EXHIBIT 4.1
XXXXXXX NAVIGATION LIMITED
FIRST AMENDED AND RESTATED
STOCK AND WARRANT PURCHASE AGREEMENT
THIS FIRST AMENDED AND RESTATED STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is made effective as of the 14th day of January 2002 by and among
Xxxxxxx Navigation Limited (the "Company"), a corporation organized under the
laws of the State of California, with its principal offices at 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, and the entities listed on Schedule A
hereto (each a "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchasers hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF STOCK.
Subject to the terms and conditions of this Agreement, the Purchasers agree to
purchase severally and not jointly at the First Closing or Second Closing (both
terms as defined below) and the Company agrees to sell and issue to each of the
Purchasers severally and not jointly at the First Closing or Second Closing (i)
that number of whole shares of the Company's common stock ("Common Stock") set
forth opposite each Purchaser's name on Schedule A hereto for each Closing (as
defined below) (collectively, the "Shares"), at that purchase price that is
equal to $15.00 per Share, and (ii) warrants (the "Warrants") in the form
attached hereto as Exhibit A giving the Purchasers the right for five (5) years
from the First Closing Date to purchase at an exercise price per share equal to
one hundred twenty-five percent (125%) of the Fair Market Value (as defined
below) of a share of Common Stock (as subject to adjustment as set forth in the
Warrant, the "Warrant Shares") and as set forth opposite each Purchaser's name
on Schedule A hereto for each Closing (as defined below), which is equal to
twenty percent (20%) of the number of Shares purchased by such Purchaser
hereunder. For purposes of this Agreement and the Warrant, the "Fair Market
Value" of a share of Common Stock shall be deemed to be $15.58, which is the
closing price per share of the Common Stock as reported on the Nasdaq National
Market System for December 18, 2001. The Shares, Warrant, and Warrant Shares are
herein sometimes collectively referred to as the "Securities."
SECTION 2. CLOSINGS.
2.1. CLOSINGS. The purchase and sale of the Shares and the Warrants upon the
terms and conditions hereof will take place at two closings (each a "Closing"
and respectively, the "First Closing" and "Second Closing") to be held at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx, on December 21, 2001, at 2:00 p.m. Pacific Standard Time, and on
January 14, 2002, at 2:00 p.m. Pacific Standard Time, respectively (each such
date and time referred to herein as a "Closing Date," and respectively as the
"First Closing Date" and "Second Closing Date"). At the respective Closing Date
identified opposite each Purchaser's name on Schedule A hereto, the Company
shall issue irrevocable instructions to its transfer agent to deliver to such
Purchaser one or more stock certificates registered in the name of such
Purchaser, or in such nominee name(s) as designated by such Purchaser in
writing, representing the number of Shares set forth opposite each Purchaser's
name on Schedule A hereto for such
1
Closing, and shall issue one or more Warrants in the name of each Purchaser
representing the right to purchase the number of Warrant Shares set forth
opposite each Purchaser's name on Schedule A hereto for such Closing.
2.2 CONDITIONS TO CLOSING.
(a) The Company's obligation to complete the purchase and sale of the
Shares and deliver such stock certificate(s) and Warrants to each Purchaser is
subject to (i) receipt by the Company of same-day funds in the full amount of
the purchase price for the Shares being purchased hereunder on the respective
Closing Date identified opposite each Purchaser's name on Schedule A hereto, and
(ii) the accuracy in all material respects as of the respective Closing Date
identified opposite each Purchaser's name on Schedule A hereto of the
representations and warranties made by the Purchasers in this Agreement and the
fulfillment in all material respects of those undertakings of the Purchasers in
this Agreement to be fulfilled on or prior to such Closing Date.
(b) The Purchasers' obligation to complete the purchase and sale of the
Shares and the Warrants is conditioned upon the close of at least twenty-five
million dollars ($25,000,000) aggregate consideration at the First Closing Date
and is subject to delivery by the Company to the Purchasers of: (i) a
certificate, dated as of the respective First or Second Closing Date, executed
by the chief executive officer and the chief financial or accounting officer of
the Company, to the effect that the representations and warranties of the
Company set forth in Section 3 below are accurate in all material respects as of
such respective Closing Date and to the effect that the Company has fulfilled in
all material respects those undertakings of the Company to be fulfilled on or
prior to such respective Closing Date; (ii) an opinion, dated as of the
respective First or Second Closing Date, from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
P.C., corporate counsel to the Company, in the form attached as Exhibit B
hereto; and (iii) the Company shall deliver instructions in the form attached as
Exhibit C hereto to the transfer agent to deliver the Shares to the Purchasers
at each respective Closing.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to, and covenants with, the
respective Purchasers as of the First Closing Date as follows, and except as set
forth on the Schedule of Exceptions attached as Schedule B hereto, the Company
hereby represents and warrants to, and covenants with, the respective Purchasers
as of the Second Closing Date as follows:
3.1. ORGANIZATION AND QUALIFICATION. The Company and any of its subsidiaries
("Subsidiaries," which for purposes of this Agreement means any entity
constituting greater than 10% of the Company's consolidated annual revenue and
in which the Company, directly or indirectly, owns 25% or more of the capital
stock or other equity or similar interests or owns capital stock or holds an
equity or similar interest which ownership entitles the Company to elect 25% or
more of the board of directors or similar governing body of such entity; such
Subsidiaries are set forth on Schedule C hereto) are corporations, partnerships
or limited liability companies duly organized and validly existing in good
standing (to the extent such concepts are applicable) under the laws of the
jurisdiction in which they are incorporated or organized, and have the requisite
corporate, limited liability company or partnership power and authorization to
own their properties and to carry on their business as now being conducted. Each
of the Company and its
2
Subsidiaries is duly qualified as a foreign corporation, partnership or
limited liability company to do business and is in good standing (to the extent
such concepts are applicable) in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Agreement, "Material Adverse Effect" means any material adverse effect on the
business, properties, assets, operations, results of operations, prospects or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to timely perform its obligations under the Transaction
Documents (as defined below).
3.2. AUTHORIZATION, ENFORCEMENT, AND VALIDITY. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants and each of the other agreements entered into by
the parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof. The execution and
delivery of the Transaction Documents by the Company and the consummation by it
of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Warrants and the reservation for issuance and
the issuance of the Warrant Shares issuable upon exercise of the Warrants, have
been duly authorized by the Company's Board of Directors and no further consent
or authorization is required of the Company's Board of Directors or
shareholders. The Transaction Documents have been duly executed and delivered by
the Company. The Transaction Documents constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
3.3. CAPITALIZATION. As of the First Closing Date, the authorized stock of the
Company is 40,000,000 shares of Common Stock, of which 24,971,079 are
outstanding, and 3,000,000 shares of Preferred Stock, of which 65,000 shares
have been designated Series A Participating Preferred Stock and of which none
are outstanding. Except as disclosed in Schedule D hereto and as provided in
this Agreement, no party has any rights to cause the Company to prepare and file
a registration statement for the resale of any Common Stock held by or issuable
to such party, and 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 or entity 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 or
entity (other than the Purchasers) 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. The offer and sale of the Securities to the
Purchasers pursuant to this Agreement will, subject to the accuracy of the
Purchaser's representations set forth in Sections 4.2, 4.3 and 4.4 below, be
made in accordance with the provisions and requirements of Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act") or Regulation D
promulgated under the Securities Act and any applicable state law.
