ANNEX I
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August
2, 2000 is made by and between DA CONSULTING GROUP, INC., a Texas corporation
(the "Company"), and the investor named on the signature page hereto (the
"Investor").
RECITALS:
A. The Company desires to borrow, and the Investor desires to lend to
the Company, Two Million ($2,000,000) as an unsecured loan upon the terms and
conditions stated in this Agreement.
B. The Investor desires to purchase and the Company desires to sell,
upon the terms and conditions stated in this Agreement (i) Two Million
(2,000,000) shares of the Common Stock, (ii) a warrant to purchase Two Million
(2,000,000) shares of Common Stock, and (iii) an additional warrant to purchase
One Million (1,000,000) shares of Common Stock.
C. The capitalized terms used herein and not otherwise defined have the
meanings given them in Article X hereof.
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investor hereby agree as follows:
ARTICLE I
LOAN
1.1 Loan. Upon execution of this Agreement, subject to the terms and
----
conditions hereof, (i) the Investor shall make a loan to the Company of Two
Million Dollars ($2,000,000) (the "Loan"), by wire transfer of immediately
available funds in accordance with the Company's written wire instructions
against delivery by the Company to the Investor of a Promissory Note in the form
of Exhibit A (the "Note").
----------
1.2 Repayment of the Loan. The principal amount of, and all accrued
------------------------
interest on, the Loan shall be payable on the date (the "Maturity Date") which
is (i) ninety (90) days after the date of the Note, or (ii) in the event that a
Special Meeting is held prior to the expiration of such ninety (90) day period,
and (a) Shareholder Approval is obtained at such Special Meeting, on the earlier
to occur of the Closing Date and seven (7) days after the date of such Special
Meeting, or (b) Shareholder Approval is not obtained at such Special Meeting,
then the Maturity Date shall be the date ninety (90) days after the date of such
Special Meeting, at which time the Company shall transfer such sum to the
Investor by wire transfer of immediately available funds. In the event that
Shareholder Approval is obtained, on the Closing Date the principal amount of,
and all accrued interest on, the Loan shall be applied to the Purchase Price (as
defined in Section 2.1) without set-off or counterclaim. In either event,
promptly upon payment in full, the Investor agrees to return the Note to the
Company, marked "cancelled". As used herein, "Special Meeting" shall mean the
special meeting of the shareholders of the Company described in Section 5.12
hereof.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
I - 1
2.1 Purchase and Sale of Securities. At the Closing, subject to the
----------------------------------
terms of this Agreement and the satisfaction or waiver of the conditions set
forth in Articles VIII and IX hereof, the Company shall issue and sell to the
Investor, and the Investor shall purchase from the Company, for an aggregate
purchase price of Four Million Eight Hundred Thousand Dollars ($4,800,000) (the
"Purchase Price"):
(a) Two Million (2,000,000) shares of the Common Stock (the
"Shares") at a purchase price per share of $2.40;
(b) A warrant, substantially in the form of Exhibit B (the
----------
"Initial Warrant") to purchase Two Million (2,000,000) shares of the Common
Stock (the "Warrant Shares") at an exercise price per share (subject to
adjustment as provided therein) equal to the greater of (x) $3.00 or (y) an
amount equal to eighty-five percent (85%) multiplied by the Market Price Per
Share, exercisable for a period of three (3) years following the Closing Date;
and
(c) A warrant, substantially in the form of Exhibit C (the "Second
---------
Warrant" and together with the Initial Warrant, the "Warrants", and each
individually a "Warrant") to purchase One Million (1,000,000) shares of the
Common Stock (the "Additional Warrant Shares") at an exercise price (subject to
adjustment as provided therein) equal to $3.00 per share, exercisable during the
period beginning January 2, 2002 and ending on the third anniversary of the
Closing Date. (The Note, Shares, Warrant Shares and Additional Warrant Shares
shall be referred to collectively herein as the "Securities").
Notwithstanding anything herein to the contrary, the Investor shall not be
required to (but may, at its option) purchase more than such number of shares so
as to cause Investor, as a result of the Closing, to be subject to the
notification and report requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"); provided that, in no event shall the
foregoing clause entitle the Investor to purchase fewer Shares than the maximum
number of Shares that may be purchased without causing the Investor to be
subject to the requirements of the HSR Act.
2.2 Payment. The Investor shall pay the Purchase Price by wire
-------
transfer of immediately available funds in accordance with the Company's written
wire instructions, upon delivery by the Company to the Investor of the Warrants
and certificates representing the Shares, and the Company shall deliver the
Warrants and such certificates against delivery of the Purchase Price as
described above; provided, however, that if Shareholder Approval is timely
obtained in accordance with Section 1.2 hereof, the Company shall apply the
principal of and accrued interest on the Loan to the Purchase Price without
setoff or counterclaim, and the excess of the Purchase Price over such principal
and interest shall be paid by the Investor to the Company in immediately
available funds at the Closing.
2.3 Closing Date. Subject to the satisfaction or waiver of the
-------------
conditions set forth in Articles VIII and IX hereof, the Closing shall take
place at 12:00 noon central time on a date mutually agreed upon by the parties
which shall be no later than six (6) days after the date that Shareholder
Approval is obtained (the "Closing Date"). The Closing shall be held at the
offices of the Company, or at such other place as the parties agree. At the
Closing, after receipt of payment therefor, the Company shall deliver the
Warrants to the Investor and the Company shall authorize its transfer agent (the
"Transfer Agent") to arrange delivery to the Investor of one or more stock
certificates representing the Shares, such Warrants and each such certificate to
be registered in the name of the Investor or, if so indicated on the Stock
Certificate Questionnaire attached hereto as Exhibit D, in the name of a nominee
---------
designated by the Investor.
I - 2
ARTICLE III
INVESTOR'S REPRESENTATIONS AND WARRANTIES
The Investor represents and warrants to the Company that:
3.1 Investment Purpose. The Investor is purchasing the Securities for
-------------------
its own account and not with a present view toward the public sale or
distribution thereof, except pursuant to sales registered or exempted from
registration under the Securities Act; provided, however, that by making the
representation herein, the Investor does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
3.2 Accredited Investor Status. The Investor is an "accredited
----------------------------
investor" as defined in Rule 501(a) of Regulation D and was not formed for the
specific purpose of acquiring the Securities.
3.3 Reliance on Exemptions. The Investor understands that the
------------------------
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
3.4 Information. The Investor and its advisors, if any, have been
-----------
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Securities,
that have been requested by the Investor or its advisors, if any. The Investor
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence investigation
conducted by the Investor or any of its advisors or representatives modifies,
amends or affects the Investor's right to rely on the Company's representations
and warranties contained in Article IV below. The Investor acknowledges and
understands that its investment in the Securities involves a significant degree
of risk. The Investor acknowledges that, except as set forth herein, it has not
relied on any materials other than the SEC Documents in purchasing the
Securities.
3.5 Governmental Review. The Investor understands that no United
--------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
an investment therein.
