Exhibit 10.1
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Among
ROWECOM INC.
and
THE INVESTORS SIGNATORY HERETO
Dated as of September 12, 2000
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
September 12, 2000, among RoweCom Inc., a Delaware corporation (the "COMPANY"),
and the investors signatory hereto (each such investor is a "PURCHASER" and all
such investors are, collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the Company desires to issue and sell to the Purchasers and
the Purchasers, severally and not jointly, desire to purchase from the Company,
an aggregate principal amount of $4,000,000 of the Company's 7% Convertible
Debentures, due six months from issuance, which shall be in the form of EXHIBIT
A (the "DEBENTURES"), and which are convertible into shares of the Company's
common stock, $ .01 par value per share (the "COMMON STOCK").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
I ARTICLE
PURCHASE AND SALE
THE CLOSING
(a) (i) THE CLOSING. Subject to the terms and conditions set
forth in this Agreement the Company shall issue and sell to the Purchasers and
the Purchasers shall, severally, and not jointly, purchase from the Company the
Debentures for an aggregate purchase price of $4,000,000. The closing of the
purchase and sale of the Debentures (the "CLOSING") shall take place at the
offices of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP ("XXXXXXXX
XXXXXXXXX"), 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, immediately
following the execution hereof or such later date as the parties shall agree.
The date of the Closing is hereinafter referred to as the "CLOSING DATE."
(ii) At the Closing, the parties shall deliver or shall cause
to be delivered the following: (A) the Company shall deliver to each
Purchaser: (1) Debentures registered in the name of such Purchaser in the
aggregate principal amount indicated below such Purchaser's name on the
signature page to this Agreement, (2) the legal opinion of Xxxxxxx Xxxx LLP,
outside counsel to the Company, in the form of EXHIBIT C, (3) an executed
Registration Rights Agreement, dated the date hereof, among the Company and
the Purchasers, in the form of EXHIBIT B (the "REGISTRATION RIGHTS
Agreement"), (4) Transfer Agent Instructions, in the form of EXHIBIT F,
delivered to and acknowledged by the Company's transfer agent (the "TRANSFER
AGENT INSTRUCTIONS"), (5) a Common Stock purchase warrant, in the form of
EXHIBIT D, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right at any time and from time to time thereafter
through the fifth anniversary of the Closing Date to acquire the number of
shares of Common Stock indicated below such Purchaser's name on the signature
page to this Agreement (the "CLOSING WARRANTS"), (6) a Common Stock purchase
warrant (representing 25% of the Closing Warrants), in the form of EXHIBIT E,
registered in the name of RAM Capital Resources LLC, pursuant to which RAM
Capital Resources LLC shall have the right at any time and from time to time
thereafter through the fifth anniversary of the
Closing Date to acquire the number of shares of Common Stock stated therein (the
"RAM WARRANTS"), (7) a Common Stock purchase warrant, in the Form of EXHIBIT G,
registered in the name of such Purchaser, pursuant to which the Purchaser shall
have the right to acquire shares of Common Stock upon the terms set forth
therein (the "CLASS A WARRANTS" and together with the RAM Warrants and Closing
Warrants, the "WARRANTS") and (8) an executed copy of this Agreement; and (B)
each Purchaser will deliver to the Company: (1) the purchase price indicated
below such Purchaser's name on the signature page to this Agreement in United
States dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose, and (2) an executed copy
of this Agreement and the Registration Rights Agreement.
CERTAIN DEFINED TERMS. For purposes of this Agreement,
"CONVERSION PRICE," "ORIGINAL ISSUE DATE," "TRADING DAY" and "PER SHARE
MARKET VALUE" shall have the meanings set forth in the Debentures; "BUSINESS
DAY" shall mean any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States or a day on which banking
institutions in the State of New York or Commonwealth of Massachusetts are
authorized or required by law or other governmental action to close; A
"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.
II ARTICLE
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchasers:
ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. On the date of this Agreement, the Company has no subsidiaries
other than as set forth in SCHEDULE 2.1(A) (collectively the "SUBSIDIARIES").