3
3.4. ISSUANCE OF SECURITIES. The Securities are duly authorized and, upon
issuance in accordance with the terms of the applicable Transaction Documents,
shall be: (i) validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issuance thereof (other than
any such taxes, liens and charges created by any Purchaser or assignee or
transferee), and shall not be subject to preemptive rights or other similar
rights of the shareholders of the Company. As of the First Closing, at least
356,670 shares of Common Stock will have been duly authorized and reserved for
issuance upon exercise of the Warrants. Upon exercise in accordance with the
Warrants, the Warrant Shares will be validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof (other than any such taxes, liens and charges created by any
Purchaser or any assignee or transferee), with the holders being entitled to all
rights accorded to a holder of Common Stock.
3.5 NO CONFLICTS. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the reservation
for issuance and issuance of the Warrant Shares) will not (i) result in a
violation of the Company's articles of incorporation or bylaws; (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party (except
for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect); or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the Nasdaq
National Market) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Neither the Company nor its Subsidiaries is in violation of any
term of or in default under its respective articles of incorporation, bylaws or
other organizational charter or document. To the knowledge of the Company,
neither the Company nor any of its Subsidiaries is in violation of any term of
or in default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except where such violations and
defaults would not result, either individually or in the aggregate, in a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect. Except as
specifically contemplated by this Agreement, as required under the Securities
Act, and as required by Blue Sky filings, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents. All consents, authorizations, orders,
filings and registrations that the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof. The Company and its Subsidiaries are currently unaware of any facts or
circumstances that might give rise to any of the foregoing events set forth in
this paragraph. The Company is not in violation of the listing requirements of
the Nasdaq National Market, and has no actual knowledge of any facts which with
notice or lapse of time would reasonably lead to delisting or suspension of the
Common Stock by the Nasdaq National Market either immediately or in the
foreseeable future.
4
3.6. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 2001, the Company has
timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (all of the foregoing filed prior to or on
the First Closing Date and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the "SEC Documents"). As of the date of filing
of such SEC Documents, each such SEC Document, as it may timely have been
subsequently amended by filings made by the Company with the SEC prior to the
First Closing Date, complied in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Document. None of the SEC Documents, as of the date filed
and as they may have been subsequently amended by filings made by the Company
with the SEC prior to the First Closing Date, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. To the knowledge
of the Company, as of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, and (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company is not required to file and will not be required to
file any agreement, note, lease, mortgage, deed or other instrument entered into
prior to the First Closing Date and to which the Company is a party or by which
the Company is bound which has not been previously filed as an exhibit to its
reports filed with the SEC under the Exchange Act. Except as set forth in the
financial statements of the Company included in the SEC Documents filed prior to
the First Closing Date, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under GAAP to be reflected in such
financial statements, which, regarding such liabilities and obligations referred
to in the foregoing clauses (i) and (ii), would individually or in the aggregate
not have a Material Adverse Effect.
3.7. ABSENCE OF CERTAIN CHANGES. Since the date of the Company's most recently
filed SEC Document, there has been no change or development that has had or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so.
3.8. ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the
5
Company or any of its Subsidiaries, threatened in writing against the Company or
any of the Company's Subsidiaries or any of the Company's or the Subsidiaries'
officers or directors in their capacities as such, that would reasonably be
expected to result in a Material Adverse Effect.
3.9. NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated, nor will the Company or any of its Subsidiaries take any action or
steps that would cause the offering of the Securities to be integrated with
other offerings.
3.10. INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries have the
right to use trademarks, trade names and other rights to copyrights, inventions,
know-how, patents, confidential information and other intellectual property
rights necessary to conduct their respective businesses as now conducted, except
where the failure to own, possess or protect such rights would not, either
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, and the Company is not aware of any infringement by a third
party with respect to such rights or any infringement by it or conflict with
asserted rights of others, that, in any such case, if determined adversely to
the Company could individually or in the aggregate have a Material Adverse
Effect. The Company and its Subsidiaries have complied with their respective
contractual obligations relating to the protection of any intellectual property
licensed from any third party, except where non-compliance with such obligations
would not have a Material Adverse Effect.
3.11. APPLICATION OF TAKEOVER PROTECTIONS. Subject to the accuracy of the
representations and warranties of each Purchaser as set forth in Section 4.8
below, the Company and its board of directors have taken all necessary corporate
action, if any, in order to render inapplicable any anti-takeover or similar
provision (including any distribution under a rights agreement) under the
Company's articles of incorporation, other applicable documents, the laws of the
state of its incorporation or the laws of any other state which is or could
become applicable to the Purchasers as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of the
Securities and the Purchasers' ownership of the Securities.
3.12. DISCLOSURE. The Company confirms that neither it nor any other person
acting on its behalf has provided any Purchaser or its agents or counsel with
any information that constitutes or might constitute material, nonpublic
information, and will not provide such information to any Purchaser or its
agents or counsel unless such Purchaser consents in writing in advance to
receive such information.
3.13. LOCK-UP. The Company agrees that until such date as the Registration
Statement (as defined below) is declared effective by the SEC, the Company will
not register, file a registration statement under the Securities Act, sell or
issue any equity securities of the Company or other securities that entitle the
holder thereof to receive Common Stock, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its
life and under any circumstances, convertible or exchangeable for Common Stock;
provided, however,
6
that (i) the Company may register, file a registration statement under the
Securities Act, sell or issue any equity securities or other securities of the
Company relating solely to any merger or reorganization of the Company or to any
employee stock option or benefit plan of the Company, and (ii) the Company may
issue any equity securities or other securities of the Company as consideration
for acquisitions of assets or businesses of third parties that do not, in the
aggregate, exceed ten million dollars ($10,000,000) based upon the then fair
market value of such equity securities on the closing date of such issuance or
sale, including but not limited to issuances or sales of equity securities of
the Company that are exempted from registration by reason of qualification
pursuant to Section 3(a)(10) of the Securities Act. The Company further agrees
that if the Company sells or issues any equity securities of the Company
pursuant to an equity line of credit at any time prior to the date that is one
hundred twenty (120) days after the date the Registration Statement is
effective, the Company will not offer such equity securities at a purchase price
per share less than the purchase price per Share determined in accordance with
this Agreement.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH PURCHASER.
As of the respective Closing Date or Dates set forth opposite such Purchaser's
name on Schedule A hereto, each Purchaser hereby severally represents and
warrants to, and covenants with, the Company as follows, as applicable:
4.1. DUE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT. Such Purchaser
has full right, power, authority and capacity to enter into this Agreement and
to consummate the transactions contemplated hereby, has taken all necessary
action to authorize the execution, delivery and performance of this Agreement
and, if applicable, such Purchaser is duly organized, validly existing and in
good standing under the laws of its jurisdiction. Upon the execution and
delivery of this Agreement, this Agreement shall constitute a valid and binding
obligation of the Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Purchaser in Section 7 below may be legally unenforceable.