3.6 Transfer or Resale. The Investor understands that:
--------------------
(a) except as provided in Article VI, the Securities have not been
and are not required to be registered under the Securities Act or any applicable
state securities laws and, consequently, the Investor may have to bear the risk
of owning the Securities for an indefinite period of time because the Securities
may not be transferred unless (i) the resale of the Securities is registered
pursuant to an effective registration statement under the Securities Act; (ii)
the Investor has delivered to the Company an opinion of counsel (in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; (iii) the
Securities are sold or transferred pursuant to Rule 144; or (iv) the Securities
are sold or transferred to an affiliate (as defined in Rule 144) of the Investor
pursuant to an exemption from registration under the Securities Act;
I - 3
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in Article VI, neither the Company nor any
other person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
3.7 Legends. The Investor understands that until such time as (a) the
-------
Securities may be sold by the Investor under Rule 144(k) or (b) the resale of
the Securities has been registered under the Securities Act as contemplated by
Article VI, the certificates representing the Securities shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
The legend set forth above shall be removed and the Company shall issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article VI hereof.
3.8 Authorization; Enforcement. This Agreement has been duly and
---------------------------
validly authorized, executed and delivered on behalf of the Investor and is a
valid and binding agreement of the Investor enforceable in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
3.9 Residency. The Investor is not a U.S. Person (as that term is
---------
defined in Regulation S under the Securities Act ("Regulation S")) and is not
acquiring the Securities for the account or benefit of any U.S. Person. The
Investor agrees to resell the Securities only (i) in accordance with the
provisions of Regulation S, (ii) pursuant to registration under the Securities
Act, or (iii) pursuant to an available exemption from such registration; and
agrees not to engage in hedging transactions with regard to the Securities
unless in compliance with the Securities Act. The Investor acknowledges and
understands that a legend will be placed on any certificates(s) representing the
Securities stating that transfer of the Securities is prohibited except (i) in
accordance with the provisions of Regulation S, (ii) pursuant to registration
under the Securities Act, or (iii) pursuant to an available exemption from
registration; and that hedging transactions involving those securities may not
be conducted unless in compliance with the Securities Act. The Investor
acknowledges and agrees that unless applicable foreign law prevents the Company
from refusing to register securities transfers, the Company will refuse to
register any transfer of the Securities not made (i) in accordance with the
provisions of Regulation S, (ii) pursuant to registration under the Securities
Act, or (iii) pursuant to an available exemption from such registration.
I - 4
3.10 Organization. The Investor is duly organized, validly existing
------------
and in good standing under the laws of the British Virgin Islands and has all
requisite power and authority to own and lease its properties, to carry on its
business as presently conducted and to carry out the transactions contemplated
hereby.
3.11 No Conflict. The execution and delivery of this Agreement will
------------
not violate or be in conflict with any order, judgment, injunction, agreement or
controlling document to which the Investor is a party or by which it is bound.
3.12 No Ownership. Neither the Investor nor any of its affiliates (as
-------------
defined in Rule 12-b under the Exchange Act) has record or beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of any shares of
the Company's Common Stock.
3.13 Foreign Requirements. The issuance of the Securities to the
---------------------
Investor, to the extent such issuance is governed by laws of a country other
than the United States, does not require any filing, registration or other
action by the Company in accordance with the local laws and customary practices
and documentation of such country.
3.14 Note. The Investor acknowledges that treatment of the Note as a
----
security, as between the parties, does not constitute admission by the Company
that the Note is a security under federal and state security laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to the Investor that, except
as set forth in the Disclosure Schedules attached hereto as Exhibit E (which
---------
representations, warranties and covenants shall be deemed to apply, where
appropriate, to each subsidiary of the Company):
4.1 Organization and Qualification. The Company is duly incorporated,
-------------------------------
validly existing and in good standing under the laws of the State of Texas, with
full power and authority (corporate and other) to own, lease, use and operate
its properties and to carry on its business as and where now owned, leased,
used, operated and conducted. The Company is duly qualified to do business and
is in good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect,
and to the Company's knowledge, no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
4.2 Authorization; Enforcement. (a) The Company has all requisite
---------------------------
corporate power and authority to enter into and to perform its obligations under
this Agreement, the Note and the Warrants, to consummate the transactions
contemplated hereby and thereby and to issue the Securities in accordance with
the terms hereof and thereof; (b) the execution, delivery and performance of
this Agreement, the Note and the Warrants by the Company and the consummation by
it of the transactions contemplated hereby (including without limitation the
issuance of the Securities) have been duly authorized by the Company's Board of
Directors, and no further consent or authorization of the Company, its Board of
I - 5
Directors, or its shareholders is required except as expressly contemplated
herein with respect to the Closing; (c) this Agreement and the Note have been
duly executed by the Company; and (d) this Agreement and the Note constitute,
and when executed and delivered by the Company, the Warrants will constitute, a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with their terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting
the rights of creditors generally and the application of general principles of
equity.
4.3 Capitalization. The authorized capital stock of the Company
--------------
consists of (a) 40,000,000 shares of Common Stock, $.01 par value per share, of
which 6,418,604 shares were issued and outstanding as of July 31, 2000, and (b)
10,000,000 shares of preferred stock, $.01 par value per share, none of which
are issued and outstanding. All of the outstanding shares of capital stock are
duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance with all federal and state securities laws. No shares of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. Except for the
transactions contemplated hereby, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into,
exercisable for, or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to issue additional
shares of capital stock of the Company; (ii) there are no agreements or
arrangements (other than this Agreement) under which the Company is obligated to
register the sale of any of its securities under the Securities Act; and (iii)
there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Securities. There are no
stockholder agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party. The Company has
made available to the Investor, if requested, true and correct copies of the
Company's Certificate of Incorporation, as amended, as in effect on the date
hereof, the Company's By-laws as in effect on the date hereof and the terms of
all securities convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect thereto.
4.4 Issuance of Securities. Each of the Shares, the Warrants, the
------------------------
Warrant Shares, and the Additional Warrant Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement or the Warrants, as
applicable, the Securities (other than the Note) will be validly issued, fully
paid and nonassessable, free from all taxes, liens, claims, encumbrances and
charges with respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of shareholders of the Company, and will not
impose personal liability on the holders thereof. No further approval or
authority of the shareholders or the Board of Directors of the Company is
required for the issuance of the Note, and, except for the Shareholder Approval,
for the issuance and sale of the Securities (other than the Note) to be sold by
the Company as contemplated in this Agreement and the Warrants. Subject to the
accuracy of the Investor' representations and warranties in Article III of this
Agreement, the offer, sale, and issuance of the Securities in conformity with
the terms of this Agreement constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act and from the registration or
qualification requirements of the laws of any applicable state or United States
jurisdiction.
