XXXXX CORPORATION
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated October 15,
2004, between Xxxxx Corporation, an Indiana corporation (the "Company"), and
Venator Merchant Fund L.P., a Delaware limited partnership (the "PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, approximately
$1,800,000 of Common Stock on the Closing Date and on the terms set forth
herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and the mutual covenants
contained in this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company and the
Purchaser agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"ACTION" shall have the meaning ascribed to such term in Section 3.1(j).
"AFFILIATE" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 144.
"AUTHORIZATION" has the meaning ascribed to such term in Section 3.1(e).
"BUSINESS DAY" means any day except Saturday, Sunday and any day that shall
be a federal legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other governmental action to
close.
"CLOSING" means the closing of the purchase and sale of the Common Stock
pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing, which shall be the date
hereof.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, $0.01 par value per
share, and any securities into which such common stock may hereafter be
reclassified.
"COMPANY PARTY" has the meaning ascribed to such term in Section 4.6.
"EFFECTIVE DATE" means the date that the Registration Statement is first
declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL ENTITY" has the meaning ascribed to such term in Section
3.1(e).
"LAW" has the meaning ascribed to such term in Section 3.1(e).
"LIEN" means a lien, charge, security interest, encumbrance, right of first
refusal or other restriction.
"MATERIAL ADVERSE EFFECT" has the meaning ascribed to such term in Section
3.1(b).
"ORDER" has the meaning ascribed to such term in Section 3.1(d).
"PER SHARE PURCHASE PRICE" means $13.173 (being an amount equal to the
average of the closing prices of the Common Stock on the American Stock Exchange
for the sixty (60) consecutive Trading Days ending October 13, 2004).
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"PURCHASER PARTY" has the meaning ascribed to such term in Section 4.5.
"REGULATION D" has the meaning ascribed to such term in Section 3.1(n).
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchaser of the Shares.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated the date of this Agreement, between the Company and the Purchaser, in the
form of Exhibit A hereto.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SEC REPORTS" has the meaning ascribed to such term in Section 3.1(h).
"SECURITIES" means the Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE AMOUNT" has the meaning ascribed to such term in Section 2.1.
2
"SHARES" means the shares of Common Stock issued or issuable to the
Purchaser pursuant to this Agreement.
"SUBSCRIPTION AMOUNT" means $1,799,998.20 (being the Share Amount
multiplied by the Per Share Purchase Price), in United States dollars and in
immediately available funds.
"SUBSIDIARY" means any "SIGNIFICANT SUBSIDIARY" as defined in Rule 1-02(w)
of Regulation S-X promulgated by the Commission under the Exchange Act.
"TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a
day on which the Common Stock is traded on the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency reporting securities
prices); provided, that in the event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.
"TRADING MARKET" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market
or the Nasdaq SmallCap Market.
"TRANSACTION DOCUMENTS" means this Agreement and the Registration Rights
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING. Subject to the terms and conditions set forth in this
Agreement, at a closing taking place on the date of this Agreement, the
Purchaser is purchasing from the Company, and the Company is issuing and selling
to the Purchaser, 136,643 shares of Common Stock (the "SHARE AMOUNT") (being
that number of shares of Common Stock as equals $1,799,998.20 divided by the Per
Share Purchase Price, rounded to the nearest whole number of shares), with each
such share being purchased at the Per Share Purchase Price.
2.2 CLOSING DELIVERIES.
(a) At the Closing the Company is delivering or causing to be
delivered to the Purchaser the following:
(i) this Agreement duly executed by the Company; and
(ii) the Registration Rights Agreement duly executed by the
Company.
(b) At the Closing the Purchaser is delivering or causing to be
delivered to the Company the following:
3
(i) this Agreement duly executed by the Purchaser;
(ii) the Subscription Amount by wire transfer to the account
designated in writing by the Company; and
(iii) the Registration Rights Agreement duly executed by the
Purchaser.
(c) Within 15 days after the Closing, the Company shall deliver to the
Purchaser a certificate evidencing a number of shares equal to the Share
Amount.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the SEC Reports, the Company hereby makes the following representations and
warranties as of the date hereof and as of the Closing Date to the Purchaser:
(a) SUBSIDIARIES. The Company owns, directly or indirectly, all of the
capital stock of each Subsidiary free and clear of any lien, charge,
security interest, encumbrance, right of first refusal or other restriction
(collectively, "LIENS"), and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) ORGANIZATION AND QUALIFICATION. Each of the Company and each
Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is
in violation of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly qualified or
licensed to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as the case may be, would not have or reasonably be expected to result in
(i) a material adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business or financial condition of the Company and
the Subsidiaries, taken as a whole, or (iii) adversely impair the Company's
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"MATERIAL ADVERSE EFFECT").