4.2. INVESTMENT EXPERIENCE. Such Purchaser is an "accredited investor" within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares representing an investment
decision like that involved in the purchase of the Securities.
4.3. INVESTMENT INTENT AND LIMITATION ON DISPOSITIONS. Such Purchaser is
acquiring Shares and Warrants for its own account for investment only and has no
present intention of distributing any of such Shares or Warrants or any
arrangement or understanding with any other persons regarding the distribution
of such Shares or Warrants. The Purchasers will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Securities
except in accordance with the provisions of Section 6 below.
7
4.4 INFORMATION AND RISK.
(a) Such Purchaser has requested, received, reviewed and considered all
information such Purchaser deems relevant in making an informed decision to
purchase the Shares and Warrants. Such Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with its
management and also had an opportunity to ask questions of officers of the
Company that were answered to such Purchaser's satisfaction, provided that such
inquiries do not impair the rights of the Purchasers to rely on the
representations and warranties of the Company as set forth in Section 3 above.
(b) Such Purchaser recognizes that an investment in the Securities involves
a high degree of risk, including a risk of total loss of such Purchaser's
investment.
(c) Such Purchaser has, in connection with such Purchaser's decision to
purchase Shares and Warrants, not relied upon any representations or other
information (whether oral or written) other than as set forth in the
representations and warranties of the Company contained herein and the SEC
Documents, and such Purchaser has, with respect to all matters relating to this
Agreement and the offer and sale of the Securities, relied solely upon the
advice of the Purchaser's own counsel and has not relied upon or consulted any
counsel to Xxxxxxx Xxxxx Barney Inc. (the "Placement Agent") or counsel to the
Company.
4.5. DISCLOSURES TO THE COMPANY. Such Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under federal and state securities laws. Such Purchaser will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser.
4.6. LEGENDS. Such Purchaser understands and agrees that each certificate or
other document evidencing any of the Securities shall be endorsed with the
legend in the form set forth below, and such Purchaser covenants that such
Purchaser will not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in the legend
endorsed on such certificate (unless there is in effect a registration statement
under the Securities Act covering such proposed transfer, such securities have
been sold under Rule 144 promulgated under the Securities Act ("Rule 144") or as
otherwise permitted by the provisions of Section 6.3 below) and understands that
the Company will refuse to register a transfer of any Securities unless the
conditions specified in the following legend are satisfied:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT OR UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER IS
OTHERWISE EXEMPT FROM REGISTRATION AND ANY APPLICABLE STATE SECURITIES
LAWS. THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER TRANSFER. THIS CERTIFICATE
8
MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER AGENT AS A
CONDITION PRECEDENT TO THE SALE OR ANY OTHER TRANSFER OF ANY INTEREST IN
ANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
Such certificates shall not be required to contain such legend (i) while a
Registration Statement (as defined below) covering the resale of such Securities
is effective under the Securities Act, (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) if such Securities are eligible for
sale under Rule 144(k). Following the effective date of the Registration
Statement or at such earlier time as a legend is no longer required for certain
Securities, the Company will, no later than three trading days following the
delivery by a Purchaser to the Company or the Company's transfer agent of a
legended certificate representing such securities, deliver or cause to be
delivered to such Purchaser a certificate representing such securities that is
free from all restrictive and other legends.
Such Purchaser covenants that such Purchaser will not transfer the Shares or
Warrant Shares represented by any such certificate without complying with any
applicable requirements under the Securities Act to deliver the final prospectus
included in the effective Registration Statement to any offeree of such Shares
or Warrant Shares. Such Purchaser agrees to severally and not jointly indemnify
and hold harmless the Company from and against all claims, losses, damages,
costs and expenses arising out of any failure to deliver such final prospectus.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Securities and, if required under the terms of such
arrangement, such 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 the pledgee, secured party or
pledgor shall be required in connection therewith, unless the Company's transfer
agent requires a legal opinion to issue a certificate in the name of the pledgee
or secured party. Further, no notice shall be required of such pledge. The
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a pledge
or transfer of the Securities, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of selling shareholders thereunder.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated by
this Agreement other than those specifically set forth in this Section 4.
4.7. NATURE OF PURCHASERS. Except as set forth in Schedule A hereto, such
Purchaser: (i) is not an affiliate (as such term is defined pursuant to Rule
12b-2 promulgated under the Exchange Act) of any other Purchaser, (ii) is not
constituted as a partnership, association, joint venture or any other type of
joint entity with any other Purchaser, and (iii) is in no way acting as a group
(as such term is defined under Section 13(d) of the Exchange Act) with any other
Purchaser. If at any time after the First Closing Date such Purchaser becomes an
affiliate (as
9
defined herein) of any other Purchaser, such Purchaser will provide prompt
written notice to the Company.
4.8. OWNERSHIP. Such Purchaser (including any person or entity controlling,
controlled by, or under common control with such Purchaser) does not, and upon
the consummation of the transactions contemplated by this Agreement will not,
hold voting securities of the Company equal to or exceeding (i) the aggregate
fair market value as of the Second Closing Date of fifty million dollars
($50,000,000), calculated pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and its implementing regulations (the "HSR
Act"), or (ii) fifteen percent (15%) of the outstanding Common Stock as of the
Second Closing Date. Notwithstanding any other provision of this Agreement or
the Warrant to the contrary, if such Purchaser (including any person or entity
controlling, controlled by, or under common control with such Purchaser) will,
upon any exercise of the Warrant, beneficially own voting securities of the
Company equal to or exceeding (i) the aggregate fair market value of fifty
million dollars ($50,000,000), calculated pursuant to the HSR Act and as
determined as of the date such exercise, or (ii) fifteen percent (15%) of the
outstanding Common Stock as of the date of such exercise, then such Purchaser
will provide reasonable written notice to the Company and such Purchaser agrees
that the Company may restrict such exercise until the waiting period required
pursuant to the HSR Act has expired or been early terminated.
SECTION 5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties as to
each respective Closing made by the Company and the Purchasers herein shall
survive for a period of one (1) year following such respective Closing Date.