4.5 No Conflicts; No Violation.
-----------------------------
I - 6
(a) The execution and delivery of this Agreement and the Note, the
execution and delivery by the Company of the Warrants to be executed and
delivered by the Company, the performance of this Agreement and the Note and the
Warrants and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the
Securities and the Warrants), will not (i) conflict with or result in a
violation of any provision of its Certificate of Incorporation, as amended, or
By-laws, as amended, or (ii) violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment (including without limitation the triggering of
any anti-dilution provision), acceleration or cancellation of, any agreement,
indenture, patent, patent license, or instrument to which the Company is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect and except to the extent that Shareholder
Approval is required for the issuance and sale of the Securities (other than the
Note).
(b) The Company is not in violation of its Certificate of
Incorporation, as amended, or By-laws, as amended, and the Company is not in
default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company is a party or by which any property or assets of the
Company are bound or affected, except for such possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, the failure to comply
with which would, individually or in the aggregate, have a Material Adverse
Effect.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof, or to issue and sell the Securities in accordance with
the terms hereof. In the case of the issuance and sale of the Securities (other
than the Note), except for Shareholder Approval, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof.
4.6 SEC Documents, Financial Statements. Since June 30, 1999, the
--------------------------------------
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to as the "SEC Documents"). The Company has
delivered to the Investor, or the Investor has had access to, true and complete
copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
I - 7
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their
respective dates, the consolidated financial statements of the Company included
in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied, during the periods involved (except (a) as may be otherwise indicated
in such financial statements or the notes thereto, or (b) in the case of
unaudited interim consolidated statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company as of the
dates thereof and the consolidated results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the financial statements
included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (x) liabilities incurred in the ordinary course of
business subsequent to the date of such financial statements, (y) liabilities of
the type not required under generally accepted accounting principles to be
reflected in such financial statements, and (z) obligations under contracts and
commitments not required under generally accepted accounting principles to be
reflected in such financial statements. Such liabilities and obligations would
not, individually or in the aggregate, have a Material Adverse Effect.
4.7 Absence of Certain Changes. Since March 31, 2000, there has not
-----------------------------
been (a) any material adverse change in or affecting the condition, financial or
otherwise, or in the earnings or assets of the Company, whether or not arising
in the ordinary course of business, except for net losses of the Company as
previously disclosed to the Investor; (b) any transactions entered into by the
Company, other than those in the ordinary course of business, which are material
with respect to the Company; (c) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company; or (d) any loss or
damage (whether or not insured) to the physical property or assets of the
Company which has a Material Adverse Effect.
4.8 Absence of Litigation. There is no action, suit, claim,
-----------------------
proceeding, 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 officers or directors acting as such that would, individually or in the
aggregate, have a Material Adverse Effect, or which would materially and
adversely affect the consummation of this Agreement. The Company is not in
default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, singly or in the aggregate, would
have a Material Adverse Effect.
4.9 NASDAQ Compliance. The Company's Common Stock is registered
------------------
pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq
National Market (the "Nasdaq Stock Market"), and the Company has taken no action
designed to terminate the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Nasdaq Stock Market. The Company is
not aware of, and has not received any notice of, any efforts or actions to
terminate the registration of the Common Stock under the Exchange Act or delist
the Common Stock from the Nasdaq Stock Market. The Company shall use its
commercially reasonable efforts to comply with all requirements of the National
Association of Securities Dealers, Inc. with respect to the issuance of the
Securities and the listing thereof on the Nasdaq Stock Market at all times
during the period beginning on the date hereof and ending two years from the
date of effectiveness of the Registration Statement.
I - 8
4.10 No Manipulation of Stock. The Company has not taken and shall
---------------------------
not, in violation of applicable law, take any action outside the ordinary course
of business that is designed to, or that might reasonably be expected to, cause
or result in unlawful manipulation of the price of the Common Stock to
facilitate the sale or resale of the Securities.
4.11 Transfer Taxes. On the Closing Date and on the date the Warrant
---------------
Shares and the Additional Warrant Shares are issued, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer to the Investor of the Securities will be, or will have
been, fully paid or provided for by the Company.
4.12 No Integrated Offering. All offers and sales of capital stock of
-----------------------
the Company before the date of this Agreement were at all relevant times duly
registered under or exempt from the registration requirements of the Securities
Act and were duly registered or subject to an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws.
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 in any
security or solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance of the
Securities to the Investor. The issuance of the Securities to the Investor will
not be integrated with any other issuance of the Company's securities (past,
current or future) for purposes of the Securities Act or any applicable rules of
Nasdaq.
4.13 No Brokers. The Company has taken no action which would give rise
----------
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
4.14 Investment Company Status. The Company is not and upon
---------------------------
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
4.15 Legal Opinion. The Company shall cause to be delivered to the
--------------
Investor by counsel to the Company a legal opinion in the form attached as
Exhibit F pertaining to, among other matters, the availability of an exemption
----------
from the registration provisions of the Securities Act.
4.16 Offering Materials. Other than the SEC Documents, the Company has
------------------
not distributed and shall not distribute prior to the Closing Date any offering
material in connection with the offering and sale of the Securities, and the
Investor acknowledges that it has not relied on any materials other than the SEC
Documents. The Company has not taken in the past nor shall it hereafter take
any action to sell, offer for sale or solicit offers to buy any securities of
the Company which would bring the offer, issuance or sale of the Securities, as
contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the
exemptions of Section 4 of the Securities Act.
ARTICLE V
COVENANTS
I - 9
5.1 Best Efforts. Each party shall use its best efforts to satisfy in
-------------
a timely fashion each of the conditions to be satisfied by it under Articles
VIII and IX of this Agreement.
5.2 Form D. The Company shall file on a timely basis a Notice of Sale
-------
of Securities on Form D with respect to the Securities, as required under
Regulation D, and shall provide a copy thereof to the Investor promptly after
such filing.
5.3 Securities Laws Compliance. From and after the Closing, the
----------------------------
Company and the Investor shall each comply with all applicable laws related to
any Registration Statement relating to the sale of the Securities and to the
offering and sale of securities and with all applicable rules and regulations of
governmental authorities in connection therewith (including, without limitation,
the Securities Act, the Exchange Act and the rules and regulations promulgated
by the SEC).
5.4 Reporting Status; Eligibility to Use Form S-3. The Company's
---------------------------------------------------
Common Stock is registered under Section 12 of the Exchange Act. The Company
shall file with the SEC a Current Report on Form 8-K disclosing this Agreement
and the transactions contemplated hereby within ten (10) business days after the
date hereof. The Company currently meets, and shall use commercially reasonable
efforts to continue to meet, the "registrant eligibility" requirements set forth
in the general instructions to Form S-3.
5.5 Expenses. Each of the Company and the Investor is liable for, and
--------
shall pay, its own expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other agreements
to be executed in connection herewith, including, without limitation, attorneys'
and consultants' fees and expenses.
5.6 Financial Information. From and after the Closing, the Company
----------------------
agrees to send to the Investor those reports that it generally sends to holders
of its Common Stock, until the Investor transfers, assigns or sells all of its
Securities.
