EXHIBIT 10.50
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is entered into as
of December 9, 1999, by and between Insignia Solutions plc, a public limited
company organized and existing under the laws of England and Wales (the
"COMPANY"), with headquarters located at 00000 Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, and Castle Creek Technology Partners LLC, an Illinois
limited liability company located at 00 Xxxx Xxxxxx Xxxxx Xxx. 0000, Xxxxxxx,
Xxxxxxxx 00000 (THE "PURCHASER").
RECITALS
A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated
by the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
B. Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, (i) the Company's American Depository Shares (the
"ADSs"), each ADS representing one ordinary share of 20p each nominal value
of the Company ( the "ORDINARY SHARES"); (ii) a Warrant in the form of
EXHIBIT A hereto (the "INITIAL WARRANT") entitling the holder thereof to
purchase certain number of the Company's ADSs; and (iii) a Warrant in the
form of EXHIBIT C hereto ( the "RESET WARRANT", and together with the Initial
Warrant, the "WARRANTS") entitling the holder thereof to purchase additional
ADSs from the Company upon the occurrence of certain events as defined
therein. The ADSs being purchased hereunder are referred to herein as the
"SHARES" and the ADSs issuable upon exercise of any Warrant (including the
Reset Warrant) are referred to herein as the "WARRANT SHARES". The Shares,
the Warrants and the Warrant Shares are collectively referred to herein as
the "SECURITIES."
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement in the form attached hereto as EXHIBIT B (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights in relation to the Securities under the Securities Act, the
rules and regulations promulgated thereunder and applicable state securities
laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
I.1 PURCHASE OF ADSs AND WARRANTS. On the Closing Date (as defined
herein), subject to the terms and the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII, the Company shall issue and sell
to Purchaser, and Purchaser shall purchase from the Company (i) 827,179
(_________) Shares, (ii) a Warrant entitling the holder thereof to purchase
248,154 Warrant Shares, and (iii) the Reset Warrant, for an aggregate
consideration of Three Million Five Hundred Thousand Dollars ($3,500,000.00)
(the "PURCHASE PRICE").
I.2 FORM OF PAYMENT. At the Closing, the Purchaser shall pay the
Purchase Price for the Shares and Warrants by wire transfer to the Company, in
accordance with the Company's written wiring instructions, against delivery of
the Shares and duly executed Warrants, and the Company shall deliver to the
Purchaser such Shares and such executed Warrants against delivery of such
Purchase Price from the Purchaser.
I.3 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the date and time of the
issuance, sale and purchase of the Securities pursuant to this Agreement shall
be December 9, 1999 (the"Closing Date"). The Closing shall occur at 10:00 a.m.
Chicago time, at the offices of Altheimer & Xxxx, 00 X. Xxxxxx Xxxxx, Xxxxxxx,
XX 00000.
I.4 LIMITATION ON SALES. Notwithstanding anything to the contrary
contained in this Agreement, the Company may not sell and Purchaser may not
purchase any Shares pursuant to this Agreement and the transactions
contemplated hereby to the extent that such sale and purchase would result in
Purchaser beneficially owning in excess of 9.9% of the Company's total Ordinary
Shares in issue at the time of such purchase. For the purposes of this
paragraph, beneficial ownership and all determinations and calculations,
including without limitation, with respect to calculations of percentage
ownership, shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
Regulation 13D and G thereunder. This Section 1.4 may not be waived by
Purchaser unless such waiver has been voted upon and approved by an ordinary
resolution of the Company's shareholders.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as set forth in
this Article II. The Purchaser makes no other representations or warranties,
express or implied, to the Company in connection with the transactions
contemplated hereby and any and all prior representations and warranties, if
any, which may have been made by the Purchaser to the Company in connection
with the transactions contemplated hereby shall be deemed to have been merged
in this Agreement and
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any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
II.1 INVESTMENT PURPOSE. Purchaser is purchasing the Shares and
Warrants for Purchaser's own account for investment only and not with a view
toward or in connection with the public re-sale or distribution thereof,
except pursuant to sales that are exempt from the registration requirements
of the Securities Act and/or sales registered under the Securities Act.
Purchaser will not resell any of the Securities except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or
sales registered under the Securities Act. Purchaser understands that
Purchaser must bear the economic risk of this investment indefinitely, unless
the applicable Securities are registered pursuant to the Securities Act and
any applicable state securities laws or an exemption from such registration
is available, and that the Company has no present intention of registering
any such Securities other than as contemplated by the Registration Rights
Agreement. By making the representations in this Section 2.1, the Purchaser
does not agree to hold any Securities for any minimum or other specific term
and reserves the right to dispose of any or all of the Securities at any time
in accordance with or pursuant to a registration statement or an applicable
exemption from registration under the Securities Act.
II.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
II.3 RELIANCE ON EXEMPTIONS. Purchaser understands that the Shares
and Warrants are being offered and sold to Purchaser in reliance upon specific
exemptions from the registration requirements of the United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of the representations and warranties of Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility of
Purchaser to acquire the Securities.
II.4 INFORMATION. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Shares and Warrants which have
been specifically requested by Purchaser. Purchaser has been afforded the
opportunity to ask questions of the Company, and its officers, directors,
employees and agents,and has received what Purchaser believes to be complete
and satisfactory answers to any such inquiries. Neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its
representations and warranties shall modify, amend or affect Purchaser's right
to rely on the Company's representations and warranties contained in Article
III. Purchaser understands that Purchaser's investment in the Securities
involves a high degree of risk.
II.5 GOVERNMENTAL REVIEW. Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
an investment therein.
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II.6 TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof); (ii) any sale of such Securities made in reliance on Rule
144 under the Securities Act (or a successor rule) ("RULE 144") may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities without registration under the
Securities Act may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Securities under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).