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to execute and deliver each of the
Transaction Documents and to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is party and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents to which it is a party by the
Company and the consummation by it of the transactions contemplated thereby
4
have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company or its
stockholders in connection therewith. Each Transaction Document including
this Agreement has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of the Company's or any Subsidiary's certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) conflict with,
or result in or constitute any violation of, any award, decision, judgment,
decree, injunction, writ, order, subpoena, ruling, verdict or arbitration
award entered, issued, made or rendered by any federal, state, local or
foreign government or any other Governmental Entity (each an "ORDER"), or
any Law, applicable to the ----- Company or any of its Subsidiaries, or to
any of their respective properties or assets, or to any Securities; or (iv)
result in the creation or imposition of (or the obligation to create or
impose) any Lien on any of the properties or assets of the Company or any
of its subsidiaries, or on any of the Securities; or (v) conflict with, or
result in or constitute any violation of, or result in the termination,
suspension or revocation of, any Authorization applicable to the Company or
any of its subsidiaries, or to any of their respective properties or
assets, or to any of the Securities, or result in any other impairment of
the rights of the holder of any such Authorization; except in the case of
each of clauses (ii) and (iii), such as would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(e) FILINGS, CONSENTS AND APPROVALS. Assuming the accuracy of the
representations of the Purchaser set forth in Section 3.2 hereof, no
registration (including any registration under the Securities Act) or
filing with, or any notification to, or any approval, permission, consent,
ratification, waiver, authorization, order, finding of suitability, permit,
license, franchise, exemption, certification or similar instrument or
document (each, an "AUTHORIZATION") of or from, any court, arbitral
tribunal, arbitrator, administrative or regulatory agency or commission or
other governmental or regulatory authority, agency or governing body,
domestic or foreign (each, a "GOVERNMENTAL ENTITY"), or any other person,
or under any statute, law, ordinance, rule, regulation or agency
requirement of any Governmental Entity (each, a "LAW"), on the part of the
Company or any of its subsidiaries is required in connection with the
5
execution or delivery by the Company of the Transaction Documents or the
performance by the Company of its obligations under each of the Transaction
Documents except as would not have a material effect on the Company or its
performance of its obligations under the Transaction Documents.
(f) ISSUANCE OF THE SECURITIES. The Securities have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens, except for such restrictions on transfer or
ownership imposed by applicable federal or state securities laws. The
Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable pursuant to this Agreement.
(g) CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 10,000,000 shares of Common Stock. As of
August 12, 2004, there were 1,495,483 shares of Common Stock issued and
outstanding. Other than as contemplated in this Agreement, the Company has
not issued any capital stock since September 30, 2004 other than pursuant
to the exercise of employee stock options under the Company's stock option
plans. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as disclosed in the SEC
Reports, there are no outstanding options, warrants, scrip, rights to
subscribe, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the shares of Common Stock being
issued to the Purchaser hereunder) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange
or reset price under such securities.
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the
date hereof (or such shorter period as the Company was required by law to
file such material) (the foregoing materials, including the exhibits
thereto, being collectively referred to herein as the "SEC REPORTS") on a
timely basis or has timely filed a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect
6
at the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(i) MATERIAL CHANGES. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in
the ordinary course of business consistent with past practice and (B)
liabilities that would not be required to be reflected in the Company's
financial statements pursuant to GAAP or that would not be required to be
disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, and (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock.
(j) LITIGATION. Except as disclosed in the SEC Reports, there are no
actions, suits, inquiries, notices of violation, proceedings or
investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an "ACTION") which (i) adversely affects
or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) would, if there were an
unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer of the Company. The Commission has not issued
any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the
Exchange Act or the Securities Act.
(k) CERTAIN FEES. No brokerage or finder's fees or commissions are or
will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement. The
Purchaser shall have no obligation with respect to any fees or with respect
to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.
7
(l) CERTAIN REGISTRATION MATTERS. Assuming the accuracy of the
Purchaser's representations and warranties set forth in Section 3.2(b)-(e),
no registration under the Securities Act is required for the offer and sale
of the Shares by the Company to the Purchaser under the Transaction
Documents. The Company is eligible to register the resale of its Common
Stock for resale by the Purchaser under Form S-3 promulgated under the
Securities Act.