5.7 Listing. On or before the twentieth (20th) business day following
-------
the Closing Date, the Company shall use its commercially reasonable efforts to
secure the listing of the Shares, and shall on or before the twentieth (20th)
business day following the exercise of each Warrant, use commercially reasonable
efforts to secure the listing of the Warrant Shares, or Additional Warrant
Shares as the case may be, upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and, so long as any Investor owns any
of the Securities, shall use its commercially reasonable efforts to maintain
such listing of the Securities. The Company shall use its commercially
reasonable efforts to obtain and, so long as any Investor owns any of the
Securities, maintain the listing and trading of its Common Stock on Nasdaq, or
the American Stock Exchange or the New York Stock Exchange, and shall use its
commercially reasonable efforts to comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers, Inc. and such exchanges, as
applicable.
5.8 No Integration. The Company shall not make any offers or sales of
---------------
any security (other than the Securities) under circumstances that would cause
the offering of the Securities to be integrated with any other offering of
securities by the Company (a) for the purpose of any stockholder approval
provision applicable to the Company or its securities or (b) for purposes of any
registration requirement under the Securities Act.
I - 10
5.9 Due Diligence; Confidentiality.
--------------------------------
(a) Prior to the date hereof, the Company has made available for
inspection by the Investor and its counsel (collectively, the "Inspectors"),
such pertinent financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), as the Inspector
reasonably deems necessary to enable the Inspector to exercise its due diligence
responsibility.
(b) Each Inspector shall hold in confidence, and shall not make
any disclosure (except to the Investor) of, any Records or other information
that the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court or government body of competent
jurisdiction, or (iii) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company is not required to disclose any confidential
information in the Records to any Inspector unless and until such Inspector has
entered into a confidentiality agreement (in form and substance satisfactory to
the Company) with the Company with respect thereto, substantially in the form of
this Section 5.9. The Investor shall, upon learning that disclosure of Records
containing confidential information is (x) necessary to avoid or correct a
material misstatement or material omission with respect to the Investor in any
Registration Statement, or (y) sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at the Company's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit the Investor's
ability to sell Securities in a manner that is otherwise consistent with
applicable laws and regulations.
(c) The Company shall hold in confidence, and shall not make any
disclosure of, information concerning the Investor provided to the Company under
this Agreement unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement, or (v) the Investor consents to the form and content of any such
disclosure. If the Company learns that disclosure of such information
concerning the Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, the Company shall give prompt
notice to the Investor prior to making such disclosure and allow the Investor,
at its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
5.10 Board of Directors.
--------------------
(a) From and after the date that the Shareholder Approval is
obtained, the Company agrees that, (A) the Company shall take appropriate action
to cause to be elected to the Board of Directors no more than one (1) director
designated by the Investor; and (B) thereafter for so long as the Investor shall
hold at least twenty-five percent (25%) of the Shares, at each annual meeting of
the shareholders of the Company, and at each special meeting of the shareholders
of the Company called for the purpose of electing directors of the Company, and
at any time at which shareholders of the Company shall have the right to, or
shall, vote for directors of the Company, then, in each such event, the Company
shall nominate for election to the Board of Directors one (1) director
designated by the Investor.
I - 11
(b) For so long as the Note remains unpaid, or until the date that
the Company nominates for election to the Board of Directors one (1) director
designated by the Investor as described in Section 5.10(a), if Shareholder
Approval is obtained, the Investor shall have the right to have one person
attend all meetings of the Company's Board of Directors as an observer. The
Company shall provide each such person with all information provided to its
Board of Directors, provided such person agrees: (A) to keep such information
confidential and return same to the Company upon the request of the Company; (B)
to be subject to the same xxxxxxx xxxxxxx policies and restrictions as members
of the Board of Directors; and (C) that such person shall have no right to vote
on any matter that comes before the Company's Board of Directors.
5.11 Right of First Offer.
-----------------------
(a) The Company hereby grants to the Investor the right (but not
the obligation) to purchase any New Securities (as hereinafter defined), which
the Company may propose to sell and issue privately during the period (the
"Offering Period") of 180 days after the Closing; provided, however, that the
-------- -------
aggregate purchase price of New Securities which the Investor shall have the
right to purchase pursuant to this Section 5.11 shall not exceed $5,000,000.
For purposes of this Section 5.11, "New Securities" shall mean any Common Stock,
and rights, options or warrants to purchase such Common Stock, but shall not
include shares of Common Stock issued or issuable to officers, directors or
employees of the Company pursuant to, or issued or issuable upon the exercise of
options granted to such persons (regardless of whether such options were granted
before or after the date of this Agreement) under, any stock option or other
equity incentive plan approved by the Board of Directors.
(b) If at any time the Company shall propose to sell and issue New
Securities privately during the Offering Period, it shall deliver written notice
to the Investor of its proposal. If the Investor shall desire to purchase all
of the New Securities, it shall, no later than ten (10) business days after its
receipt of the above-described notice from the Company, notify the Company of
its desire to purchase the New Securities and specify the price, terms and
conditions upon which the Investor desires to purchase the New Securities. The
Investor's offer to purchase the New Securities shall by its terms remain open
and irrevocable for a period of ten (10) business days from the date notice of
such offer is given.
(c) In the event that the Company shall decide not to sell and
issue the New Securities to the Investor, the Company shall not sell New
Securities to any third party during the Offering Period on any other terms
without first having provided such purchase opportunity to the Investor with
respect to such other terms.
(d) Notwithstanding anything to the contrary herein, the
Investor's right to purchase New Securities pursuant to this Section 5.11 shall
be null and void if Nasdaq's Stock Market Marketplace Rules would require the
Company to obtain shareholder approval for the issuance of such New Securities
to the Investor.
5.12 Shareholder Meeting. The Company shall use its best efforts to
--------------------
hold a Special Meeting as soon as practicable for the sole purpose of obtaining,
in order to satisfy Nasdaq's rules relating to obtaining shareholder approval of
a "change of control," the approval of its shareholders with respect to the
transactions contemplated by this Agreement, including (x) the Company's
issuance of the Shares, Warrants and the terms thereof, and the Warrant Shares
and the Additional Warrant Shares, and (y) the board representation rights of
the Investor set forth in Section 5.10 hereof (the "Shareholder Approval").
I - 12
5.13 Opinion. The Company shall cause the Investor to receive an
-------
opinion letter of the Company's counsel, Xxxxxx Xxxxxxxx LLP, dated as of the
Closing Date containing opinions in substantially the form attached hereto as
Exhibit F.
----------
5.14 Transfer Agent Instructions. The Company shall deliver evidence
-----------------------------
reasonably satisfactory to the Investor that the Company's transfer agent has
agreed to act in accordance with irrevocable instructions in the form attached
hereto as Exhibit G.