II.7 LEGENDS. Purchaser understands that, subject to Article V
hereof, the certificate for the Warrants, and until such time as the Shares and
the Warrant Shares, as applicable, have been registered under the Securities
Act as contemplated by the Registration Rights Agreement or otherwise may be
sold by Purchaser pursuant to Rule 144, the certificates for the Shares and
Warrant Shares will bear a restrictive legend (the "LEGEND") in the following
form:
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
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED 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.
II.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
II.9 RESIDENCY. Purchaser is a resident of the State of Illinois.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that:
III.1 ORGANIZATION AND QUALIFICATION. The Company is a public limited
company duly incorporated and validly existing under the laws of England and
Wales and registered in England under the Companies Act of 1985. Each of the
Company's subsidiaries is a corporation, limited liability company or other
entity duly organized, validly existing and, to the extent applicable, in good
standing under the laws of the jurisdiction of its organization, except where
the failure to be so organized, existing or in good standing that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. The Company and each of its subsidiaries have full power and
authority to conduct their respective businesses as they are presently being
conducted and to own, lease and operate their respective properties and assets,
except, in the case of any subsidiary only, where the failure to have such
power or authority would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Company and each of its
subsidiaries are duly qualified to do business as foreign entities and are in
good standing in each jurisdiction in which the character or location of the
properties and assets owned or operated by them or the nature of the businesses
conducted by them makes such qualification necessary, except where the failure
to be so qualified or in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. "MATERIAL
ADVERSE EFFECT" means any material adverse effect on (i) the business,
operations, properties, financial condition, operating results or prospects of
the Company and its subsidiaries, taken as a whole on a consolidated basis,
(ii) the transactions contemplated hereby, (iii) the ability of the Company to
perform its obligations under this Agreement, the Warrants or the Registration
Rights Agreement (collectively, the "TRANSACTION DOCUMENTS") or (iv) the
Purchaser's interest in the Securities.
III.2 AUTHORIZATION; ENFORCEMENT. Except as disclosed in Schedule
3.2, (a) the Company has the requisite corporate power and authority (i) to
enter into and perform its obligations under each of the Transaction Documents,
(ii) to issue and sell to Purchaser, and to perform its obligations with
respect to, the Shares and the Warrants in accordance with the terms hereof and
thereof, as applicable, (iii) issue the Warrant Shares in accordance with the
terms of the Warrants; (b) the execution, delivery and performance of each of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Warrants and the reservation for issuance and the issuance of
the Shares and the Warrant Shares) have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company, its
board of directors, or its shareholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby or thereby
(whether under rules of The Nasdaq National Market ("NASDAQ"), the National
Association of Securities Dealers or otherwise), other than the Nasdaq
Authorizations (as herein defined) and the declaration or ordering of
effectiveness by the SEC of the Registration Statement or Statements as
contemplated by the Registration Rights Agreement (collectively, the
"CONSENTS"); (c) this Agreement, the Registration Rights Agreement and the
Warrants have been duly executed
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and delivered by the Company; and (d) each of the Transaction Documents
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
III.3 CAPITALIZATION. The capitalization of the Company as of the
date of this Agreement, including the authorized share capital, the number of
shares in issue, the number of shares reserved for issuance pursuant to the
Company's stock option plans and employee stock purchase plans, the number of
shares reserved for issuance pursuant to securities (other than the Warrants)
exercisable for, or convertible into or exchangeable for any share, the number
of Ordinary Shares represented by ADSs, the number of shares to be initially
reserved for issuance in the form of ADSs upon exercise of the Warrants is set
forth on Schedule 3.3. All of the issued Ordinary Shares have been duly and
validly authorized and validly issued and are fully paid and were not issued in
violation of, or subject to, any preemptive, subscription or other similar
rights of any shareholders of the Company or any liens or encumbrance. All of
the outstanding ADSs have been duly and validly authorized and validly issued
and are entitled to the benefits specified in the corresponding American
Depositary Receipts ("ADRs") and in the Deposit Agreement (the "DEPOSIT
AGREEMENT") dated November 17, 1995 between the Company and The Bank of New
York, as Depositary (the "DEPOSITARY"). Except as disclosed in Schedule 3.3,
as of the date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
and (ii) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights Agreement).
The Company has furnished to Purchaser true, correct and complete copies of the
Company's Memorandum of Association as currently in effect ("MEMORANDUM OF
ASSOCIATION"), and the Company's Articles of Association as currently in effect
(the "ARTICLES OF ASSOCIATION"). The Company has set forth on SCHEDULE 3.3 all
instruments and agreements (other than the Memorandum and Articles of
Association) governing securities convertible into or exercisable or
exchangeable for the Ordinary Shares (including in the form of ADSs) of the
Company (and the Company shall provide to Purchaser copies thereof upon the
request of Purchaser). Except as disclosed in SCHEDULE 3.3, the Company has no
indebtedness for borrowed money and no agreement providing for indebtedness for
borrowed money. Except as disclosed in Schedule 3.3 and this Agreement, the
Company has no share purchase agreements, rights plans or agreements containing
similar provisions and no agreements containing anti-dilution provisions. No
anti-dilution provisions which have, individually or in the aggregate, any
dilutive effect on Purchaser's investment are triggered as a result of any of
the transactions contemplated hereby, including exercise of the Warrants. The
Company shall provide Purchaser with a written update of this representation
signed by the Company's Chief Executive Officer or Chief Financial Officer on
behalf of the Company as of the date of the Closing and it shall be a condition
to Purchaser's obligations at Closing that there are no material changes in
such capitalization since the Company's representation on the date hereof. The
Company has no subsidiaries, except as provided on Schedule
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3.3. All such subsidiaries included on Schedule 3.3. are one hundred percent
(100%) owned by the Company. Except as provided on Schedule 3.3, the Company
has no investments, either debt or equity, in any other entity.