Each of the Subsidiaries is an entity, duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities
(as defined below) or any of this Agreement, the Registration Rights
Agreement, the Transfer Agent Instructions, or the Warrants (collectively,
the "TRANSACTION DOCUMENTS"), (y) have or result in a material adverse effect
on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "MATERIAL ADVERSE
EFFECT").
AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and subject to the Required
Approvals set forth in Section 2.1f(ii)-(iv) to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has 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. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
by-laws or other organizational or charter documents.
CAPITALIZATION. On the date of this Agreement the number of
authorized, issued and outstanding capital stock of the Company is set forth in
SCHEDULE 2.1(C). Except as disclosed in SCHEDULE 2.1(C), on the date of this
Agreement the Company owns all of the Capital Stock of each Subsidiary. No
shares of Common Stock are entitled to preemptive or similar rights, nor is any
holder of the securities of the Company entitled to preemptive or similar rights
arising out of any agreement or understanding with the Company by virtue of any
of the Transaction Documents. Except as a result of the purchase and sale of the
Debentures and Warrants and except as disclosed in SCHEDULE 2.1(C), on the date
of this Agreement there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. Except as disclosed in SCHEDULE 2.1(C), the issue and sale of the
Warrants or Underlying Shares (as hereinafter defined) will not obligate the
Company to issue shares of Common Stock or other securities to any Person other
than the Purchaser and will not result in a right of any holder of Company
securities to adjust the exercise or conversion or reset price under such
securities.
ISSUANCE OF THE DEBENTURES AND THE WARRANTS. The Company will
have (and will, at all times while Debentures are outstanding, maintain) an
adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the holders of such Debentures and Warrants, to enable it to
perform its conversion and other obligations under this Agreement. All such
authorized shares of Common Stock shall be duly reserved for issuance to the
holders of the Debentures and Warrants. The shares of Common Stock issuable
upon conversion of the Debentures and upon exercise of the Warrants are
collectively referred to herein as the "UNDERLYING SHARES." The Debentures,
warrants and the Underlying Shares are collectively
referred to herein as, the "SECURITIES." When issued in accordance with the
Debentures and Warrants, the Underlying Shares will be duly authorized, validly
issued, fully paid and nonassessable.
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 charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), 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
(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) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), as could not,
individually or in the aggregate, have or result in a Material Adverse
Effect. The business of the Company is not being conducted in violation of
any law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, could not have or result
in a Material Adverse Effect.
FILINGS, CONSENTS AND APPROVALS. Assuming the Purchaser is not
foreign owned or controlled, neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to
Section 3.10, (ii) the filing with the Securities and Exchange Commission
(the "Commission") of a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale of the
Underlying Shares by the Purchasers (the "UNDERLYING SHARES REGISTRATION
STATEMENT") and the Commission's declaring effective of the Underlying Shares
Registration Statement, (iii) the application(s) to the Nasdaq National
Market ("NASDAQ") for the listing of the underlying shares for trading on the
NASDAQ (and with any other national securities exchange or market on which
the Common Stock is then listed) in the time and manner required thereby,
(iv) applicable Blue Sky filings, (v) compliance with the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, the parties agree that no
filings under such Act is required for so long as a Purchaser owns less than
10% of the then outstanding shares of Common Stock solely for the purpose of
investments, (vi) any filings following a transfer, if any, of Debentures or
Warrants to a foreign owned or controlled Person that may be required to
permit such transferee to hold securities of the Company, (vii) Shareholder
Approval (as defined in the Debentures) as may be required in the
circumstances described in the Debentures, and (viii) in all other cases
where the failure to obtain
such consent, waiver, authorization or order, or to give such notice or make
such filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (collectively, the "REQUIRED APPROVALS").
LITIGATION; PROCEEDINGS. There is no action, suit, inquiry,
notice of violation, proceeding or investigation pending as evidenced by the
Company' receipt of process or other notice thereof or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which
(i) adversely affects or challenges the legality, validity or enforceability
of any of the Transaction Documents or the Securities or (ii) could, if there
were an unfavorable decision, individually or in the aggregate, have or
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) a claim of violation of or liability under federal or state
securities laws or (B) a claim of breach of fiduciary duty; (iii) the Company
does not have pending before the Commission on the date of this Agreement,
any request for confidential treatment of information and the Company has no
knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement); and
(iv) there has not been, and to the best of the Company's knowledge 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.