----------
5.15 HSR Act. In the event that the Investor elects to purchase Shares,
-------
Warrant Shares or Additional Warrant Shares, as the case may be, which purchase
would cause Investor to be subject to the notification and report requirements
of the HSR Act, the parties shall, prior to any such purchase, file with the
Federal Trade Commission and the Department of Justice the notifications and
reports required to be filed pursuant to the HSR Act and shall file any
supplemental information which may be reasonably requested in connection
therewith, which notifications and reports and filing of supplemental
information will comply in all material respects with the requirements of HSR
Act. Each party shall be responsible for the payment of one half of the filing
fees required to be made in connection with such notification. Each party shall
furnish to the other party such information as such other party may reasonably
request to assist it to make such filings as it may be legally required to make
under the HSR Act. As promptly as practicable after the date of this Agreement,
the parties shall each further prepare and file all other filings required under
any foreign, federal, state or local laws relating to the transactions
contemplated hereby and shall promptly respond to any request for additional
information with respect thereof.
ARTICLE VI
REGISTRATION OF THE SECURITIES
For the purpose of Articles VI and VII, the term "Registrable Securities"
shall include (i) the Shares, (ii) the Warrant Shares, (iii) the Additional
Warrant Shares and (iv) any shares of capital stock issued or issuable from time
to time (with any adjustments) in exchange for or otherwise with respect to the
Shares, Warrant Shares or Additional Warrant Shares.
6.1 Registration Procedures. The Company shall:
------------------------
(a) Subject to receipt of necessary information from the Investor,
prepare and file with the SEC, no later than one (1) year after the Closing Date
(the "Anniversary Date"), a registration statement on Form S-3 (the
"Registration Statement") to enable the resale of the Registrable Securities by
the Investor from time to time through the automated quotation system of the
Nasdaq Stock Market (or the facilities of any national securities exchange on
which the Company's Common Stock is then traded) or in privately-negotiated
transactions (if Form S-3 is not available at that time, then the Company shall
file a Registration Statement on such form as is then available to effect a
registration of the Registrable Securities then outstanding, subject to the
consent of the Investor, which consent shall not be unreasonably withheld). The
Company shall not, and shall not agree to, allow the holders of any securities
of the Company to include any of their securities in any Registration Statement
under this Section 6.1 without the consent of the holders of a majority in
interest of the Registrable Securities then outstanding. In addition, beginning
I - 13
six (6) months after the Closing Date, the Company shall not register, or agree
to register, any of its securities for its own account or for the account of
shareholders other than the holders of the Registrable Securities then
outstanding, without the consent of the holders of a majority in interest of the
Registrable Securities then outstanding, until the Registration Statement with
respect to such has been declared effective.
(b) Use its commercially reasonable efforts, subject to receipt of
necessary information from the Investor, to cause the Registration Statement to
be declared effective by the SEC as soon as practicable after filing. The
Company's commercially reasonable efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the SEC. If the
Company receives notification from the SEC that the Registration Statement shall
receive no action or review from the SEC, then the Company shall, subject to its
rights under Section 6.2, cause the Registration Statement to become effective
within five (5) business days after such SEC notification.
(c) Use its commercially reasonable efforts to prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to the Registrable Securities, the earliest of (i) the second
anniversary of the date of effectiveness of the Registration Statement with
respect to the Registrable Securities, (ii) the date on which the Investor may
sell all Registrable Securities then held by the Investor, without registration
or without regard to any volume limitations by reason of Rule 144(k) of the
Securities Act or (iii) such time as all Registrable Securities purchased by the
Investor in this Offering have been sold pursuant to a Registration Statement
(the "Registration Period").
(d) Furnish to the Investor whose Registrable Securities are
included in a Registration Statement, and to its legal counsel, (i) promptly
after each document is prepared and publicly distributed, filed with the SEC or
received by the Company, one copy of any Registration Statement filed pursuant
to this Agreement and any amendments thereto, each Preliminary Prospectus and
final Prospectus and each amendment or supplement thereto; and each letter
written by or on behalf of the Company to the SEC and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any item thereof which
contains information for which the Company has sought confidential treatment);
and (ii) such number of copies of the Registration Statement, Prospectuses and
Preliminary Prospectuses in conformity with the requirements of the Securities
Act and such other documents as the Investor may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the Registrable
Securities by the Investor, provided, however, that the obligation of the
Company to deliver copies of Prospectuses or Preliminary Prospectuses to the
Investor shall be subject to the receipt by the Company of reasonable assurances
from the Investor that the Investor shall comply with the applicable provisions
of the Securities Act and of such other securities or Blue Sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses. The Company shall immediately notify by facsimile the Investor
whose Registrable Securities are included in any Registration Statement of the
effectiveness of the Registration Statement and any post-effective amendment.
(e) Use its commercially reasonable efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or Blue Sky laws of such jurisdictions as the Investor who
holds (or has the right to hold) Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions any amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain their effectiveness during the
I - 14
Registration Period, (iii) take any other actions necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take any other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions.
Notwithstanding the foregoing, the Company is not required, in connection with
such obligations, to (A) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6.1, (B) subject
itself to general taxation in any such jurisdiction, (C) file a general consent
to service of process in any such jurisdiction, (D) provide any undertakings
that cause material expense or burden to the Company, or (E) make any change in
its Certificate of Incorporation or By-laws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its shareholders.
(f) During the period when copies of the Prospectus are required
to be delivered under the Securities Act or the Exchange Act, file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder.
(g) Advise the Investor, promptly after it shall receive notice or
obtain knowledge of the issuance of any stop order by the SEC delaying or
suspending the effectiveness of the Registration Statement or of the initiation
of any proceeding for that purpose; and it shall promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Section 6.1, that the Investor shall furnish to the
Company such information regarding itself, the Registrable Securities to be sold
by the Investor, and the intended method of disposition of such Registrable
Securities as shall be required to effect the registration of the Registrable
Securities.
The Company understands that the Investor disclaims being an underwriter,
but the Investor being deemed an underwriter by the SEC shall not relieve the
Company of any obligations it has hereunder, provided, however, that if the
Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period in which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the
ninetieth (90th) day after such SEC notification, or (ii) one hundred twenty
(120) days after the initial filing of the Registration Statement with the SEC.
6.2 Transfer of Registrable Securities After Registration; Suspension.
------------------------------------------------------------------
The Investor agrees that it shall not effect any disposition of the Registrable
Securities except as contemplated in the Registration Statement referred to in
Section 6.1 or as otherwise permitted by law, and that it shall promptly notify
the Company of any changes in the information set forth in the Registration
Statement regarding the Investor or its plan of distribution.
(a) Any Registration Statement (including any amendments or
supplements thereto and Prospectuses contained therein) filed by the Company
covering the Registrable Securities shall not contain any 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 light of the circumstances in which
they were made, not misleading. Except in the event that Section (c) below
applies, the Company shall: (i) prepare and file from time to time with the SEC
a post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or file any other required document so that such
I - 15
Registration Statement shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that, as thereafter delivered
to the Investor of the Registrable Securities being sold thereunder, such
Prospectus shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) provide the Investor copies of any documents filed pursuant
to Section 6.2(b)(i); and (iii) inform the Investor that the Company has
complied with its obligations in Section 6.2(b)(i) (or that, if the Company has
filed a post-effective amendment to the Registration Statement which has not yet
been declared effective, the Company shall notify the Investor to that effect,
shall use its commercially reasonable efforts to secure the effectiveness of
such post-effective amendment as promptly as possible and shall promptly notify
the Investor pursuant to Section 6.2(b)(i) hereof when the amendment has become
effective).