III.4 ISSUANCE OF SECURITIES. The Shares and the Warrant Shares and
the Ordinary Shares represented by such Shares and Warrant Shares are duly
authorized and reserved for issuance, and, upon issuance in accordance with the
terms hereof and exercise of the Warrants in accordance with the terms thereof,
as applicable, will be validly issued, fully paid and free from all liens,
claims and encumbrances and will not be subject to any preemptive rights or
other similar rights of shareholders of the Company. Upon issuance, the Shares
are, and the Warrant Shares will be, entitled to the benefits specified in the
corresponding American Depositary Receipts ("ADRs) and in the Deposit
Agreement. The Warrants are duly and validly authorized and are validly
issued, fully paid, and free from all liens, claims and encumbrances and are
not and will not be subject to any preemptive rights or other similar rights of
shareholders of the Company. The Board of Directors of the Company has
unanimously approved the issuance of Shares and the Warrants pursuant to the
terms hereof and of Warrant Shares issuable upon full exercise of the Warrants
pursuant to the terms thereof (without giving effect to any limitations on
exercise contained therein, including for purposes of Nasdaq Rule 4460(i) and
Nasdaq Rule 4310(c)(25)(H)(1)(b)) (the "NASDAQ AUTHORIZATIONS"), has
unanimously recommended to the shareholders of the Company the approval of the
Nasdaq Authorizations and will seek Shareholder Approval (as defined in
Section 4.13) at the Company's next annual meeting, which is currently
scheduled for July, 2000. No further corporate authorization or approval (other
than the Shareholder Approval) is required under the rules of the Nasdaq with
respect to the transactions contemplated by this Agreement, including, without
limitation, the issuance of the Shares and Warrant Shares and the inclusion
thereof for trading on the Nasdaq.
III.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Shares, the Warrants and Warrant Shares and the
Purchaser's purchase and acquisition of the Shares, the Warrants and the
Warrant Shares) do not and will not (a) result in a violation of the Memorandum
of Association and Articles of Association, (b) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party (except for such
conflicts, defaults, terminations, amendments, accelerations, and cancellations
as would not, individually or in the aggregate, have a Material Adverse
Effect), or (c) result in a violation of any law, rule, regulation, order,
judgment or decree (including, without limitation, U.S. federal and state
securities laws and regulations and the laws of England and Wales) applicable
to the Company or any of its subsidiaries, or by which any property or asset of
the Company or any of its subsidiaries, is bound or affected. Neither the
Company nor any of its subsidiaries is in violation of its Memorandum of
Association, its Articles of Association, or other organizational documents,
and neither the Company nor any of its subsidiaries is in default (and no event
has occurred which, with notice or lapse of time or both, would put the Company
or
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any of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
fr possible defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted so long as
Purchaser owns any of the Securities, in violation of any law, ordinance, rule,
regulation, order, judgment or decree of any governmental entity, court or
arbitration tribunal except for possible violations the sanctions for which
either singly or in the aggregate would not have a Material Adverse Effect. 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, the Warrants or the
Registration Rights Agreement or to perform its obligations in accordance with
the terms hereof or thereof, other than the Consents. The purchase and
acquisition of the Securities by the Purchaser do not violate any law, rule,
regulation, order, judgment or decree applicable to the Company, or require
further filing by the Company or Purchaser under such law, rule, regulation,
order, judgment or decree, by virtue of the Company's business or assets, other
than the Consents as described in Section 3.2. The Company is not in violation
of the listing requirements of Nasdaq and does not reasonably anticipate that
the ADSs will be de-listed by Nasdaq for the foreseeable future, and the
Company has made all necessary filings and notifications with, and obtained all
necessary approvals from, Nasdaq with respect to the transactions contemplated
hereby, including, without limitation, the issuance of the Securities and the
listing of the Shares and the Warrant Shares on the Nasdaq.
III.6 REGISTRATION AND SEC DOCUMENTS. The Ordinary Shares are
registered under Section 12 of the Exchange Act and have been so registered
since __________. Except as disclosed in SCHEDULE 3.6, since December 31,
1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with Companies House pursuant to
the U.K. Companies Xxx 0000 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "COMPANY REPORTS") and 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
after December 31, 1996, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being referred to herein as the "SEC DOCUMENTS" and such documents
filed prior to the date hereof, the "FILED SEC DOCUMENTS"), including for
purposes of determining the availability of Form S-3. The Company has
delivered to Purchaser true and complete copies of the SEC Documents filed
since December 31, 1996. As of their respective dates of filing, the Company
Reports and the SEC Documents complied in all material respects with the
requirements of the applicable law and the rules and regulations promulgated
thereunder applicable to such Company Reports and SEC Documents, and none of
the Company Reports and SEC Documents, at the time they were filed with the
Companies House or 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. None of the statements made in any such SEC
Document is, or, except
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pursuant to Filed SEC Documents has been, required to be updated or amended
under applicable law. The financial statements of the Company included in the
SEC Documents were prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, and the rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and present accurately and completely the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, immaterial year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the Filed SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred subsequent to the date of such financial statements in the ordinary
course of business consistent with past practice and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
financial statements, in each case of clause (i) and (ii) next above which,
individually or in the aggregate, are not material to the financial condition,
business, operations, properties, operating results or prospects of the Company
and its subsidiaries taken on a whole. The Filed SEC Documents, as supplemented
by SCHEDULE 3.6 hereto, contain a complete and accurate list of all material
undischarged written or oral contracts, agreements, leases or other instruments
to which the Company or any subsidiary is a party or by which the Company or any
subsidiary is bound or to which any of the properties or assets of the Company
or any subsidiary is subject (each a "CONTRACT"), except to the extent not
required to be filed pursuant to the applicable Rules and Regulations of the
SEC. None of the Company, its subsidiaries or, to the best knowledge of the
Company, any of the other parties thereto, is in breach or violation of any
Contract, which breach or violation relates to indebtedness for borrowed money,
is with respect to an obligation in excess of one hundred thousand dollars
($100,000) or would have a Material Adverse Effect. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a breach or
default by the Company or its subsidiaries under any Contract which breach or
default would have a Material Adverse Effect.