NO DEFAULT OR VIOLATION. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred which
has not been waived which, with notice or lapse of time or both, would result
in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, in each case of clauses
(i), (ii) or (iii) above, except as could not individually or in the
aggregate, have or result in a Material Adverse Effect.
PRIVATE OFFERING. Assuming the continuing accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers
as contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
taken or is, to the knowledge of the Company, contemplating taking any action
which could subject the offering, issuance or sale of the Securities to the
registration requirements of the Securities Act including soliciting any
offer to buy or sell the Securities by means of any form of general
solicitation or advertising.
SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"),
including, without limitation, all filings required pursuant to Sections 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 being collectively referred to herein as the "SEC REPORTS" and,
together with the Schedules to this Agreement, the "DISCLOSURE MATERIALS") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. All material agreements to which the Company is
a party or to which the property or assets of the Company are subject have been
filed as exhibits to the SEC Reports as required under the Exchange Act. Except
as disclosed in Schedule 2.1(j) the financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing and 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 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. Since June 30, 2000, except as specifically disclosed in the SEC
Reports, (a) there has been no event, occurrence or development that has or that
could result in a Material Adverse Effect, (b) the Company has not incurred any
liabilities (contingent or otherwise) other than (x) liabilities incurred in the
ordinary course of business consistent with past practice and (y) liabilities
not required to be reflected in the Company's financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (c) the
Company has not altered its method of accounting or the identity of its auditors
and (d) the Company has not declared or made any payment or distribution of cash
or other property to its stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its capital stock.
INVESTMENT COMPANY. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
CERTAIN FEES. Except as disclosed in SCHEDULE 2.1(L), no fees
or commissions will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other similar Person with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any such
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. The Company shall indemnify and hold harmless the Purchasers,
their employees, officers, directors, agents, and partners, and their respective
Affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as such fees and expenses are incurred.
SOLICITATION MATERIALS. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
FORM S-3 ELIGIBILITY. The Company is eligible to register
securities for resale under Form S-3 promulgated under the Securities Act.
EXCLUSIVITY. The Company shall not issue and sell the Debentures
to any Person other than the Purchasers without the specific prior written
consent of the Purchasers.
SENIORITY. Except as disclosed in SCHEDULE 2.1(P) or as
permitted under the Debentures, no indebtedness of the Company is senior to
the Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
LISTING AND MAINTENANCE REQUIREMENTS. Except as set forth in
the SEC Reports, the Company has not, in the two years preceding the date
hereof, received notice (written or oral) from the NASDAQ, any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted) to the effect that the Company is not
in compliance with the listing or maintenance requirements of such exchange,
market or trading facility. Except as disclosed in Schedule 2.1(q), the
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
PATENTS AND TRADEMARKS. The Company and its Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
rights which are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure
to so have would have a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or its Subsidiaries violates or infringes upon the rights of any
Person. To the best knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.
REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as set
forth on Schedule 6(b) to the Registration Rights Agreement, as of the date
of this Agreement the Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental
authority which has not been satisfied. Except as set forth on Schedule 6(b) to
the Registration Rights Agreement, 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.
REGULATORY PERMITS. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any such Subsidiary has received any notice of proceedings
seeking the revocation or negative and material modification of any Material
Permit.
TITLE. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them which is material to the
business of the Company and its Subsidiaries and good and marketable title in
all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries. Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under leases which are
enforceable against the Company or its relevant Subsidiary, and to the Company's
knowledge, the other parties thereto, and with which the Company and its
Subsidiaries are in compliance and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
Subsidiaries.
LABOR RELATIONS. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
DISCLOSURE. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or its agents
or counsel with any information that constitutes or might constitute material
non-public information. The Company understands and confirms that the
Purchasers shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by
or on behalf of the Company 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.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser hereby for itself and for no other Purchaser represents and warrants
to the Company as follows:
ORGANIZATION; AUTHORITY. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The purchase by such
Purchaser of the Securities hereunder has been duly authorized by all necessary
action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms.