SECTION 6. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
6.1.REGISTRATION PROCEDURES AND EXPENSES. Except for such times as the Company
may be required to suspend the use of a prospectus forming a part of the
Registration Statement, the Company will:
(a) as soon as practicable, but in no event later than thirty (30) days
following the First Closing Date, use commercially reasonable efforts to prepare
and file with the SEC a registration statement on Form S-3 (the "Registration
Statement") covering the resale of the Shares and at least 612,672 Warrant
Shares by the Purchaser and which shall contain the Plan of Distribution as
attached hereto as Exhibit D;
(b) use commercially reasonable efforts to cause the Registration Statement
to become effective under the Securities Act no later than sixty (60) days after
the First Closing Date, if the Registration Statement is not reviewed by the
SEC, or no later than one hundred ten (110) days after the First Closing Date,
if the Registration Statement is reviewed by the SEC;
(c) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective until the
earliest of (i) the second
10
anniversary of the First Closing Date, (ii) the date on which the Purchaser may
sell all Shares then held by the Purchaser and all Warrant Shares purchasable by
Purchaser without volume limitations and without registration by reason of Rule
144 or any other rule of similar effect, or (iii) such time as all Shares and
Warrant Shares purchased by the Purchasers have been sold;
(d) so long as the Registration Statement is effective covering the resale
of Shares and Warrant Shares owned by the Purchasers, furnish to the Purchasers
with respect to the Shares and Warrant Shares registered under the Registration
Statement (and to each underwriter, if any, of such Shares) such reasonable
number of copies of prospectuses and such other documents as the Purchaser may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Shares and Warrant Shares by the Purchasers; provided,
however, that the obligation of the Company to deliver copies of prospectuses to
the Purchasers shall be subject to the receipt by the Company of reasonable
assurances from the Purchasers that the Purchasers will comply with the
applicable provisions of the Securities Act and of such other securities laws as
may be applicable in connection with any use of such prospectuses;
(e) use commercially reasonable efforts to file documents required of the
Company for normal Blue Sky clearance in states specified in writing by the
Purchasers; provided, however, that the Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which the
Company is not now so qualified or has not so consented; and
(f) bear all expenses in connection with the procedures in paragraphs (a)
through (e) of this Section 6.1 and the registration of the Shares and Warrant
Shares pursuant to the Registration Statement, other than fees and expenses, if
any, of counsel or other advisers to the Purchasers or underwriting discounts,
brokerage fees and commissions incurred by the Purchasers, if any.
6.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT. In the event that the
Registration Statement is not declared effective by the SEC by the date that is
one hundred ten (110) days after the First Closing Date, the Company shall pay
to each Purchaser liquidated damages in a cash amount equal to one-thirtieth of
one percent (1/30 of 1%) of the total purchase price of the Shares purchased by
such Purchaser pursuant to this Agreement for each day that the Registration
Statement is not declared effective by the SEC after the date that is one
hundred ten (110) days after the First Closing Date.
6.3. RESTRICTIONS ON TRANSFERABILITY.
(a) Each Purchaser agrees that it will not effect any disposition of the
Securities that would constitute a sale within the meaning of the Securities Act
or pursuant to any applicable state securities or Blue Sky laws, except as
contemplated in the Registration Statement referred to in Section 6.1 above or
pursuant to: (i) a written opinion of legal counsel reasonably satisfactory to
the Company and addressed to the Company to the effect that registration is not
required in connection with the proposed transfer; (ii) Rule 144A promulgated
under the Securities Act; or (iii) a "no-action" letter from the SEC to the
effect that the transfer of such securities without registration will not result
in a recommendation by the staff of the SEC that action be taken with respect
thereto, whereupon the holder of such securities shall be entitled to transfer
such securities in accordance with the terms of the notice delivered by the
holder to the
11
Company. Each certificate, warrant or other security evidencing the securities
transferred as above provided shall bear the appropriate restrictive legends set
forth in Section 4.6.
(b) Each Purchaser acknowledges that there may occasionally be times when
the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment or supplement to the
Registration Statement has been filed by the Company and declared effective, or
until such time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act. Each Purchaser hereby covenants that such
Purchaser will not sell any Shares or Warrant Shares pursuant to said prospectus
during the period commencing at the time at which the Company gives the
Purchasers written notice of the suspension of the use of said prospectus and
ending at the time the Company gives the Purchasers written notice that the
Purchasers may thereafter effect sales pursuant to said prospectus.
Notwithstanding the foregoing, the Company will not suspend such use of the
prospectus for reason of the occurrence of any non-material events, as
determined in good faith by the Company's board of directors. In the event that
the Purchasers are prohibited for any reason from selling Shares or Warrant
Shares in excess of thirty (30) business days but less than sixty (60) business
days in any three hundred sixty-five (365) day period, the Company agrees as
liquidated damages (until the Expiration Date, as such term is defined in the
Section 1.1 of the Warrant) to increase the number of shares purchasable under
the Warrants by a number of Warrant Shares (collectively, the "Additional
Warrant Shares") which is equal to: (i) one-thirtieth of two point five percent
(1/30th of 2.5%) of the number of Warrant Shares then exercisable times (ii) the
total number of calendar days over such thirty (30) business day limit but less
than sixty (60) business days (such last business day, a "Target Date"), rounded
to the nearest whole share. In the event that the Purchasers are prohibited from
selling Shares or Warrant Shares in excess of sixty (60) business days in any
three hundred sixty five (365) day period, then, in addition to any other
remedies available under this Agreement and applicable law, the Company shall
pay to each Purchaser liquidated damages in a cash amount which is equal to: (i)
one-thirtieth of one percent (1/30 of 1%) of the total purchase price of the
Shares purchased by such Purchaser pursuant to this Agreement and then
beneficially owned by such Purchaser, (ii) times the number of calendar days
over such sixty (60) business day limit. On each Target Date (if any), the
Company will file with the SEC a new registration statement covering the resale
of the Additional Warrant Shares. Such registration statement shall be included
within the definition of "Registration Statement" and, with respect to the
Additional Warrant Shares, the holders of the Warrants shall be entitled to all
of the rights and obligations under Sections 6 and 7 with respect to the Shares
and Warrant Shares (including, but not limited to, the receipt of liquidated
damages pursuant to Sections 6.2 and 6.3(b) (it being understood that for
purposes of this sentence, "First Closing Date" shall be replaced with "Target
Date")).
(c) None of the Securities shall be transferable except upon the conditions
specified in this Section 6, which are intended to ensure compliance with the
provisions of the Securities Act. Each Purchaser will cause any proposed
transferee of the Securities held by such Purchaser to agree to take and hold
such Securities subject to the provisions and upon the conditions specified in
this Section 6 if and to the extent that such Securities continue to be
restricted securities in the hands of the transferee.
6.4. TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent imposed
by Section 6.3 above regarding the transferability of the Shares and Warrant
Shares shall cease and terminate as to any particular number of the Shares or
Warrant Shares upon the date on which the Purchaser may sell without volume
limitations all such Shares or Warrant
12
Shares then held by the Purchaser without registration by reason of Rule 144 or
any other rule of similar effect.
6.5. THIRD PARTY REGISTRATION RIGHTS. The Purchasers acknowledge the existing
registration rights of Xxxx Xxxxxxx Mutual Life Insurance Company and Xxxx
Xxxxxxx Life Insurance Company pursuant to a Warrant Purchase Agreement dated
June 13, 1994, for an aggregate of 400,000 shares of Common Stock, and hereby
expressly agree to the inclusion of any or all such shares in any Registration
Statement or amendment thereto.
SECTION 7. INDEMNIFICATION.