III.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company.
III.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, governmental
agency or authority, or self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, any of its subsidiaries, or any of their respective
directors or officers in their capacities as such, wherein an unfavorable
decision, ruling or finding could reasonably be expected to have a Material
Adverse Effect or would adversely affect the transactions contemplated by this
Agreement or any of the documents contemplated hereby or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of such other
documents. To the Company's
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knowledge, there are no facts which, if known by a potential claimant or
governmental agency or authority, could give rise to a claim or proceeding
which, if asserted or conducted with results unfavorable to the Company or
any of its subsidiaries, could reasonably be expected to have a Material
Adverse Effect.
III.9 DISCLOSURE. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement and the
transactions contemplated hereby, no material fact (within the meaning of the
federal securities laws of the United States) exists with respect to the Company
or any of its subsidiaries which has not been publicly disclosed.
III.10 ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE
SECURITIES. The Company acknowledges and agrees that Purchaser is acting
independently and is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement or the
transactions contemplated hereby, that this Agreement and the transaction
contemplated hereby, and the relationship between Purchaser and the Company,
are "arms-length", and that any statement made by Purchaser, or any of its
representatives or agents, in connection with this Agreement or the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser's purchase of the Securities and has not been relied
upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to Purchaser that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.
III.11 CURRENT PUBLIC INFORMATION. The Company is currently eligible
to register the resale of the Shares and the Warrant Shares by the Purchaser in
a secondary offering under General Instruction B3 and B4 of Form S-3 on a
registration statement on Form S-3 under the Securities Act, all as contemplated
by Section 2.1 of the Registration Rights Agreement.
III.12 NO GENERAL SOLICITATION. Neither the Company nor any person
acting on behalf of the Company has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
III.13 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on their behalf, has directly or indirectly
made any offers or sales of any security or solicited any offers to buy any
security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the representations
and warranties herein contained of Purchaser to the extent relevant for such
determination.
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III.14 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 by Purchaser relating to this Agreement or the transactions
contemplated hereby, except for dealings with Allied Capital International, Inc.
(the fees of which shall be paid in full by the Company). The Company will
indemnify Purchaser from and against any fees and expenses sought or other
claims made by Allied Capital International, Inc.
III.15 ACKNOWLEDGMENT OF DILUTION. The number of Warrant Shares
issuable upon exercise each of the Warrants may increase substantially in
certain circumstances. The Company's executive officers and directors have
studied and fully understand the terms of this Agreement and the transactions
contemplated hereby and the nature of the securities being sold hereunder and
recognize that they have a potentially dilutive effect. The board of directors
of the Company has unanimously concluded in its good faith business judgment
that the issuance of the Shares, the Warrants and the Warrant Shares as
contemplated hereby is in the best interests of the Company. The Company
acknowledges that its obligation to issue Warrant Shares upon exercise of the
Warrants is binding upon it and enforceable regardless of the dilution that such
issuance may have on the ownership interests of other shareholders.
III.16 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "INTANGIBLES") used or necessary for the conduct of its
business as now being conducted and as previously described in the Company's
Annual Report on Form 10-K most recently filed and any subsequently filed
reports on Form 10-Q and Form 8-K. Neither the Company nor any subsidiary of
the Company infringes on or is in conflict with any right of any other person
with respect to any Intangibles nor is there any claim of infringement made by a
third party against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
III.17 FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee. Without limiting the generality of the foregoing, the Company and its
subsidiaries have not directly or indirectly made or agreed to make (whether or
not said payment is lawful) any payment to obtain,
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or with respect to, sales other than usual and regular compensation to its or
their employees and sales representatives with respect to such sales.
III.18 KEY EMPLOYEES. Each Key Employee (as defined below) is
currently serving the Company in the capacity disclosed in SCHEDULE 3.18.
No Key Employee, to the best of the knowledge of the Company and its
subsidiaries, is, or is now expected to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
Key Employee does not subject the Company or any of its subsidiaries to any
liability with respect to any of the foregoing matters. No Key Employee has,
to the best of the knowledge of the Company and its subsidiaries, any
intention to terminate or limit his employment with, or services to, the
Company or any of its subsidiaries, nor is any such Key Employee subject to
any constraints (e.g., litigation) which would cause such employee to be
unable to devote his full time and attention to such employment or services.
"Key Employees" means Xxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx XxXxxxxx, Xxxxxx
Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxxx and Xxxxxxxx Xxxxx and any individual who
assumes or performs any of the duties of a Key Employee.
3.19 YEAR 2000 COMPLIANCE. The information set forth in the Filed
SEC Documents with respect to Year 2000-related compliance by the Company does
not contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein not misleading. The Company's
testing compliance program and contingency plan, in each case regarding
Year 2000-related matters, are adequate to prevent a Material Adverse Effect and
such Year 2000-related matters will not cause a Material Adverse Effect.
ARTICLE IV
COVENANTS
IV.1 BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
IV.2 SECURITIES LAWS. The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D and to
provide a copy thereof to Purchaser on or prior to the date of Closing. The
Company agrees to file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within three (3) days following the Closing
Date. Such Form 8-K shall contain as exhibits this Agreement, the Warrants and
the Registration Rights Agreement. The Company shall, on or prior to the
Closing Date, take such action as is necessary to sell the Securities to
Purchaser in accordance with applicable U.S. federal and state securities laws
and regulations and the applicable laws of England and Wales, and shall provide
evidence of any such action so taken to Purchaser on or prior to the date of the
Closing. Without limiting any of the Company's obligations under this
Agreement, the Registration Rights Agreement or the Warrants, from and after the
Closing Date, neither the Company nor any person acting on its behalf shall take
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any action which would adversely affect any exemptions from registration under
the Securities Act with respect to the transactions contemplated hereby.