INVESTMENT INTENT. Such 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 thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement, the Registration Rights Agreement, and the Warrants, 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 in compliance with applicable federal and state
securities laws. Nothing contained herein shall be deemed a representation or
warranty by such Purchaser to hold Securities for any period of time. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any Person to distribute the Securities.
PURCHASER STATUS. At the time such 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.
EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
ABILITY OF SUCH PURCHASER TO BEAR RISK OF INVESTMENT. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
ACCESS TO INFORMATION. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials 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 Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
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 which 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 and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of or subsequent to 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.
RELIANCE. Such Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that no Purchaser makes or
has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.2.
II ARTICLE
OTHER AGREEMENTS OF THE PARTIES
TRANSFER RESTRICTIONS. Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, 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. 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.
The Purchasers agree to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE OR EXERCISABLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The Underlying Shares shall not contain the legend set forth above
nor any other legend if the conversion of Debentures, occurs at any time while
an Underlying Shares Registration Statement is effective under the Securities
Act or the holder is relying on Rule 144 promulgated under the Securities Act
("RULE 144") in connection with the resale of such Underlying Shares, or in the
event there is not an effective Underlying Shares Registration Statement, and
Rule 144 is not then available for resale of the Underlying Shares, at such time
as such legend is not required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission). The Company shall cause its counsel to issue the legal
opinion included in the Transfer Agent Instructions to the Company's transfer
agent on the date that an Underlying Shares Registration Statement is declared
effective by the Commission (such date, the "EFFECTIVE DATE"), it being agreed
that the Purchasers are not third-party beneficiaries of the Company's
relationship with its counsel. The Company agrees that following the Effective
Date, it will, no later than three (3) Trading Days following the delivery by a
Purchaser to the Company of a certificate or certificates representing
Underlying Shares issued with a restrictive legend, deliver to such Purchaser
certificates representing such shares which shall be free from all restrictive
and other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the restrictions
of transfer set forth in this Section.
ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of Underlying Shares upon the conversion of the Debentures or exercise
of the Warrants will result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligation to issue Underlying Shares upon
conversion of the Debentures or exercise of the Warrants is unconditional and
absolute, subject to the limitations set forth in the Debentures and Warrants,
regardless of the effect of any such dilution.
FURNISHING OF INFORMATION. As long as the Purchasers own
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 Section
13(a) or 15(d) of the Exchange Act. As long as the Purchasers own Securities, if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act such information as is
required for the Purchasers to sell the Securities under Rule 144 promulgated
under
the Securities Act. 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 Underlying Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
causing its attorneys to render and deliver any legal opinion required in order
to permit a Purchaser to receive Underlying Shares free of all restrictive
legends and to subsequently sell Underlying Shares under Rule 144 upon receipt
of appropriate written factual representations (it being agreed that the
Purchasers are not third-party beneficiaries of the Company's relationship with
its attorneys). Upon the request of any such Person, the Company shall deliver
to such Person a written certification of a duly authorized officer as to
whether it has complied with such requirements.
INTEGRATION. The Company shall not, and shall use its best
efforts to ensure that, no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for the
purposes of the rules and regulations of NASDAQ.
INCREASE IN AUTHORIZED SHARES. If on any date the Company would
be, if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from issuing the sum of (i) 200% of the number
of Underlying Shares as would then be issuable upon a conversion in full of the
Debentures, (ii) the number of Underlying Shares then issuable upon exercise in
full of the Warrants (the "CURRENT REQUIRED MINIMUM") due to the unavailability
of a sufficient number of authorized but unissued or reserved shares of Common
Stock, then the Board of Directors of the Company shall promptly prepare and
mail to the stockholders of the Company proxy materials requesting authorization
to amend the Company's certificate or articles of incorporation to increase the
number of shares of Common Stock which the Company is authorized to issue to at
least such number of shares as reasonably requested by the Purchasers in order
to provide for such number of authorized and unissued shares of Common Stock to
enable the Company to comply with its issuance, conversion, exercise and
reservation of shares obligations as set forth in this Agreement, the Debentures
and the Warrants (the sum of (x) the number of shares of Common Stock then
outstanding plus all shares of Common Stock issuable upon exercise of all
outstanding options, warrants and convertible instruments other than the
Warrants and (y) the Current Required Minimum, shall be a reasonable number). In
connection therewith, the Board of Directors shall (a) adopt proper resolutions
authorizing such increase, (b) recommend to and otherwise use its best efforts
to promptly and duly obtain stockholder approval to carry out such resolutions
(and hold a special meeting of the stockholders no later than the earlier to
occur of the 60th day after delivery of the proxy materials relating to such
meeting and the 90th day after request by a holder of Securities to issue the
number of Underlying Shares in accordance with the terms hereof) and (c) within
five (5) Business Days of obtaining such stockholder authorization, file an
appropriate amendment to the Company's certificate or articles of incorporation
to evidence such increase.