(b) In the event: (i) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to a Registration
Statement or a related Prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation of any proceeding for such purpose; or (iv)
of any event or circumstance which necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it shall not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
Prospectus, it shall not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; then the Company shall deliver a certificate in
writing to the Investor (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, the Investor shall refrain from
selling any Registrable Securities pursuant to the Registration Statement (a
"Suspension") until the Investor's receipt of copies of a supplemented or
amended Prospectus prepared and filed by the Company, or until it is advised in
writing by the Company that the current Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such Prospectus. In the event of any
Suspension, the Company shall use its commercially reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable after delivery of a Suspension Notice to the Investor, shall prepare
a supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and shall deliver a number of copies of such supplement
or amendment to the Investor as the Investor may reasonably request. In
addition to and without limiting any other remedies (including, without
limitation, at law or at equity) available to the Investor, the Investor shall
be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 6.2(b). Subject to the Company's
rights under this Section 6.2(b), the Company shall use its commercially
reasonable efforts to prevent the issuance of any stop order or other suspension
of effectiveness of a Registration Statement and, if such an order is issued,
shall use its commercially reasonable efforts to obtain the withdrawal of such
order at the earliest possible time and to notify the Investor that holds the
Registrable Securities being sold of the issuance of such order and the
resolution thereof. If the use of the Registration Statement is suspended by
the Company, the Company shall promptly give notice of the suspension to the
Investor and shall promptly notify the Investor as soon as the use of the
Registration Statement may be resumed.
I - 16
(c) Provided that a Suspension is not then in effect, the Investor
may sell the Registrable Securities under the Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Registrable Securities. Upon receipt of a request therefor, the Company has
agreed to provide an adequate number of current Prospectuses to the Investor and
to supply copies to any other parties requiring such Prospectuses.
6.3 Review by the Investor. The Company shall permit the Investor's
-------------------------
legal counsel to review the Registration Statement and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof) for a reasonable period of time prior to their filing with the SEC, and
shall not file any document in a form to which such counsel reasonably objects,
unless otherwise required by law in the opinion of the Company's counsel. The
sections of any such Registration Statement, including information with respect
to the Investor, the Investor' beneficial ownership of the Registrable
Securities or the Investor' intended method of disposition of the Registrable
Securities, must conform to the information provided to the Company by each of
the Investor.
6.4 Expenses. Subject to the limitations contained herein, the Company
--------
shall pay the following expenses incident to the registration of the Registrable
Securities under this Article VI: registration, filing and NASD fees, all fees
and expenses of complying with state securities or Blue Sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any "cold comfort" letters
required by or incident to such performance and compliance, premiums and other
costs of policies of insurance purchased by the Company at its option against
liabilities arising out of the public offering of such Registrable Securities;
but excluding discounts, spreads and commissions and fees and expenses of
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Securities, transfer taxes, fees
and disbursements of counsel for any selling shareholder(s), fees and
disbursements of the Company's public accountants for special audits and other
selling expenses, if any, all of which expenses shall be borne by the Investor.
6.5 Indemnification.
---------------
(a) For the purpose of this Section 6.5:
(i) The term "Selling Stockholder" shall include the Investor
and each person, if any, who controls the Investor within the meaning of the
Securities Act or any affiliate of the Investor;
(ii) The term "Registration Statement" shall include any
final Prospectus, exhibit, supplement or amendment included in or relating to
the Registration Statement referred to in Section 6.1; and
(iii) The term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement 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.
I - 17
(b) The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages, liabilities or
expenses, joint or several, to which such Selling Stockholder may become subject
(under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement of any material fact contained in the Registration Statement,
including the Prospectus, financial statements and schedules, and all other
documents filed as a part thereof, as amended at the time of effectiveness of
the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the Rules and Regulations, or the Prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them, in light of
the circumstances under which they were made, not misleading, or arise out of or
are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure of the
Company to perform its obligations under this Agreement or under law, and shall
reimburse the Investor and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Investor or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The Company shall reimburse such Selling Stockholder for any reasonable
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim, provided, however,
that the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of, or is based upon, an untrue
statement made in such Registration Statement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Selling Stockholder specifically for use in preparation of the Registration
Statement or the failure of such Selling Stockholder to comply with its
covenants and agreements contained in Sections 3.1, 3.6 or 6.2 hereof or any
statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Investor prior to the pertinent sale or
sales by the Investor.
(c) The Investor agrees to indemnify and hold harmless the Company
(and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, (i) any failure
to comply with the covenants and agreements contained in Sections 3.1, 3.6 or
6.2 hereof, or (ii) any untrue statement of a material fact contained in the
Registration Statement but only to the extent that such untrue statement was
made in reliance upon and in conformity with written information furnished by or
on behalf of the Investor specifically for use in preparation of the
Registration Statement, and the Investor shall reimburse the Company (or such
officer, director or controlling person), as the case may be, for any legal or
other expenses reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that the
Investor shall not be liable for any such untrue statement which the Investor
has delivered to the Company in writing a correction before the occurrence of
the transaction from which such loss was incurred, and the Investor shall
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
I - 18
(d) Promptly after receipt by any indemnified person of a notice
of a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 6.5, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, but the omission to so notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party under this Section 6.5 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 6.5.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the reasonable opinion of counsel to the indemnified person,
for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified parties. In no
event shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written consent of
the indemnified person, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such indemnified
person, unless such settlement includes an unconditional release of such
indemnified person from all liability on claims that are the subject matter of
such proceeding. Notwithstanding the provisions of this Section 6.5, the
Investor shall not be liable for any indemnification obligation under this
Agreement in excess of the amount of gross proceeds received by the Investor
from the sale of the Registrable Securities.
(e) If the indemnification provided for in this Section 6.5 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to (i) reflect the relative benefits received by the Company and the Investor
from the placement of Common Stock or if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Investor in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
I - 19
respective relative benefits received by the Company on the one hand and the
Investor on the other shall be deemed to be in the same proportion as the amount
paid by the Investor to the Company pursuant to this Agreement for the
Registrable Securities purchased by the Investor that were sold pursuant to the
Registration Statement bears to the difference (the "Difference") between the
amount the Investor paid for the Registrable Securities that were sold pursuant
to the Registration Statement and the amount received by the Investor from such
sale. The relative fault shall be determined by reference to, among other
things, whether the untrue statement or the omission or alleged omission to
state a mutual fact or the inaccurate or alleged inaccurate representation or
warranty relates to information supplied by the Company on the one hand or the
Investor on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement. The
provisions set forth in Section 6.5 with respect to the notice of the threat or
commencement of any threat or action shall apply if a claim for contribution is
to be made under this Section; provided, however, that no additional notice
shall be required with respect to any threat or action for which notice has been
given under Section 6.5 for purposes of indemnification. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (e) were determined by pro rata allocation (even if the
Investor were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (e) shall be
deemed to include, subject to the limitations set forth in this Section 6.5, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), no Investor shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages which the Investor has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Investor' obligations in this subsection to contribute
are several in proportion to their sales of the Registrable Securities to which
such loss relates and not joint.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 6.5, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 6.5
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act and the Exchange
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions may be contrary to certain of the
provisions of this Section 6.5, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 6.5 and further agree not to attempt to assert any
such defense.