IV.3 REPORTING STATUS. So long as Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
IV.4 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Securities hereunder for general working capital purposes.
IV.5 RESTRICTION ON BELOW MARKET ISSUANCE OF SECURITIES.
(i) During the period beginning on the Closing Date and ending on
the later of (x) the date which is three (3) months after the Effective Date
and (y) the date which is six (6) months following the Closing Date (such
period, the "FINANCING PERIOD"), the Company shall not issue or agree to
issue (except (A) the issuance of ADSs pursuant to this Agreement and the
issuance of ADSs to Xxxxxxx Xxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxx-Xxxxx and
Viscount Bearsted ("OTHER INVESTORS") pursuant to an agreement reached at or
prior to the Closing for an aggregate amount of One Million Dollars
($1,000,000) on terms substantially similar to this Agreement, (B) pursuant
to investments from industry participants, in which there is a significant
purpose other than raising equity capital, (C) in connection with the
acquisition of another company, (D) in an underwritten public offering or (E)
on conversion of the Convertible Promissory Notes issued in favor of Quantum
Corporation dated October 20, 1999) any equity securities or any equity-like
or equity-linked securities of the Company (or any security convertible into
or exercisable or exchangeable, directly or indirectly, for equity,
equity-like or equity-linked securities of the Company) if such securities
are issued at a price (or in the case of securities convertible into or
exercisable or exchangeable, directly or indirectly, for Ordinary Shares or
ADSs such securities provide for a conversion, exercise or exchange price)
which may be less than the then current market price for Ordinary Shares or
ADSs on the date of issuance (in the case of Ordinary Shares or ADSs) or the
date of conversion, exercise or exchange (in the case of securities
convertible into or exercisable or exchangeable, directly or indirectly, for
Ordinary Shares or ADSs), or if such securities are variable-priced or
contain provisions for price resetting (any such securities, the "RESTRICTED
SECURITIES").
(ii) During the six-month period beginning on the date immediately
following the final day of the Financing Period, the Company will not issue or
agree to issue any Restricted Securities unless the Company has satisfied all
of the following requirements with respect to such issuance:
(I) The Company shall have delivered notice to Purchaser (the
"TRANSFER NOTICE"), which notice shall include (A) the terms and number
of units of the security and the consideration per unit which the Company
desires to receive for the securities (which, in the case where the
Company shall have received an offer to purchase such securities other
13
than from Purchaser (a "THIRD PARTY OFFER"), shall be the consideration
set forth in such offer) and (B) all of the material terms and
conditions, including the terms and conditions of payment, upon which the
Company proposes to transfer said securities (which, in the case of a
Third Party Offer, shall be the terms and conditions set forth in the
Third Party Offer).
(II) Upon the delivery of the Transfer Notice, the Purchaser
shall have an option to purchase any or all of the securities described
therein. Such option shall be exercisable by Purchaser by service of
written notice upon the Company within five (5) days of receipt of the
Transfer Notice.
(III) If the options created in clause (II) hereof are not
exercised by Purchaser within five (5) days of service of the Transfer
Notice, or if such options are exercised only in part, then, within a
period of thirty (30) days beginning on the day following the date of
expiration of the option period, the Company may issue some or all of the
securities sought to be issued as to which such options were not
exercised, at a price which is not less than one hundred percent (100%)
of the price specified in the Transfer Notice and on terms and conditions
not less favorable to the Company than those specified in the Transfer
Notice.
IV.6 FURTHER RESTRICTION ON ISSUANCE OF SECURITIES. While Purchaser
holds any Shares, any Warrants or Warrant Shares, the Company and each of its
subsidiaries shall not issue, or authorize for issuance, or otherwise transfer
or enter into any commitment to issue or otherwise transfer, any debt or equity
security, bond, note or other security of any of the Company's subsidiaries,
provided that Purchaser shall keep the Company current on its such
Shareholdings.
IV.7 EXPENSES.
(i) The Company shall pay to Purchaser at the Closing reimbursement
for the expenses incurred by it and its affiliates and advisors in connection
with the negotiation, preparation, execution, and delivery of this Agreement and
the other agreements and documents to be executed in connection herewith,
including, without limitation, due diligence and attorneys' fees and expenses
(the "EXPENSES"). In addition, from time to time thereafter, upon Purchaser's
written request, the Company shall pay to Purchaser such Expenses, if any, not
so paid at Closing and/or covered by such payment, in each case to the extent
incurred by Purchaser. The Company shall not be required to reimburse Expenses
to the extent such Expenses exceed Forty Thousand Dollars ($40,000) in the
aggregate.
(ii) The Company shall pay all UK documentary, stamp, transfer or
similar taxes, plus any fees of the Depositary for the ADSs, attributable to the
exercise of the Warrants and the issuance or delivery of Ordinary Shares or ADSs
representing the Ordinary Shares.
IV.8 INFORMATION. The Company agrees to send the following reports to
Purchaser until the earlier of (i) Purchaser transfers, assigns or sells all of
its Securities; or (ii) the second (2nd) anniversary of the Closing Date: (a)
within three (3) days after the filing with the SEC, a copy of
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its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any proxy
statements and any Current Reports on Form 8-K; and (b) within two (2) days
after release, copies of all press releases issued by the Company or any of
its subsidiaries. The Company further agrees to promptly provide to
Purchaser any information with respect to the Company, its properties, or its
business or Purchaser's investment as Purchaser may reasonably request;
provided, however, that the Company shall not be required to give Purchaser
any material nonpublic information. If any information requested by
Purchaser from the Company contains material nonpublic information, the
Company shall inform Purchaser in writing that the information requested
contains material nonpublic information and shall in no event provide such
information to Purchaser without the express prior written consent of
Purchaser after being so informed.