(m) DISCLOSURE. The Company understands and confirms that the
Purchaser will rely on the foregoing representations and covenants in
effecting transactions in securities of the Company. All disclosure
provided to the Purchaser regarding the Company, its business and the
transactions contemplated hereby furnished by or on behalf of the Company
are true and correct and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(n) REGULATION D. None of the Company or any affiliate (as defined in
Rule 501(b) of Regulation D ("REGULATION D") under the Securities Act) of
the Company has directly, or through any agent, (a) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of any security
(as defined in the Securities Act) which is or will be integrated with the
sale of the Securities in a manner that would require the registration of
the Securities under the Securities Act or; (b) engaged in or used any form
of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the sale of the Securities, including
articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:
(a) ORGANIZATION; AUTHORITY. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery
and performance by the Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary [corporate or, if the
Purchaser is not a corporation, such partnership, limited liability company
or other applicable like action,] on the part of the Purchaser. Each of
this Agreement and the Registration Rights Agreement has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms.
(b) INVESTMENT INTENT. The Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part
8
thereof, without prejudice, however, to the Purchaser's right, subject to
the provisions of this Agreement, at all times to sell or otherwise dispose
of all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such
registration and otherwise in compliance with applicable federal and state
securities laws. The Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. The Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any
of the Securities.
(c) PURCHASER STATUS. At the time the Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. The Purchaser is not
required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
(d) EXPERIENCE OF THE PURCHASER. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
The Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(e) GENERAL SOLICITATION. The Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine
or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
(f) REGISTRATION REQUIRED. The Purchaser hereby covenants with the
Company not to make any sale of the Shares without complying with the
provisions hereof and of the Registration Rights Agreement, and without
effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (unless the Purchaser is selling such Shares
in a transaction not subject to the prospectus delivery requirement), and
the Purchaser acknowledges that the certificates evidencing the Shares will
be imprinted with a legend that prohibits their transfer except in
accordance therewith.
(g) ACCESS TO INFORMATION. The Purchaser acknowledges that it has
reviewed the SEC Reports and has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Shares and the merits and risks of
investing in the Securities; (ii) access to information about the Company
and the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
9
inquiries nor any other investigation conducted by or on behalf of the
Purchaser or its representatives or counsel shall modify, amend or affect
the Purchaser's right to rely on the truth, accuracy and completeness of
the Company's representations and warranties contained in the Transaction
Documents.
(h) CERTAIN FEES. The Purchaser has not entered into any agreement or
arrangement that would entitle any broker or finder to compensation by the
Company in connection with the sale of the Securities to the Purchaser
(i) NO TAX, LEGAL OR INVESTMENT ADVICE. The Purchaser understands that
nothing in the Transaction Documents or any other materials presented to
the Purchaser in connection with the purchase and sale of the Securities
constitutes tax, legal, or investment advice. The Purchaser has consulted
such tax, legal, and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the
Securities.
(j) The Purchaser represents and warrants that it is aware of the
following Telephone Interpretation in the SEC Manual of Publicly Available
Telephone Interpretations (July 1997):
A.65. Section 5
An issuer filed a Form S-3 registration statement for a secondary
offering of common stock which is not yet effective. One of the
selling shareholders wanted to do a short sale of common stock
"against the box" and cover the short sale with registered shares
after the effective date. The issuer was advised that the short sale
could not be made before the registration statement becomes effective,
because the shares underlying the short sale are deemed to be sold at
the time such sale is made. There would, therefore, be a violation of
Section 5 if the shares were effectively sold prior to the effective
date.
(k) The Purchaser represents and warrants that, in connection with its
purchase of the Securities, it has complied with all applicable provisions
of the Act, the rules and regulations promulgated by the SEC thereunder,
including Regulation M, and applicable state securities laws.
The Company acknowledges and agrees that the Purchaser does not make or has
not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with state
and federal securities laws, including pursuant to an exemption therefrom.
10
In connection with any transfer of the Securities other than pursuant to an
effective registration statement, pursuant to paragraph (k) of Rule 144, to
the Company, to an Affiliate of a Purchaser or in connection with a pledge
as contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights of a
Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchaser agree to the imprinting, so long as is required by
this Section 4.1(b), of a legend on any of the Securities in the following
form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES
ACT.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge and/or grant a security interest pursuant to a bona fide margin
agreement in a bona fide margin account and, if required under the terms of
such arrangement, agreement or account, the Purchaser may transfer pledged
or secured Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith. However, at the discretion of the
Company, such legal opinion may be required in connection with a subsequent
transfer following default by the Purchaser transferee of the pledge. No
notice shall be required of such pledge. At the Purchaser's expense, the
Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
11
pledge or transfer of the Securities, including, if the Securities are
subject to registration pursuant to the Registration Rights Agreement, the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
(c) The Purchaser agrees that, in addition to the other restrictions
on transfer set forth in this Section 4.1, without the prior written
consent of the Company, until the date that is six months and two days
after the Closing Date, the Purchaser shall not sell or otherwise transfer
or dispose of, directly or indirectly, any of the Shares.