6.6 Termination of Conditions and Obligations. The conditions
---------------------------------------------
precedent imposed by Article III or this Article VI upon the transferability of
the Registrable Securities shall cease and terminate as to any particular number
of the Registrable Securities upon the passage of two (2) years from the
effective date of the Registration Statement or when such Registrable Securities
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition set
forth in the Registration Statement covering such Registrable Securities or at
such time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
I - 20
6.7 Information Available. So long as the Registration Statement is
----------------------
effective covering the resale of the Registrable Securities owned by the
Investor, the Company shall furnish to the Investor:
(a) as soon as practicable after it is available (but in the case
of the Company's Annual Report to Shareholders, within one hundred twenty (120)
days after the end of each fiscal year of the Company), one copy of (i) its
Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a national firm of certified public accountants); (ii) if not included in
substance in the Annual Report to Stockholders, its Annual Report on Form 10-K
(the foregoing, in each case, excluding exhibits); (iii) if not included in
substance in its Quarterly Reports to Shareholders, its quarterly reports on
Form 10-Q; and (iv) a full copy of the particular Registration Statement
covering the Registrable Securities (the foregoing, in each case, excluding
exhibits);
(b) upon the reasonable request of the Investor, all exhibits
excluded by the parenthetical to subparagraphs (a)(ii), (iii) and (iv) of this
Section 6.7 as filed with the SEC and all other information that is made
available to shareholders; and
(c) upon the reasonable request of the Investor, an adequate
number of copies of the Prospectuses to supply to any other party requiring such
Prospectuses; and the Company, upon the reasonable request of the Investor,
shall meet with the Investor or a representative thereof at the Company's
headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable Securities and shall otherwise
cooperate with any Investor conducting an investigation for the purpose of
reducing or eliminating the Investor's exposure to liability under the
Securities Act, including the reasonable production of information at the
Company's headquarters; provided, that the Company shall not be required to
disclose any confidential information to or meet at its headquarters with any
Investor until and unless the Investor shall have entered into a confidentiality
agreement with the Company in form and substance reasonably satisfactory to the
Company with respect thereto.
6.8 Rule 144 Information. In order to make available to the Investor
----------------------
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Investor to sell the Registrable Securities to the public
without registration, the Company shall use its commercially reasonable efforts
to:
(a) file with the SEC in a timely manner, and make and keep
available, all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein limits the Company's
obligations under Section 6.3 of the Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
(b) furnish to the Investor, so long as the Investor holds the
Registrable Securities, promptly upon the Investor's request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents filed by the Company with the SEC and (iii) such other information as
may be reasonably requested to permit the Investor to sell such Registrable
Securities pursuant to Rule 144 without registration.
I - 21
6.9 Assignment of Registration Rights. The rights of the Investor
------------------------------------
hereunder, including the right to have the Company register the Registrable
Securities pursuant to this Agreement, shall be automatically assigned by the
Investor to transferees or assignees of all or any portion of such Registrable
Securities, but only if (a) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
Registrable Securities with respect to which such registration rights are being
transferred or assigned, (c) after such transfer or assignment, the further
disposition of such Registrable Securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (d) at
or before the time the Company received the written notice contemplated by
clause (b) of this sentence, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and (e) the
transferee is an "accredited investor" as that term is defined in Rule 501 of
Regulation D.
ARTICLE VII
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
7.1 Issuance of Registrable Securities. The Company shall issue the
-------------------------------------
Warrants and shall instruct its transfer agent to issue certificates, registered
in the name of the Investor or its nominee, for the Shares and, when issued in
accordance with the terms of the Warrants, the Warrant Shares and the Additional
Warrant Shares. The Warrants and all such certificates shall bear the
restrictive legend described in Section 3.7, except as otherwise specified in
this Article VII. The Company shall not give to its transfer agent any
instruction other than as described in this Article VII and stop-transfer
instructions to give effect to Section 3.7 hereof (prior to registration of the
Registrable Securities under the Securities Act). Nothing in this Section shall
affect in any way the Investor's obligations and agreement set forth in Sections
3.6 and 3.7 hereof to resell the Registrable Securities pursuant to an effective
registration statement or in compliance with an exemption from the registration
requirement of applicable securities laws.
7.2 Unrestricted Registrable Securities. If, unless otherwise required
-----------------------------------
by applicable state securities laws, (a) Registrable Securities represented by a
certificate have been registered under an effective registration statement filed
under the Securities Act, (b) a holder of the Registrable Securities provides
the Company and the Transfer Agent with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Registrable
Securities may be made without registration under the Securities Act and such
sale either has occurred or may occur without restriction on the manner of such
sale or transfer, (c) such holder provides the Company and the Transfer Agent
with reasonable assurances that such Registrable Securities can be sold under
Rule 144, or (d) such Registrable Securities can be sold without restriction as
to the number of the Registrable Securities sold under Rule 144(k), the Company
shall permit the transfer of such Registrable Securities, and the Transfer Agent
shall issue one or more certificates, free from any restrictive legend, in such
name and in such denominations as specified by such holder. In the event that
the restrictive legend is removed from any of the certificates for such
Registrable Securities and thereafter the effectiveness of a registration
statement covering such Registrable Securities is suspended or terminated or the
Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon a reasonable advance notice to the
Investor the Company may require that the restrictive legend be placed on any
certificates for such Registrable Securities that cannot be sold pursuant to an
effective registration statement or under Rule 144, and the Investor shall
cooperate in the replacement of such legend. Such legend shall thereafter be
removed when such Registrable Securities may again be sold pursuant to an
effective registration statement or Rule 144.
I - 22
ARTICLE VIII
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Shares and the Warrants
to the Investor at the Closing is subject to the satisfaction by the Investor,
on or before the Closing Date, of the following conditions. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:
8.1 Shareholder Approval shall have been obtained.
8.2 The Investor shall have delivered the Purchase Price to the Company
in accordance with this Agreement.
8.3 The representations and warranties of the Investor shall be true
and correct in all material respects as of the Closing Date as though made on
such date (except for representations and warranties that speak as of a specific
date, which representations and warranties must be correct as of such date), and
the Investor shall have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investor at or prior to the Closing. The Company shall have
received a certificate or certificates dated as of the Closing Date and executed
by the Investor or a duly authorized officer of the Investor certifying as to
the matters contained in this Section 8.3.