IV.9 AVAILABILITY OF SHARES. From and after the Closing Date,
the Company shall:
a. at all times have sufficient authorized share capital
available for allotment and issue to permit the exercise of the Warrants into
Warrant Shares.
b issue and cause its Depositary to issue and deliver such ADSs
as required upon exercise of the Warrants and take all actions necessary to
ensure that all such Warrant Shares shall, when issued and paid for, be duly and
validly issued, fully paid and be entitled to the benefits specified in the
corresponding ADRs and in the Deposit Agreement; and
c If, and so long as, any ADSs are listed or quoted on any
securities exchange or market, the Company shall, if permitted by the rules of
such securities exchange or market, list and keep listed or quoted on such
securities exchange or market, upon official notice of issuance, all Warrant
Shares issuable upon exercise of the Warrants.
IV.10 LISTING. For a period of beginning on the Closing Date and
ending on the third (3rd) anniversary of the Closing Date, the Company shall
continue the listing and trading of its ADSs on The Nasdaq National Market, the
New York Stock Exchange or the American Stock Exchange, secure and maintain
listing and trading of the Shares and Warrant Shares on such exchange, and
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of such exchange. If the Company fails to
maintain the listing or trading of the ADSs as required by this Section 4.10,
then beginning on the tenth (10th) business day following such failure, if the
ADSs are still not listed or traded, then the Company shall pay to Purchaser an
amount equal to one percent (1%) of the fair market value of the Shares and
Warrant Shares then held by Purchaser per day that such failure continues. For
purposes hereof, the number of Warrant Shares held by Purchaser shall be
calculated as though the Warrants held by Purchaser were fully exercised,
without regard to any limitations on the exercise thereof.
IV.11 PROSPECTUS DELIVERY REQUIREMENT. Purchaser understands that the
Securities Act may require delivery of a prospectus relating to the ADSs in
connection with any sale thereof pursuant to a registration statement under the
Securities Act covering the resale by Purchaser of the ADSs being sold
hereunder.
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IV.12 INTENTIONAL ACTS OR OMISSIONS. Neither the Company nor Purchaser
shall intentionally perform any act which if performed, or intentionally omit
to perform any act which, if omitted to be performed, would prevent or excuse
the performance of this Agreement or any of the transactions contemplated
hereby.
IV.13 SHARE AUTHORIZATION. The Company covenants and agrees that it
shall (i) solicit by proxy the Shareholder Approval (as defined below) and
(ii) use its best efforts to obtain the Shareholder Approval at its next
annual shareholder meeting, which shall be held no later than July 31, 2000
("SHAREHOLDER APPROVAL DATE"). For purposes hereof, "SHAREHOLDER APPROVAL"
means authorization by the shareholders of the Company for the issuance of
ADSs to Purchaser at the Closing and upon the exercise of the Warrants
pursuant to the terms thereof and the issuance of ADSs at or prior to the
Closing to Other Investors and upon the exercise of the warrants issued to
the Other Investors at or prior to the Closing on substantially similar terms
in the aggregate in excess of twenty percent (20%) of the total Ordinary
Shares then in issue and, if necessary, the elimination of any prohibitions
under the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization with jurisdiction over the
Company or any of its securities on the Company's ability to issue ADSs in
excess of twenty percent (20%). In addition, the Company shall, unless
otherwise consented to by Purchaser, have a definitive proxy statement mailed
to each shareholder of the Company at least twenty (20) days prior to the
Approval Date. The Company shall deliver one copy of any SEC comments it
receives with respect to its proxy statement to the Purchaser and will not
file such proxy statement (or any amendments thereto), whether such proxy
statement is in preliminary or definitive form, without the approval of the
Purchaser, which approval shall not be unreasonably withheld or delayed.
ARTICLE V
LEGEND REMOVAL AND TRANSFER INSTRUCTIONS
V.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company
shall issue or cause its Depositary to issue a certificate without any legend to
the holder of any Security upon which such Legend is stamped, and a certificate
for a Security shall be originally issued without any legend, if, unless
otherwise required by applicable state securities laws, (a) the sale of such
Security is registered under the Securities Act, (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, and reasonably satisfactory to
the Company (the cost of which shall be borne by the holder), to the effect
that a public sale or transfer of such Security may be made without registration
under the Securities Act or (c) such Security can be sold pursuant to Rule 144.
Purchaser agrees to sell all Securities, including those represented by a
certificate(s) from which the Legend has been removed, or which were originally
issued without the Legend, (i) pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or (ii) in compliance
with an exemption from the registration requirements of the Securities Act. In
the event the Legend is removed from any Security or any Security is issued
without the Legend and thereafter the effectiveness of a registration statement
covering the resale of such Security is suspended or a
16
supplement or amendment thereto is required by applicable securities laws,
then upon reasonable advance notice to Purchaser holding such Security, the
Company may require that the Legend be placed on any such Security that
cannot then be sold pursuant to an effective registration statement or Rule
144 or with respect to which the opinion referred to in clause (b) next above
has not been rendered, which Legend shall be removed when such Security may
be sold pursuant to an effective registration statement or Rule 144 or such
holder provides the opinion with respect thereto described in clause (b) next
aboe. Except for the Legend required pursuant to this Section 5.1, the
Securities shall bear no legend.