RESERVATION AND LISTING OF UNDERLYING SHARES. The Company shall
(i) in the time and manner required by NASDAQ and such other exchange, market or
quotation facility on which the Common Stock is traded, prepare and file with
NASDAQ (and such national securities exchange, market, trading or quotation
facility on which the Common Stock is then traded) an
additional shares listing application covering a number of shares of Common
Stock to permit the exercise in full of the Warrants and conversion in full of
the Debentures, (ii) take all steps necessary to cause such shares of Common
Stock to be approved for listing on the NASDAQ (as well as on any such other
national securities exchange or market or trading or quotation facility on which
the Common Stock is then listed) as soon as possible thereafter, and (iii)
provide to the Purchasers evidence of such listing, and the Company shall
maintain the listing of its Common Stock thereon. If the number of Underlying
Shares issuable upon conversion in full of the then outstanding Debentures or
exercise of the then unexercised portion of the Warrants exceeds eighty-five
percent (85%) of the number of Underlying Shares previously listed on account
thereof with NASDAQ (and such national securities exchange, market, trading or
quotation facility on which the Common Stock is then traded), then the Company
shall take the necessary actions to immediately list a number of Underlying
Shares as equals no less than the then Current Required Minimum.
The Company shall maintain a reserve of shares of Common Stock
for issuance upon conversion of the Debentures in full or exercise in full of
the Warrants in accordance with this Agreement, and the Warrants, respectively,
in such amount as may be required to fulfill its obligations in full under the
Transaction Documents.
CONVERSION AND EXERCISE PROCEDURES. The Transfer Agent
Instructions, the Conversion Notice (as defined in the Debentures) and the
Form of Election to Purchase under the Warrants set forth the totality of the
procedures with respect to the conversion of the Debentures or exercise of
the Warrants, including the form of legal opinion, if necessary, that shall
be rendered to the Company's transfer agent and such other information and
instructions as may be reasonably necessary to enable the Purchasers to
convert their Debentures or exercise their Warrants.
CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The Company
shall honor conversions of the Debentures and exercises of the Warrants and
shall deliver Underlying Shares in accordance with the respective terms,
conditions and time periods set forth in the Debentures and Warrants.
SUBSEQUENT FINANCING; LIMITATION ON REGISTRATIONS. from the
date hereof through the 90th Trading Day following the Effective Date, the
Company will not offer, sell, grant any option to purchase, or otherwise dispose
of (or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity equivalent
securities (including the issuance of any debt or other instrument at any time
over the life thereof convertible into or exchangeable for Common Stock) other
than to the Purchasers.