4.2 FURNISHING OF INFORMATION. As long as the Purchaser owns the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the Purchaser's request, the Company shall deliver to the
Purchaser a written certification of a duly authorized officer as to whether it
has complied with the preceding sentence. As long as the Purchaser owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchaser and make publicly available
in accordance with Rule 144(c) such information as is required for the Purchaser
to sell the Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such Person to
sell such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
4.3 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall timely file a
Current Report on Form 8-K, and, if required, issue a press release reasonably
acceptable to the Purchaser disclosing the transactions contemplated hereby and
make such other filings and notices in the manner and time required by the
Commission. The Company and the Purchaser shall consult with each other in
issuing any press releases with respect to the transactions contemplated hereby,
and neither the Company nor the Purchaser shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of the Purchaser, or without the
prior consent of the Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication.
4.5 INDEMNIFICATION OF PURCHASERS. The Company will indemnify and hold the
Purchaser and its directors, officers, shareholders, partners, employees and
12
agents (each, a "PURCHASER PARTY") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any Purchaser Party may suffer
or incur as a result of or relating to: (a) any misrepresentation, breach or
inaccuracy, of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents; or
(b) any cause of action, suit or claim brought or made against the Purchaser
Party and arising solely out of or solely resulting from the execution,
delivery, performance or enforcement of this Agreement or any of the other
Transaction Documents and without causation by any other activity, obligation,
condition or liability pertaining to the Purchaser. The Company will reimburse
the Purchaser Parties for their reasonable legal and other expenses (including
the cost of any investigation, preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred.
4.6 INDEMNIFICATION OF THE COMPANY. The Purchaser will indemnify and hold
the Company and its directors, officers, shareholders, partners, employees and
agents (each, a "COMPANY PARTY") harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys'
fees and costs of investigation that any Company Party may suffer or incur as a
result of or relating to any misrepresentation, breach or inaccuracy, of any of
the representations, warranties, covenants or agreements made by the Purchaser
in this Agreement or in the other Transaction Documents. The Purchaser will
reimburse the Company Parties for their reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred.
4.7 LISTING OF COMMON STOCK. The Company shall use commercially reasonably
efforts to maintain the listing of the Common Stock on the American Stock
Exchange, and as soon as reasonably practicable following the Closing (but not
later than the Effective Date) to list all of the Shares on the American Stock
Exchange. The Company further agrees, if the Company applies to have the Common
Stock traded on any other Trading Market, it will include in such application
all of the Shares, and will take such other action as is necessary or desirable
in the opinion of the Purchaser to cause the Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Trading Market.
ARTICLE V.
MISCELLANEOUS
5.1 FEES AND EXPENSES. The Company shall pay the reasonable fees and
expenses of the Purchaser's advisers, counsel, accountants and other experts, if
any, and other expenses incurred by the Purchaser incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
sale of the Securities.
13
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 NOTICES. All notices, requests, demands or other communications
provided for or permitted to be given pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally
(which personal delivery shall include delivery by responsible overnight
courier), or five days after being sent by registered or certified mail, return
receipt requested, postage prepaid:
(a) If to the Company to:
Xxxxx Corporation
50 Xxxxxxx Plaza, Suite 1250
Providence, Rhode Island 02903
Attention: Chief Executive Officer
Tel: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
(b) If to the Purchaser to:
Venator Merchant Fund L.P.
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Tel: (000) 000-0000
By giving to the other party at least five days' written notice thereof, either
party hereto shall have the right from time to time and at any time during the
term of this Agreement to change its respective address and each party shall
have the right to specify as its address any other address within the United
States of America.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
14
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. The Purchaser may assign any
or all of its rights under this Agreement to any Person to whom the Purchaser
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the "Purchaser".
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.
5.8 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state or federal courts sitting in the
County of New York, State of New York. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the County of New York, State of New York for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto (including its affiliates,
agents, officers, directors and employees) hereby irrevocably waives, to the
15
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
5.9 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and delivery of the Shares.
5.10 EXECUTION. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 REPLACEMENT OF SECURITIES. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
5.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.
[SIGNATURE PAGE TO FOLLOW]
16
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories on the
date first indicated above.
XXXXX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
VENATOR MERCHANT FUND L.P.
By: Venator Global LLC, its General Partner
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
17
