and sign this Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are true and accurate:
(a) The investor has been duly formed and is validly existing and has full power and authority to invest in the Company. The person signing on behalf of the undersigned has the authority to execute and deliver the Securities Purchase Agreement on behalf of Investor and to take other actions with respect thereto.
(b) Indicate the form of entity of the undersigned:
____ Limited Partnership
____ General Partnership
A LIMITED LIABILITY COMPANY incorporated under the Companies Xxx 0000
of India
____ Corporation
|
____ Revocable Trust (identify each grantor and indicate under what circumstances the trust is revocable by the grantor): |
||
| (Continue on a separate piece of paper, if necessary.) | ||
|
____ Other type of Trust (indicate type of trust and, for trusts other than pension trusts, name the grantors and beneficiaries): |
||
| (Continue on a separate piece of paper, if necessary.) | ||
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____ Other form of organization (indicate form of organization |
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(c) Indicate the approximate date the undersigned entity was formed:
22nd May 1984 is the date of incorporation.
(d) In order for the Company to offer and sell the Common Shares in conformance with state and federal securities laws, the following information must be obtained regarding your investor status. Please initial each category applicable to you as an investor in the Company.
___ 1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;
___ 2. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;
___ 3. An insurance company as defined in Section 2(13) of the Securities Act;
___ 4. An investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;
___ 5. A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
___ 6. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;
___ 7. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
___ 8. A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
___ 9. An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;
___ 10. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Exchange Act;
___ 11. An entity in which all of the equity owners qualify
under any of the above subparagraphs. If the undersigned belongs to
this investor category only, list the equity owners of the undersigned,
and the investor category which each such equity owner satisfies:
_________________________________________________________________________________________________________________________________________________________
_________________________________________________________________________________________________________________________________________________________(Continue
on a separate piece of paper, if necessary.)
Please set forth in the space provided below the (i) states, if any, in the U.S. in which you maintained your principal office during the past two years and the dates during which you maintained your office in each state, (ii) state(s), if any, in which you are incorporated or otherwise organized and (iii) state(s), if any, in which you pay income taxes.
NOT APPLICABLE
________________________________________________________________________________________________________________________________________________________
_________________________________________________________________________________________________________________________________________________________
Dated: Xxxxx 00, 0000
XXXXX XXXXXXXXX XX XXXXX LIMITED
Name of investor
___________________________________________
Signature and title of
authorized officer, partner or trustee
XX XXXXX XXXX POONAWALLA
CHAIRMAN & MANAGING DIRECTOR
Exhibit C
WARRANT
Exhibit D
NON-DISCLOSURE AGREEMENT