(a) For purposes of this Section 7:
(i) the term "Purchaser" shall include the Purchaser and any
affiliate (as such term is defined pursuant to Rule 12b-2 promulgated under the
Exchange Act) of such Purchaser;
(ii) the term "Prospectus" shall mean the prospectus and any
amendment or supplement thereto in the form first filed with the SEC pursuant to
Rule 424(b) promulgated under the Securities Act or, if no Rule 424(b) filing is
required, filed as part of the Registration Statement at the time of
effectiveness; and
(iii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment included in or relating to
the Registration Statement.
(b) The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or arise out of or are based in whole or
in part on any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses reasonably incurred as such
expenses are reasonably incurred by such Purchaser or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Purchaser expressly for use therein, (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in Section 6.3 above
respecting sale of the Securities, (iii) the inaccuracy of any representations
made by such Purchaser herein or (iv) any statement or
13
omission in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(c) Each Purchaser will severally indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure by such Purchaser to comply with the covenants
and agreements contained in Sections 6.3 above respecting the sale of the
Securities, (ii) the inaccuracy of any representation made by such Purchaser
herein or (iii) any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser expressly for use therein, and will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred, as such expenses are reasonably incurred by the Company,
each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that in no event will any Purchaser be
required to reimburse the Company in excess of an amount equal to the
consideration paid by such Purchaser to the Company on the respective First or
Second Closing Date.
(d) Promptly after receipt by an indemnified party under this Section 7 of
notice of the threat or commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this Section 7, promptly notify the indemnifying party in writing thereof, but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise to the extent it is not prejudiced as a result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
14
party to such indemnified party of its election to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, reasonably satisfactory to the indemnifying party,
representing the indemnified parties who are parties to such action) or (ii) the
indemnified party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of action, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying party.
SECTION 8. NOTICES.
(a) All notices, requests, consents and other communications hereunder
shall be in writing, shall be mailed by first-class registered or certified
airmail, confirmed facsimile or nationally recognized overnight express courier
postage prepaid, and shall be as addressed as follows:
if to the Company, to:
Xxxxxxx Navigation Limited
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
or to such other person at such other place as the Company shall designate
to the Purchasers in writing in accordance with this Section 8;
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
and if to the Purchasers, at their addresses as set forth in Schedule A
hereto, or at such other address or addresses as may have been previously
furnished to the Company in writing in accordance with this Section 8.
(b) Such notices or other communications shall be deemed delivered upon
receipt, in the case of overnight delivery, personal delivery or facsimile
transmission (as evidenced by the confirmation thereof), or two (2) days after
deposit in the mail (as determined by reference to the postmark).
15
SECTION 9. MISCELLANEOUS.
9.1. AMENDMENTS. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and each Purchaser. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
9.2. HEADINGS. The headings of the various sections of this Agreement are for
convenience of reference only and shall not be deemed to be part of this
Agreement.
9.3. SEVERABILITY. In the event that any provision in this Agreement is held to
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
9.4. GOVERNING LAW AND FORUM. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
any choice of law provisions thereof, and the federal law of the United States
of America. The parties hereto agree to submit to the exclusive jurisdiction of
the federal and state courts of the State of New York with respect to the
interpretation of this Agreement or for the purposes of any action arising out
of or related to this Agreement.
9.5. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, and all of which together shall
constitute one and the same instrument. In the event that any signature is
delivered via 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 hereof.
9.6. ENTIRE AGREEMENT. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein, supersede all prior agreements and understandings
with respect to such matters, including that certain Stock and Warrant Purchase
Agreement dated December 21, 2001, and executed by and among the Company and the
purchasers set forth on Schedule A thereto, and, except as specifically set
forth herein or therein, neither the Company nor Purchasers make any
representation, warranty, covenant or undertaking with respect to such matters.
9.7. INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The obligations
of each Purchaser under any Transaction Document are 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 or as a group, or are deemed affiliates (as such term is
defined under the Exchange Act) with respect to such obligations or the
transactions contemplated by the Transaction Document. Each Purchaser shall be
entitled to independently protect and enforce its
16
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.
9.8. EXPENSES. Each party hereto shall pay all costs and expenses incurred by it
in connection with the execution and delivery of this Agreement, the Warrant,
and all the transactions contemplated thereby, including fees of legal counsel;
provided, however, that at the First Closing Date, the Company shall reimburse
Pine Ridge Financial Inc. $25,000 for legal fees and expenses payable to
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP in connection with legal
services provided to Pine Ridge Financial Inc. in regard to such transactions.
Such $25,000 payment shall be deducted from the cash consideration payable by
Pine Ridge Financial Inc. for the Shares.
[Remainder of Page Intentionally Left Blank]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the day and year
first above written.
XXXXXXX NAVIGATION LIMITED
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------------------
Its: President and CEO
----------------------------------------------------------
PURCHASERS
Name of Entity
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
[Conformed Signature Blocks of Each of the Purchasers hereto as listed on
Schedule A not included]
[Signature Page to Stock and Warrant Purchase Agreement]
18
SCHEDULE A
PURCHASERS
LIST OF PURCHASERS
Number of Number of Shares
Shares Purchasable under Purchase Price
Purchased, Warrant, First to be Delivered,
Name and Address of Purchaser First Closing Closing First Closing
------------------------------------------------------ ------------------- -------------------
Pine Ridge Financial Inc. 466,667 93,334 $7,000,005
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Mor Sagi
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
First Investors Holding Co., Inc. 333,334 66,667 $5,000,010
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Mor Sagi
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
19
Castle Creek Technology Partners LLC 266,667 53,334 $4,000,005
c/o Castle Creek Partners, LLC
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
AIG SoundShore Holdings Ltd. 86,333 17,267 $1,294,995
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Opportunity Holding
Fund Ltd. 57,000 11,400 $855,000
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
20
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Strategic Holding
Fund Ltd. 40,000 8,000 $600,000
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Private Investors
Holding Fund Ltd 50,000 10,000 $750,000
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
Xxxxxxxxx Xxxxxxx, L.P. 63,334 25,334 $1,900,005
Cranshire Capital, L.P. 63,333
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Euram Cap Strat. "A" Fund Limited 20,000 8,000 $600,000
Euram Cap Strat. "A" Fund Limited 20,000
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
ZLP Master Technology Fund, LTD 133,335 26,667 2,000,025
Notice and Certificates Delivered to:
Xxxxxx Xxxxx Partners, LLC
00 Xxxxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Xxxxxxx Xxxxx (Cayman) Trust, Ltd.
0xx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxx
Grand Cayman, Cayman Islands, B.W.I.
22
Steelhead Investments Ltd. 133,334 26,667 $2,000,010
Notice and Certificates:
c/o HBK Investments L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxx Xxxxxx
Xxxxxx and Xxxxxx
Xxxxxx House, S. Church Street
Grand Cayman Islands
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Cleveland Overseas Ltd. 50,000 10,000 $750,000
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
c/o Primeway X.X.