(i) The Company shall not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition) any of its equity or
equity-equivalent securities or securities of any of its Affiliates that are
exchangeable or convertible (directly or indirectly) for shares of Common Stock,
including the issuance of any debt or other instrument at any time over the life
thereof
convertible into or exchangeable for Common Stock (collectively, a "SUBSEQUENT
PLACEMENT") from the date hereof until the expiration of the 180th Trading Day
after the Effective Date or earlier as set forth in sub-section (ii) below,
unless (A) the Company delivers to each of the Purchasers a written notice (the
"SUBSEQUENT PLACEMENT NOTICE") of its intention to effect such Subsequent
Placement, which Subsequent Placement Notice shall describe in reasonable detail
the proposed terms of such Subsequent Placement, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Placement shall be
effected, and attached to which shall be a term sheet or similar document
relating thereto and (B) such Purchaser shall not have notified the Company by
6:30 p.m. (New York City time) on the fifth Trading Day after its receipt of the
Subsequent Placement Notice of its willingness to provide (or to cause its sole
designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to notify the Company
of their intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Placement substantially upon the terms and to
the Persons (or Affiliates of such Persons) set forth in the Subsequent
Placement Notice; PROVIDED, that the Company shall provide the Purchasers with a
second Subsequent Placement Notice, and the Purchasers shall again have the
right of first refusal set forth above in this paragraph (a), if the Subsequent
Placement subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within 45 Trading Days after the date of the initial Subsequent Placement
Notice with the Person (or an Affiliate of such Person) identified in the
Subsequent Placement Notice. If the Purchasers shall indicate a willingness to
provide financing in excess of the amount set forth in the Subsequent Placement
Notice, then each Purchaser shall be entitled to provide financing pursuant to
such Subsequent Placement Notice up to an amount equal to such Purchaser's
pro-rata portion of the aggregate number of shares purchased by such Purchaser
under this Agreement, but the Company shall not be required to accept financing
from the Purchasers in an amount in excess of the amount set forth in the
Subsequent Placement Notice.
(ii) The restrictions contained in Sections 3.9(a), (b)(i) and
(c) shall terminate on the fifth Trading Day following the date on which no
Debentures and no Class A Warrants remain outstanding. Additionally, if no
Class A Warrants remain outstanding and the Company provides Purchasers with
an agreement ("Use Agreement") that the use of proceeds raised from a
Subsequent Placement shall be used to redeem the Debentures in full, the
Purchasers shall be deemed to have waived their right of first refusal under
(b) (i) above and on the fifth Trading Day following the date on which the
Debentures are redeemed in full and no Debentures remain outstanding, the
restrictions contained in Sections 3.9(a), (b)(i) and (c) shall terminate. If
such Subsequent Placement shall not close within forty five Trading Days from
the Purchaser's Use Agreement, Purchaser shall again have the right of first
refusal set forth in (b)(i) above and the restrictions contained in Sections
3.9(a) and (c) shall apply.
Except for (x) Underlying Shares, (y) other "Registerable
Securities" (as such term is defined in the Registration Rights Agreement) to
be registered, and securities of the Company permitted pursuant to Section
6(c) of the Registration Rights Agreement to be
registered, in the Underlying Shares Registration Statement in accordance with
the Registration Rights Agreement, and (z) Common Stock permitted to be issued
pursuant to Section 3.9(e), the Company shall not, for a period of not less than
90 Trading Days after the Effective Date, without the prior written consent of
the Purchasers (i) issue or sell any of its or any of its Affiliates' equity or
equity-equivalent securities pursuant to Regulation S promulgated under the
Securities Act, or (ii) register any securities of the Company. Any days after
the Effective Date that a Purchaser is unable to sell Underlying Shares under
the Underlying Shares Registration Statement shall be added to such 90 Trading
Day period.
The 90 and 180 Trading Day periods referenced in Sections
3.9(a)-(c) shall be extended for the number of Trading Days during such period
(A) in which trading in the Common Stock is suspended by any securities exchange
or market or quotation system on which the Common Stock is then listed, or (B)
during which the Underlying Shares Registration Statement is not effective, or
(C) during which the prospectus included in the Underlying Shares Registration
Statement may not be used by the holders thereof for the resale of Underlying
Shares.
The restrictions contained in Section 3.9(a), (b) and (c) above,
shall not apply to (i) the granting of options or warrants to employees,
officers and directors of the Company, and the issuance of Common Stock upon
exercise of such options or warrants granted under any stock option plan or
stock purchase plan heretofore or hereinafter duly adopted by the Company and
the registration of the shares issuable upon exercise of such options or
warrants, (ii) issuances pursuant to an Excluded Transaction (as defined below)
and (iii) issuances pursuant to existing commitments of the Company to the
extent set forth in SCHEDULE 2.1(C). An "EXCLUDED Transaction" shall mean a
transaction in which the Company shall issue Common Stock or Common Stock
Equivalents to one or more of Silverlake Partners and Xx. Xxxxxx Xxxxxxxx (and
their respective affiliates) at a price per share which shall never over the
life of such securities be less than the Conversion Price, but subject to
customary "formula/weighted average" (as opposed to "full ratchet")
anti-dilution adjustments to such pricing (with respect to convertible or
exchangeable securities).