V.2 DEPOSITARY INSTRUCTIONS. The Company shall instruct its
Depositary to issue certificates, registered in the name of Purchaser or its
nominee, for the Shares and Warrant Shares in such amounts as specified from
time to time by Purchaser to the Company and the Depositary. Such certificates
shall bear a legend only in the form of the Legend and only to the extent
permitted by Section 5.1 above. The Company warrants that no instruction other
than such instructions referred to in this Article V, and no stop transfer
instructions other than stop transfer instructions to give effect to Section 2.6
hereof in the case of the Shares and Warrant Shares prior to registration
thereof under the Securities Act, will be given by the Company to its Depositary
and that the Securities shall otherwise be freely transferable on the books and
records of the Company. Nothing in this Section shall affect in any way
Purchaser's obligations and agreement set forth in Section 5.1 hereof to resell
the Securities pursuant to an effective registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of applicable securities laws. Without limiting
any other rights of Purchaser or obligations of the Company, if (a) Purchaser
provides the Company with an opinion of counsel, which opinion of counsel shall
be in form, substance and scope customary for opinions of counsel in comparable
transactions (the reasonable cost of which shall be borne by the Company), to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from registration or (b) Purchaser
transfers Securities pursuant to Rule 144, the Company shall permit the
transfer, and promptly instruct its Depositary and take all actions necessary to
cause its Depositary to issue one or more certificates in such name and in such
denomination as specified by Purchaser in order to effect such a transfer or
sale. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to Purchaser by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Article V will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Article V, that Purchaser shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
V.3 FAILURE TO REMOVE LEGEND. If the Company fails to remove any
legend as required by this Article V (a "LEGEND REMOVAL FAILURE"), then
beginning on the tenth (10th) day following such failure, if the Company
continues to fail to remove such legend, the Company shall pay to Purchaser
holding shares subject to a Legend Removal Failure an amount equal to one
percent (1%) of the fair market value of the Shares and Warrant Shares then held
by Purchaser per day that such
17
failure continues. For purposes hereof, the number of Warrant Shares held by
Purchaser shall be calculated as though the Warrants held by Purchaser were
fully exercised, without regard to any limitations on the exercise thereof.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
VI.1 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Shares and Warrants to Purchaser at
the Closing is subject to the satisfaction, as of the date of the Closing and
with respect to Purchaser, of each of the following conditions thereto, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(i) Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to
the Company.
(ii) Purchaser shall deliver the applicable Purchase Price for
the Shares and the Warrants purchased at the Closing.
(iii) The representations and warranties of Purchaser shall be
true and correct as of the date when made and as of the Closing as though
made at that time, and Purchaser shall have performed, satisfied and
complied in all material respects with the covenants and agreements
required by this Agreement to be performed or complied with by Purchaser
at or prior to the Closing. The Company shall have received an Officer's
Certificate from Purchaser dated the Closing Date to the foregoing
effect and as to such other matters as may be reasonably requested by the
Company.
(iv) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which restricts or prohibits the consummation of any
of the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
VII.1 CONDITIONS TO THE CLOSING. The obligation of Purchaser hereunder
to purchase the Shares and Warrants to be purchased by it on the Closing Date is
subject to the satisfaction of each of the following conditions, provided that
these conditions are for Purchaser's sole benefit and may be waived by Purchaser
at any time in Purchaser's sole discretion:
18
(i) The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to
Purchaser.
(ii) The Company shall have delivered duly executed certificates
for the Shares (in such denominations as Purchaser shall reasonably
request) and Warrants being so purchased by Purchaser at the Closing.
(iii) At or prior to the Closing, Other Investors shall have
purchased from the Company Shares and warrants for an aggregate
consideration of One Million Dollars ($1,000,000) on terms substantially
similar to terms contained herein.
(iv) The ADSs, including all Shares and Warrant Shares, shall be
listed on the Nasdaq and trading in the ADSs shall not have been
suspended by the Nasdaq, the SEC or other regulatory authority and no
de-listing or suspension shall be reasonably likely for the foreseeable
future.
(v) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as though
made at that time and the Company shall have performed, satisfied and
complied with the covenants and agreements required by this Agreement to
be performed or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as of
the Closing to the foregoing effect and as to such other matters as may
be reasonably requested by Purchaser.
(vi) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by 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.
(vii) Purchaser shall have received the officer's certificate
described in Section 3.3, dated as of the Closing and there shall be no
material changes from the date of signing of this Agreement to the date
of the Closing other than as a result of issuance of ADSs pursuant to
options, warrants and other obligations disclosed on Schedule 3.3 as of
the date of this Agreement.
(viii) Purchaser shall have received opinions of the
Company's counsel, dated as of the Closing, in the form attached hereto
as EXHIBIT D.
(ix) Intentionally Omitted.
(x) The Company has filed a Form D with respect to the
Securities with the SEC as required under Regulation D and has provided a
copy thereof to Purchaser.
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(xi) The Company has filed an Additional Listing Application
(and no additional time is required for the effectiveness thereof) with
respect to all Shares and Warrant Shares with the National Association of
Securities Dealers and has provided a copy thereof to Purchaser.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
VIII.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of New York and the state courts located in the County of
New York in the State of New York in any suit or proceeding based on or arising
under this Agreement or the transactions contemplated hereby and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company further agrees
that service of process upon the Company mailed by the first class mail shall be
deemed in every respect effective service of process upon the Company in any
suit or proceeding arising hereunder. Nothing herein shall affect Purchaser's
right to serve process in any other manner permitted by law. The parties hereto
agree that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
VIII.2 OFFICER AND DIRECTOR TRANSACTIONS. If any executive officer or
director of the Company, directly or indirectly, including through family
members, trusts or other entities related to such executive officer or
director, disposes or provides or files any public notice, including pursuant
to Rule 144 of the Securities Act, of a bona fide intent to dispose, of any
Ordinary Shares or ADSs beneficially owned by him during the period beginning
on the Closing Date and ending on the date which is six (6) months after the
Effective Date, the Company shall pay to Purchaser an amount equal to (x) the
number of Shares and Warrant Shares (without giving effect to any exercise or
limitation on exercise thereof) then held by Purchaser TIMES (y) the
difference between (m) the closing bid price of the ADSs on the trading day
immediately preceding the day on which such disposal was publicly announced
(the "ANNOUNCEMENT DATE") and (n) the lowest closing bid price of the ADSs
during the thirty (30) trading day period beginning on the Announcement Date;
PROVIDED, HOWEVER, that any individual executive officer or director may
transfer up to ten percent (10%) of the Ordinary Shares and/or ADSs
beneficially owned by such executive officer or director (which includes ADSs
and Ordinary Shares to be received upon exercise of existing options) after
the Effective Date without triggering the Company's payment obligations
pursuant to this Section 8.2.