Xxx xx Xxxxx 0
XX-0000 Xxxxxx
------------------------------------------------------ ------------------- -------------------
Total 1,783,337 356,670 $26,750,055
====================================================== =================== ===================
23
LIST OF PURCHASERS
Number of
Number of Shares
Shares Purchasable Purchase Price to
Purchased, Under Warrant, be Delivered,
Name and Address of Purchaser Second Closing Second Closing Second Closing
------------------------------------------ ------------------- ------------------ -------------------
------------------------------------------ ------------------- ------------------ -------------------
Pine Ridge Financial Inc. 333,334 66,667 $5,000,010
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Mor Sagi
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
First Investors Holding Co., Inc. 200,000 40,000 $3,000,000
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Mor Sagi
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
24
Castle Creek Technology Partners LLC 133,335 26,667 $2,000,025
c/o Castle Creek Partners, LLC
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
AIG SoundShore Holdings Ltd. 37,600 7,520 $564,000
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
25
00 Xxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Opportunity Holding
Fund Ltd. 24,900 4,980 $373,500
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Strategic Holding
Fund Ltd. 17,500 3,500 $262,500
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
AIG SoundShore Private Investors
Holding Fund Ltd 000 0 0 0
Certificates and Notices to:
x/x XXX Capital Inc.
0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
00
00 Xxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
Xxxxxxxxx Xxxxxxx, L.P. 63,334 25,334 $1,900,005
Cranshire Capital, L.P. 63,333
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Euram Cap Strat. "A" Fund Limited 20,000 8,000 $600,000
Euram Cap Strat. "A" Fund Limited 20,000
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
ZLP Master Technology Fund, LTD 333,334 66,667 $5,000,010
Notice and Certificates Delivered to:
Xxxxxx Xxxxx Partners, LLC
00 Xxxxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Xxxxxxx Xxxxx (Cayman) Trust, Ltd.
0xx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxx
Grand Cayman, Cayman Islands, B.W.I.
27
Steelhead Investments Ltd. 0 0 0
Notice and Certificates:
c/o HBK Investments L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxx Xxxxxx
Xxxxxx and Xxxxxx
Xxxxxx House, S. Church Street
Grand Cayman Islands
cc: Xxxxxx Xxxxxx, Esq.
c/o Robinson Xxxxxxxxx Xxxxxx
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Cleveland Overseas Ltd. 33,334 6,667 $500,010
(Contact/Address for Certificates)
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
c/o Primeway X.X.
Xxx xx Xxxxx 0
XX-0000 Xxxxxx
------------------------------------------ ------------------- ------------------ -------------------
Total 1,280,004 256,002 $19,200,060
========================================== =================== ================== ===================
28
SCHEDULE B
SCHEDULE OF EXCEPTIONS
Pursuant to Section 3 of the First Amended and Restated Stock and Warrant
Purchase Agreement (the "Agreement"), by and among Xxxxxxx Navigation Limited
(the "Company"), and the entities listed on Schedule A thereto (each a
"Purchaser"), the Company hereby provides to the Purchasers this Schedule of
Exceptions. Unless the context otherwise requires, all capitalized terms herein
have the same meanings as defined in the Agreement. For convenience, the Company
has stated exceptions and listed information by reference to the numbered
representations, warranties and covenants set forth in Section 3 of the
Agreement.
3.1 Organization and Qualification
On December 28, 2001, Spectra Precision USA, Inc. was merged into Spectra
Precision Inc., which was then merged into the Company. As of the Second Closing
Date, Xxxxxxx XX is the sole entity constituting greater than 10% of the
Company's consolidated annual revenue and in which the Company, directly or
indirectly, owns 25% or more of the capital stock or other equity or similar
interests or owns capital stock or holds an equity or similar interest which
ownership entitles the Company to elect 25% or more of the board of directors or
similar governing body of such entity.
3.3 Capitalization
As of the Second Closing Date, the authorized stock of the Company is
40,000,000 shares of Common Stock, of which 26,864,912 are outstanding, and
3,000,000 shares of Preferred Stock, of which 65,000 shares have been designated
Series A Participating Preferred Stock and of which none are outstanding.
The Company hereby corrects Schedule D to the Agreement as follows: the
number of stock rights outstanding under the 1993 Stock Option Plan has
decreased from 4,300,750 to 4,289,134. The total number of stock options
outstanding has therefore decreased from 4,624,083 to 4,612,467.
3.4 Issuance of Securities
As of the Second Closing Date, at least 800,000 shares of Common Stock will
have been duly authorized and reserved for issuance upon exercise of the
Warrants.
3.5 No Conflicts
The offering of additional Shares and Warrants in the Second Closing has
created a requirement that the Company file with the Nasdaq a Notification of
Listing of Additional Shares, which the Company has filed less than the required
fifteen (15) days prior to the Second Closing Date but for which the Company has
received an oral waiver from Nasdaq of the fifteen-day period.
29
SCHEDULE C
SUBSIDIARIES
1. Spectra Precision, Inc.
2. Spectra Precision USA, Inc.
3. Xxxxxxx XX
30
SCHEDULE D
STOCK RIGHTS OUTSTANDING
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1990 Director Stock Option Plan 198,333
1992 Management Discount Stock Option Plan 125,000
1993 Stock Option Plan 4,300,750
-------------------
Total Stock Options Outstanding 4,624,083
===================
Additionally, Xxxx Xxxxxxx Mutual Life Insurance Company and Xxxx Xxxxxxx Life
Insurance Company of America own an aggregate of 400,000 shares of Common Stock
and have certain demand and piggyback registration rights pursuant to a Warrant
Purchase Agreement dated June 13, 1994.
31
EXHIBIT A
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES, INCLUDING THE SHARES OF COMMON STOCK TO BE
ISSUED UPON EXERCISE, MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION THEREFROM
UNDER SAID ACT, AND ANY APPLICABLE STATE SECURITIES LAWS, AND AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR RECEIPT OF A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THESE
SECURITIES TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION.
Date of Issuance: January 14, 2002
WARRANT TO PURCHASE
__________ SHARES OF COMMON STOCK OF
XXXXXXX NAVIGATION LIMITED
No. W2001-___
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, this warrant has been issued by Xxxxxxx Navigation Limited, a
California corporation (the "Company") to ______________ (the "Purchaser")
pursuant to the terms and conditions of that certain First Amended and Restated
Stock and Warrant Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"). This warrant certifies that Purchaser and its nominees or assigns
hereunder (the "Holder") is entitled to purchase from the Company up to
______________ (________) fully paid and nonassessable shares of the Company's
common stock ("Common Stock"), at a price of $19.475 per share (which is 125% of
the "Fair Market Value" of a share of Common Stock, as defined in the Purchase
Agreement, hereinafter the "Exercise Price"), at any time or from time to time
up to and including 5:00 p.m. (California time) on the Expiration Date (as
hereinafter defined), upon surrender to the Company at its principal office at
000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as
the Company may advise the Holder in writing) of this Warrant properly endorsed
with the Form of Subscription attached as Exhibit A hereto duly filled in and
signed and upon payment, in any manner set forth herein, of the aggregate
Exercise Price for the number of shares for which this Warrant is being
exercised determined in accordance with the
32
provisions hereof. The Exercise Price and the number of shares purchasable
hereunder are subject to additional adjustments and limitations as provided in
Section 4 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. Exercise.