If a Purchaser fails to exercise Class A Warrants by the Trading
Day following a Call Expiration Date in response to a Call Notice satisfying the
requirements set forth in the Class A Warrant, then such Purchaser shall cease
to have the right to enforce the provisions of this Section 3.9.
Notwithstanding anything to the contrary set forth in any
Transaction Document, if (i) a Purchaser shall object to revisions to the Plan
of Distribution attached to the Registration Rights Agreement required by the
Commission, as evidenced by a written comment letter from the Commission to the
Underlying Shares Registration Statement, and (ii) the Commission has not
conditioned the effectiveness of the Underlying Shares Registration Statement to
any other revisions to such Underlying Shares Registration Statement that have
not been fully made and acknowledged by the Commission, then, at the request of
a Purchaser or, if more than ten Business Days shall have elapsed from the date
that the conditions set forth in (i) and (ii) of this
sentence have been met, at the request of the Company, all references in such
Underlying Shares Registration Statement to the Callable Warrant and the
Underlying Shares issuable upon exercise thereof shall be removed from such
Underlying Shares Registration Statement, such Underlying Shares Registration
Statement shall promptly be refiled only to cover the "Registrable Securities"
not issuable upon exercise of the Callable Warrants, and the Callable Warrants
shall terminate and be void, AB INITIO. If an Underlying Shares Registration
Statement shall be so amended to delete references to the Callable Warrants and
Underlying Shares issuable upon their exercise, and if the Company shall have
caused to be declared effective such Underlying Shares Registration Statement to
cover the "Registrable Securities" not issuable upon exercise of the Callable
Warrants and the Company shall have maintained the effectiveness of such
Underlying Shares Registration Statement, then each Purchaser shall cease to
have the right to enforce the provisions of Section 3.9(a) and, if such
Purchaser shall have failed to indicate its willingness to acquire the
securities offered in a Subsequent Placement following such events, Section
3.9(c).
CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company
shall: (i) on the Closing Date, issue a press release reasonably acceptable
to the Purchasers disclosing the transactions contemplated hereby, (ii) file
with the Commission a Report on Form 8-K disclosing the transactions
contemplated hereby within ten Business Days after the Closing Date, and
(iii) timely file with the Commission a Form D promulgated under the
Securities Act. The Company shall, no less than two Business Days prior to
the filing of any disclosure required by clauses (ii) and (iii) above,
provide a copy thereof to the Purchasers for their review. The Company and
the Purchasers shall consult with each other in issuing any other press
releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or stock market
or trading facility with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, except that if such disclosure is required by law or
stock market regulation, in which such case the disclosing party shall
promptly provide the other party with prior notice of such public statement,
filing or other communication. Notwithstanding the foregoing, the Company
shall not publicly disclose the names of the Purchasers, or include the names
of the Purchasers in any filing with the Commission, or any regulatory
agency, trading facility or stock market without the prior written consent of
the Purchasers, except to the extent such disclosure (but not any disclosure
as to the controlling Persons thereof) is required by law or stock market
regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure.
TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection
with the sale of all or substantially all of the assets of the Company or
licensing arrangements in the ordinary course of the Company's business, the
Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens (except as permitted by the Debentures), or fail to
renew such Intellectual Property Rights (if renewable and it would otherwise
lapse if not renewed), without the prior written consent of the Purchasers.
USE OF PROCEEDS. The Company shall use the net proceeds from
the sale of the Securities hereunder for working capital purposes and not for
the satisfaction of any portion of the Company's debt (other than payment of
trade payables in the ordinary course of the Company's business and prior
practices), to redeem any Company equity or equity-equivalent securities or to
settle any outstanding litigation.