8.4 No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
ARTICLE IX
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of the Investor hereunder to purchase the Shares and the
Warrants from the Company at the Closing is subject to the satisfaction, on or
before the Closing Date, of the following conditions. These conditions are for
the Investor's benefit and may be waived by the Investor at any time in its sole
discretion:
9.1 Shareholder Approval shall have been obtained.
9.2 The Company shall have delivered to the Investor duly executed
certificates representing the Shares and the duly executed Initial Warrant and
Second Warrant.
9.3 The representations and warranties of the Company shall be true and
correct in all material respects as of the Closing Date as though made on such
date (except for representations and warranties that speak as of a specific
date, which representations and warranties must be true and correct as of such
I - 23
date) and the Company must have performed and complied in all material respects
with the covenants and conditions required by this Agreement to be performed or
complied with by the Company at or prior to the Closing. The Investor shall
have received a certificate or certificates dated as of the Closing Date and
executed by the Chief Executive Officer or the Chief Financial Officer of the
Company certifying as to the matters contained in this Section 9.3 and as to
such other matters as may be reasonably requested by the Investor, including,
but not limited to, the Company's Certificate of Incorporation, as amended,
By-laws, as amended, Board of Directors' resolutions relating to the
transactions contemplated hereby and the incumbency and signatures of each of
the officers of the Company who may execute on behalf of the Company any
document delivered at the Closing.
9.4 No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the
matters contemplated hereby which prohibits or seeks to prohibit the
consummation of any of the transactions contemplated by this Agreement.
9.5 Trading and listing of the Common Stock on Nasdaq shall not have
been suspended or materially limited by the SEC or Nasdaq.
9.6 The Investor shall have received an opinion letter of the Company's
counsel, Xxxxxx Xxxxxxxx LLP, dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Investor and containing opinions in
substantially the form attached hereto as Exhibit F.
----------
9.7 The Company shall have delivered evidence reasonably satisfactory
to the Investor that the Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as Exhibit
-------
G.
-
ARTICLE X
DEFINITIONS
10.1 "Closing" means the closing of the purchase and sale of the
Securities (other than the Note) under this Agreement.
10.2 "Closing Date" has the meaning set forth in Section 2.3.
10.3 "Common Stock" means the common stock, $.01 par value per share,
of the Company.
10.4 "Company" means DA Consulting Group, Inc., a Texas corporation.
10.5 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
10.6 "Investor" means the investor whose name is set forth on the
signature pages of this Agreement.
10.7 "Market Price Per Share" means the average of the last sale price
for the Common Stock as quoted on the NASDAQ National Market System for the five
(5) trading days ending on the second trading day prior to the date on which the
Warrants are exercised (from time to time as the case may be) or, if not so
quoted, means the price as mutually agreed upon by the parties or if the parties
can not so mutually agree, the price determined by a neutral party appraiser, as
chosen by the Investor and reasonably agreed to by the Company.
I - 24
10.8 "Material Adverse Effect" means a material adverse effect on the
business, operations, assets or financial condition of the Company on a
consolidated basis.
10.9 "Nasdaq" means the Nasdaq National Market System.
10.10 "Registrable Securities has the meaning set forth in Article VI.
10.11 "Regulation D" means Regulation D as promulgated by the SEC under
the Securities Act.
10.12 "Rule 144" and "Rule 144(k)" mean Rule 144 and Rule 144(k),
respectively, promulgated under the Securities Act, or any successor rule.
10.13 "SEC" means the United States Securities and Exchange Commission.
10.14 "SEC Documents" has the meaning set forth in Section 4.6.
10.15 "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder, or any similar successor statute.
10.16 "Shareholder Approval" has the meaning set forth in Section 5.12.
ARTICLE XI
GOVERNING LAW; MISCELLANEOUS
11.1 Governing Law; Jurisdiction. This Agreement shall be governed by
----------------------------
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. The parties hereto hereby submit
to the exclusive jurisdiction of the United States federal and state courts
located in the State of New York with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby.
11.2 Counterparts; Signatures by Facsimile. This Agreement may be
----------------------------------------
executed in two or more counterparts, all of which are considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed pages to be physically delivered to the other parties within five
business days of the execution hereof.
11.3 Headings. The headings of this Agreement are for convenience of
--------
reference only, are not part of this Agreement and do not affect its
interpretation.
11.4 Severability. If any provision of this Agreement is invalid or
------------
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
I - 25
11.5 Entire Agreement; Amendments. This Agreement (including all
------------------------------
schedules and exhibits hereto), the Note and the Warrants constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement, the Note and the
Warrants supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
11.6 Notices. Any notices required or permitted to be given under the
-------
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five (5) days
after being placed in the mail, if mailed by regular U.S. mail, or upon receipt,
if delivered personally, by courier (including a recognized overnight delivery
service) or by facsimile, in each case addressed to a party. The addresses for
such communications are:
If to the Company: DA Consulting Group, Inc.
San Xxxxxx Plaza
0000 Xxx Xxxxxx, Xxxxx 00000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Chief Executive Officer;
and Xxxxxx X. Xxxxxxxxx, Chief Financial Officer
Facsimile: 000-000-0000
With a copy to: Xxxxxx Xxxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esquire
If to the Investor: To the addresses set forth immediately below the
Investor's name on its signature page hereto.
Each party shall provide written notice to the other party of any change in
its address.
11.7 Successors and Assigns. This Agreement is binding upon and inures
----------------------
to the benefit of the parties and their successors and assigns. The Company
shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Investor, and the Investor may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, the Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an "accredited investor" (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement.
11.8 Third-Party Beneficiaries. This Agreement is intended for the
--------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
11.9 Survival. The representations and warranties of the Company and
--------
the agreements and covenants set forth herein shall survive the Closing
hereunder and remain in full force and effect regardless of any investigations
heretofore or hereafter made by or on behalf of either of the parties hereto for
the period time commencing on the date hereof and ending on the third
anniversary of the Closing Date, unless Shareholder Approval is not obtained, in
which case, ending on the date the Note is paid in full. The Company makes no
representations or warranties in any oral or written information provided to
Investor, other than the representations and warranties included herein.
I - 26
11.10 Further Assurances. Each party shall do and perform, or cause to
------------------
be done and performed, all such further acts and things, and shall execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
11.11 No Strict Construction. The language used in this Agreement is
------------------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction shall be applied against any party.
11.12 Equitable Relief. Each party acknowledges that a breach by it or
----------------
its obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purposes of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach,
actual or threatened, by such party of the provisions of this Agreement, that
the other party shall be entitled, in addition to all other available remedies,
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
I - 27
IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement
to be duly executed as of the date first above written.
COMPANY:
DA CONSULTING GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and CEO
INVESTOR:
PURSE HOLDING LIMITED,
a British Virgin Islands limited company
By: /s/ X.X. Xxxxxx
-------------------------------------
Name: X. X. Xxxxxx
Title: Authorized Signatory
Address: Xxxxxxxxxxxxxxxxx 000
X.X. Xxx 0000
XX - 0000
Xxxxxx, Xxxxxxxxxxx
Attention: Xxxxx Xxxxxxxx
Facsimile: +41-1-439 6266
with copies of all notices to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
I - 28