1.1 Issuance of Certificates; Payment for Shares. This Warrant is
exercisable only by the Holder of record hereof, at any time or from time to
time, in whole or in part, until 5:00 p.m., California time, on January 14, 2007
(the "Expiration Date"). The Company agrees that the shares of Common Stock
purchased under this Warrant shall be deemed to be issued to the Holder hereof
as the record owner of such shares as of the close of business on the date on
which this Warrant shall have been properly surrendered for exercise.
Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered, free of any legends except as provided in the
Purchase Agreement, to the Holder hereof by the Company at the Company's expense
as soon as practicable but, in any event, within three (3) trading days, after
the rights represented by this Warrant have been so exercised. In case of the
purchase of less than all the shares which may be purchased under this Warrant,
the Company shall cancel this Warrant upon its surrender and execute and deliver
a new Warrant or Warrants of like tenor for the balance of the shares
purchasable under the Warrant surrendered upon such purchase to the Holder
hereof as soon as practicable but within said three (3) day period. Each stock
certificate so delivered shall be in such denominations of Common Stock as may
be requested by the Holder hereof and shall be registered in the name of such
Holder or such other name as shall be designated by such Holder, subject to the
limitations contained in Section 10.
1.2 Buy-In. In addition to any other rights available to the Holder, if the
Company fails to deliver to the Holder a certificate or certificates
representing the shares of Common Stock issuable upon exercise of the Warrant
(the "Warrant Stock") pursuant to an exercise by the third trading day after the
date of exercise, and if after such third trading day the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a "Buy-In"), then the Company shall
(i) pay in cash to the Holder the amount by which (x) the Holder's total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Stock that the Company was required to deliver to the Holder
in connection with the exercise at issue by (B) the closing bid price of the
Common Stock at the time of the obligation giving rise to such purchase
obligation and (ii) at the option of the Holder, reinstate the portion of the
Warrant and equivalent number of Warrant Stock for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
33
2. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Common Stock which may be issued upon the exercise
of the rights represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued Common Stock,
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company shall take all
such action as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed. The Company shall not take any action
which would result in any adjustment (pursuant to Section 4 hereof) of the
Exercise Price if the total number of shares of Common Stock issuable after such
action, together with all shares of Common Stock then outstanding and then
issuable upon exercise of all options and all similar rights and upon the
conversion of all convertible securities then outstanding would exceed the total
number of shares of Common Stock then authorized by the Company's articles of
incorporation.
3. Exercise.
3.1 Payment of Exercise Price. Payment of the Exercise Price may be made,
at the option of the Holder, (i) in cash or by check, (ii) by canceling all or a
portion of any indebtedness of the Company to the Holder, in an amount equal to
the aggregate Exercise Price of the shares of Common Stock then being acquired
by the Holder upon exercise of this Warrant, (iii) by a combination of cash and
cancellation of such indebtedness, or (iv) by electing a net issue exercise in
the manner described in Section 3.2 below.
3.2 Net Issue Exercise. In lieu of exercising this Warrant by payment of
the Exercise Price pursuant to Section 3.1 above, the Holder may elect to
convert this Warrant (the "Conversion Right"), in whole or in part, into the
number of shares of Common Stock calculated pursuant to the following formula,
by surrendering this Warrant and specifying the number of shares of Common Stock
which the Holder desires to convert:
X = Y (A - B)
---------
A
where: X = the number of shares of Common Stock to be issued to the
Holder;
Y = the number of shares of Common Stock subject to this
Warrant for which the Conversion Right is being exercised;
A = the fair market value of one share of Common Stock; and
B = the Exercise Price, as adjusted.
34
As used herein, the fair market value of one share of Common Stock shall
mean the closing price per share of the Company's Common Stock on the principal
securities exchange on which the Common Stock is then listed or admitted to
trading or, if not then listed or admitted to trading on any such exchange, on
the NASDAQ National Market System, or if not then listed or traded on the NASDAQ
National Market System, the average of the bid and offer price per share on
NASDAQ, in each case averaged over the ten (10) trading days consisting of the
day preceding the date upon which the Warrant is exercised and the nine (9)
consecutive trading days prior to such day. If at any time the Common Stock is
not listed or traded on any exchange or system, the current fair market value of
a share of Common Stock shall be the price per share which the Company could
obtain from a willing buyer (not a current employee, consultant or director) for
shares of Common Stock sold by the Company, as determined in good faith by the
Company's board of directors. Notwithstanding the preceding sentence, if the
Company shall become a party to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving entity, the current fair
market value of a share of Common Stock shall be deemed to be the value received
by the holders of the Company's Common Stock pursuant to such transaction.
In the event of any conversion of this Warrant, certificates for the shares
of stock so converted shall be delivered to the Holder as soon as practicable
but, in any event, within three (3) days thereafter and, unless this Warrant has
been fully converted or has expired, a new Warrant representing the portion of
the shares, if any, with respect to which this Warrant shall not have been
converted, shall also be issued to the Holder as soon as practicable but within
such three (3) day period.
4. Adjustment of Exercise Price and Number of Shares. The Exercise Price
and/or the number and kind of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 4.
4.1 Subdivision or Combination of Stock. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the number of shares purchasable hereunder shall be proportionately
increased and the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced and, conversely, in case the outstanding shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the number of shares purchasable hereunder shall be proportionately
reduced and the Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
4.2 Dividends or Distributions in Common Stock, Other Stock, or Property.
If at any time or from time to time the holders of Common Stock (or any shares
of capital stock or other securities at the time receivable upon the exercise of
this Warrant) shall have received or become entitled to receive, without payment
therefore,
(a) Common Stock or any shares of stock or other securities which are at
any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution,
35
(b) any cash paid or payable otherwise than as a regular periodic cash
dividend at a rate which is substantially consistent with past practice (or, in
the case of an initial dividend, at a rate which is substantially consistent
with industry practice), or
(c) Common Stock or other or additional capital stock or other securities
or property (including cash) by way of spin-off, split-up, or similar corporate
distribution (other than shares of Common Stock issued as a stock split,
adjustments in respect of which shall be covered by the terms of Section 4.1
above),
then and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
thereof, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (b) and (c) above) which such Holder would
hold on the date of such exercise had it been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares and/or all other additional capital stock and
other securities and property.