REIMBURSEMENT. If any Purchaser becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including stockholders of the Company, solely as a result of acquiring
the Securities under this Agreement and the Warrants, the Company will reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation, preparation and travel in connection therewith incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company solely as a result of acquiring the Securities under this Agreement and
the Warrants.
CERTAIN TRADING RESTRICTIONS. Each Purchaser agrees that
as long as such Purchaser holds the Debentures and Class A Warrants, such
Purchaser will not enter into any Short Sales (as defined herein). For purposes
hereof, a "Short Sale" by a Purchaser shall mean a short sale of Common Stock by
such Purchaser that is made at a time when there is no equivalent offsetting
long position in the Common Stock held by such Purchaser. For purposes of
determining whether there is an equivalent offsetting long position in the
Common Stock held by a Purchaser, Underlying Shares issuable upon conversions of
the Debenture (including interest thereon) or exercises of Warrants (as the case
may be) shall be deemed to be held long by such Purchaser.
SHAREHOLDER RIGHTS PLAN. Subject to its compliance with the
voting agreement in this section, no claim will be made or enforced by the
Company or any other Person under the Company's control (which shall include
members of the board of directors of the Company, senior management of the
Company and their respective affiliates) that a Purchaser is an "Acquiring
Person" (or words to similar effect) under any shareholders rights plan or
similar plan or arrangement in effect on the date of this Agreement or hereafter
adopted by the Company, or that such Purchaser could be deemed to trigger the
provisions of any such plan or arrangement by virtue of receiving Securities or
shares of Common Stock under the Transaction Documents. Each Purchaser severally
agrees that, so long as it holds Debentures and is the beneficial owner of 5% or
more of the issued and outstanding shares of Common Stock (as determined
pursuant to Section 13(d) of the Exchange Act), it will vote or cause to be
voted any and all such shares of Common Stock as recommended by the Company's
Board of Directors in any meeting of the
stockholders of the Company, at any adjournment thereof and whenever the consent
of the stockholders of the Company is solicited other than on matters that have
the direct effect of materially and adversely affecting such Purchaser's rights
under the Transaction Documents or on which the Purchasers are not permitted by
the Transaction Documents to cast votes. Any vote cast or action taken in
contravention of the requirements hereof shall have no force or effect.
ARTICLE
MISCELLANEOUS
FEES AND EXPENSES. Except as otherwise stated in the
Registration Rights Agreement, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay
all stamp and other taxes and duties levied in connection with the initial
issuance of the Securities including the Underlying Shares to the Purchasers.
ENTIRE AGREEMENT; AMENDMENTS. 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.
NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Company: RoweCom Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (617) 497- 6825
Attn: Xxxx Xxxxxxxxxx
With copies to: Xxxxx Xxxxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
If to a Purchaser: To the address set forth under
such Purchaser's name on the signature pages
hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
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 both the Company and each of the Purchasers or, in the case of
a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any 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 accruing to it
thereafter.
HEADINGS. 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.
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 Purchasers.
Except as set forth in Section 3.1(a), the Purchasers may not assign this
Agreement or any of the rights or obligations hereunder without the consent
of the Company. This provision shall not limit any Purchaser's right to
transfer securities or transfer or assign rights under the Registration
Rights Agreement.
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.
GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the 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 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.
SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
conversion of the Debentures and exercise of the Warrants.
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) the same with the same force and effect as if
such facsimile signature page were an original thereof.
SEVERABILITY. In case any one or more of the provisions of this
Agreement shall 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 affecting or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The parties hereto agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
breach of its obligations described in the foregoing sentence and hereby agrees
to waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of
any other Purchaser and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any Transaction
Document. Nothing contained herein or in any Transaction Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
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SIGNATURE PAGES FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Debenture Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
ROWECOM INC.
By:
---------------------------------
Name:
Title:
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SIGNATURE PAGE FOR PURCHASER FOLLOWS]
MONTROSE INVESTMENTS LTD.
By:
---------------------------------
Name:
Title:
Purchase Price for Debentures: $4,000,000
Warrant shares subject to Closing Warrant: 101,968
Address for Notice:
Montrose Investments Ltd.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx Xxxxx and Xxx Xxxxxx
With copies to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