VIII.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been
20
signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using such
means of delivery shall cause additional original executed signature pages to
be promptly delivered to the other parties.
VIII.4 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
VIII.5 SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
VIII.6 SCOPE OF AGREEMENT; AMENDMENTS. This Agreement and the documents
and instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, no Purchaser makes any representation,
warranty, covenant or undertaking with respect the transactions contemplated
hereby. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and no
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and Purchaser.
VIII.7 NOTICE. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000)000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx PC
0000 Xxxxxxxxxxx Xxxx
P. O. Xxx 00000
Xxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000)000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
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If to the Purchaser:
Castle Creek Technology Partners LLC
c/o Castle Creek Partners LLC
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Portfolio Manager
with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
VIII.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, Purchaser may assign its rights and obligations
hereunder and may transfer any or all of its Securities to any of its
"affiliates," as that term is defined under the Exchange Act, without the
consent of the Company so long as such affiliate is an accredited investor.
This provision shall not limit Purchaser's right to transfer the Securities
pursuant to the terms of this Agreement. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Warrants or the
Registration Rights Agreement, the Securities may be pledged, and all rights of
Purchaser under this Agreement or any other agreement or document related to the
transaction contemplated hereby may be assigned, without further consent of the
Company, to a bona fide pledgee in connection with Purchaser's margin or
brokerage accounts.
VIII.9 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.
VIII.10 SURVIVAL. The representations, warranties, covenants and
agreements of the Company in this Agreement shall survive each and every Closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of Purchaser. The Company agrees to indemnify and hold harmless Purchaser
and each of Purchaser's officers, directors, employees, partners, agents and
affiliates for loss or damage to the extent arising as a result of or related to
(a) any breach by the Company of any of its representations or covenants set
forth herein or (b) any cause of action, suit or claim brought or made against
such indemnitee (other than by the Company solely for breach of this Agreement,
the Warrants or the Registration Rights Agreement by the indemnitee or by
governmental or regulatory authorities) and arising out of or resulting from the
execution, delivery,
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performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto or contemplated hereby, any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or the status
of Purchaser as an investor in the Company, except to the extent that such
actual loss or damage arises out of or results from a breach by such
indemnitee of this Agreement, the Warrants or the Registration Rights
Agreement or from Purchaser's violation of law. The right to indemnification
shall include the right to advancement of expenses as they are incurred.
VIII.11 PUBLIC FILINGS; PUBLICITY. Immediately following execution of
this Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. Prior to the issuance, filing or other
submission of any press releases (including the foregoing press release), SEC
or other filings, or any other public statements, with respect to the
transactions contemplated hereby, the Company shall provide such press releases,
filings or statements to Purchaser and its counsel for comment and approval,
provided, however, that the such approval shall be rendered within 48 hours
after receipt thereof by Purchaser and shall not be unreasonably withheld or
delayed and the Company shall be entitled, without the prior approval of
Purchaser, to make any press release or SEC, Nasdaq, NASD or exchange filings
with respect to such transactions as is required by applicable law and
regulations (although Purchaser shall (to the extent time permits) be consulted
by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof).
VIII.12 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 such other agreements, certificates, instruments and documents, as
the other 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, including, without limitation, the filing of
all appropriate documentation and notifications with Nasdaq with respect to the
Warrant Shares immediately following each of any applicable Shareholder
Approval, any applicable Nasdaq Approval and any applicable Second Nasdaq
Approval.
VIII.13 REMEDIES. No provision of this Agreement providing for any
remedy to Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
VIII.14 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any person or entity, or which such person or
entity is prohibited from taking, such provision shall be applicable whether the
action in question is taken directly or indirectly by such person or entity.
VIII.15 REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement, at law or
in equity (including a decree of specific performance
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and/or other injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit Purchaser's right to actual damages for any
failure by the Company to comply with the terms of this Agreement. The
Company covenants to Purchaser that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts
set forth or provided for herein with respect to payments and the like (and
the computation thereof) shall be the amounts to be received by Purchaser and
shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchaser and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of
any such breach or threatened breach, the Purchaser shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond
or other security being required.
VIII.16 PAYMENT OF CASH; DEFAULTS. Whenever the Company is required to
make any cash payment to Purchaser under this Agreement, such cash payment shall
be due on the date (the "CASH DUE DATE") that Purchaser delivers written notice
from the Purchaser to the Company. Such cash payment shall be made to the
Purchaser by the method (by certified or cashier's check or wire transfer of
immediately available funds) elected by such Holder. If such payment is not
delivered within two (2) days of the Cash Due Date, Purchaser shall thereafter
be entitled to interest on the unpaid amount at a per annum rate equal to the
lower of eighteen percent (18%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the Holder.
VIII.17 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of Purchaser in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.
VIII.18 TERMINATION. In the event that the Closing shall not have
occurred on or before two (2) business days after the date of this agreement,
unless the parties agree otherwise, this Agreement shall terminate at the close
of business on such date.
* * *
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
BY: Castle Creek Partners, L.L.C.
ITS: Investment Manager
BY: s/Xxxx X. Xxxxxxxxx
NAME: Xxxx X. Xxxxxxxxx
TITLE: Managing Member
COMPANY
INSIGNIA SOLUTIONS PLC
By: s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
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