4.3 Reorganization, Reclassification, Consolidation or Merger. If, at any
time while this Warrant is outstanding, (i) the Company effects any merger or
consolidation of the Company with or into another entity, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Company or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a "Fundamental Transaction"), then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant Stock
then issuable upon exercise in full of this Warrant (the "Alternate
Consideration"). The aggregate Exercise Price for this Warrant will not be
affected by any such Fundamental Transaction, but the Company shall apportion
such aggregate Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's request, any successor to the Company or surviving
entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
ensuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
If any Fundamental Transaction constitutes or results in a change of control of
the Company, then at the request of the Holder delivered before the 90th day
after such Fundamental Transaction, the Company (or any such successor or
surviving
36
entity) will purchase the Warrant from the Holder for a purchase price, payable
in cash within five trading days after such request (or, if later, on the
effective date of the Fundamental Transaction), equal to the value of the
Warrant on the effective date of the Fundamental Transaction, determined using a
Black Scholes valuation model and assumptions reasonably mutually acceptable to
the Company and Holder, provided that for purposes of such calculation, the
market price of the Common Stock shall be the higher of the closing price on
trading day immediately preceeding or the closing price on the trading day
immediately following the public announcement of such Fundamental Transaction,
and in no event will the volatility factor be greater than fifty percent (50%).
For purposes of this Section 4.3, "change of control" means a sale of all or
substantially all of the assets of the Company or a consolidation or merger of
the Company into or with any entity or entities after which the holders of
capital stock of the Company hold less than fifty percent (50%) of the aggregate
outstanding voting securities of the surviving entity.
4.4 Additional Shares. The number of shares purchasable upon the exercise
of this Warrant shall be subject to increase from time to time in accordance
with the provisions of Section 6.3(b) of the Purchase Agreement upon the
occurrence of certain events as set forth in that section.
4.5 Sale or Issuance Below Warrant Price.
(a) Adjustment to Warrant Price. The "Warrant Price" shall initially be
equal to the Fair Market Value, as defined in the Purchase Agreement, and shall
be subject to adjustment and readjustment from time to time, as required by this
Section 4.5. If the Company shall at any time or from time to time issue or sell
any of its Common Stock, convertible preferred stock, warrants, options, or any
other rights or securities convertible into or exchangeable for Common Stock for
a consideration per share less than the Warrant Price in effect immediately
prior to the time of such issue or sale (excluding certain securities as
described below), the Warrant Price shall be reduced concurrently with such
issue or sale to a price (calculated to the nearest tenth of a cent) determined
by dividing (A) the number of shares of Common Stock Outstanding immediately
prior to such issue or sale multiplied by the Warrant Price plus (B) the
aggregate consideration received for such issue or sale, by the number of shares
of Common Stock Outstanding immediately after such issue or sale.
The Exercise Price shall also be concurrently reduced to a price
(calculated to the nearest tenth of a cent) determined by multiplying 1.25 by
the reduced Warrant Price.
The number of shares of Common Stock "outstanding" as used in the foregoing
calculation shall mean the number of shares of Common Stock issued and
outstanding plus the number of shares of Common Stock issuable upon (x) the
exercise of all outstanding options and warrants to purchase Common Stock and
(y) the conversion of all outstanding convertible preferred stock, convertible
debentures, or any other rights or securities convertible into or exchangeable
for Common Stock.
(b) Exceptions to Adjustment of the Warrant Price. No adjustment to the
Warrant Price or the Exercise Price shall be made under this Section 4.5 as a
result of any grant or
37
issuance by the Company of any rights or securities approved by the Company's
board of directors in good faith, as follows:
(i) Any grant or exercise of any shares of Common Stock issued to
employees, officers and directors of or consultants to the Company pursuant to
any stock option plan, employee stock purchase plan or similar plan or incentive
arrangement approved by the Company's board of directors;
(ii) Any options, warrants or other convertible securities or rights or
agreements to purchase securities of the Company outstanding on the date hereof;
(iii) Any underwritten public offerings of the equity securities of the
Company (excluding any equity line of credit);
(iv) Any equity securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or other similar business
combination;
(v) Any equity securities issued in connection with any stock split, stock
dividend or recapitalization of the Company;
(vi) Any equity securities of the Company issued in connection with
strategic transactions involving the Company and other entities in a similar or
complementary business of the Company, such as, but not limited to, joint
ventures, manufacturing, marketing or distribution agreements, technology
transfer agreements, research and development agreements; provided that, in each
case, the primary purpose of such transaction is not the raising of capital for
the Company and the primary business purpose of such other entity is not
investing in securities;
(vii) Any equity securities of the Company issued pursuant to any equipment
leasing arrangement or debt financing from a bank or other financial
institution; provided that, in each case, the primary business purpose of such
other entity is not investing in securities; and
(viii) Any shares of Common Stock issued upon the exercise of this Warrant
or any similar warrant issued pursuant to the Purchase Agreement.
(c) Other Factors. No adjustment shall be made under this Section 4.5 upon
the issuance of any additional shares of Common Stock which are issued pursuant
to the exercise of any options or warrants or other rights or the conversion of
any convertible securities if any adjustment shall previously have been made
upon the issuance of any such options, warrants or rights or the conversion of
any convertible securities as provided above. If the maximum number of shares of
Common Stock otherwise issuable or deemed issued for purposes of this Section 4
upon the exercise of any options, warrants, convertible securities or other
rights or agreements is not in fact issued and the remaining portion of such
options, warrants, convertible securities or other rights or agreements expires
or otherwise terminates, then the Exercise Price of this Warrant, as previously
adjusted pursuant to this Section 4.5, shall be readjusted as if such expired or
terminated portions had not been considered issuable or deemed issued for
purposes of this Section 4.5. In the case of the issuance or deemed issuance of
shares of Common Stock for a consideration other than cash, the
38
consideration received by the Company therefor shall be deemed to be the fair
value of such consideration as determined in good faith by the Company's board
of directors.
4.6 Limitations on Exercise.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the total
number of shares of Common Stock then beneficially owned by such Holder and its
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act)
under Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), does not exceed 4.999% of the total number of issued and
outstanding shares of Common Stock (including for such purposes the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that the
issuance of the full number of shares of Common Stock to be issued as requested
in such Exercise Notice is permitted under this paragraph. The Company's
obligation to issue shares of Common Stock in excess of the limitation referred
to in this Section shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as such
shares of Common Stock may be issued in compliance with such limitation. By
written notice to the Company, the Holder may waive the provisions of this
Section but (i) any such waiver, including such increase in shares, will not be
effective until the 61st day after such notice is delivered to the Company, and
(ii) any such waiver will apply only to the Holder and not to any other holder
of Warrants.
(b) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the total
number of shares of Common Stock then beneficially owned by such Holder and its
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act)
under Section 13(d) of the Securities Exchange Act, does not exceed 9.999% of
the total number of issued and outstanding shares of Common Stock (including for
such purposes the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a representation
by the Holder that it has evaluated the limitation set forth in this paragraph
and determined that the issuance of the full number of shares of Common Stock to
be issued as requested in such Exercise Notice is permitted under this
paragraph. The Company's obligation to issue shares of Common Stock in excess of
the limitation referred to in this Section shall be suspended (and shall not
terminate or expire notwithstanding any contrary provisions hereof) until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation. By written notice to the Company, the Holder may waive the
provisions of this Section but (i) any such waiver, including such increase in
shares, will not be effective until the 61st day after such notice is delivered
to the Company, and (ii) any such waiver will apply only to the Holder and not
to any other holder of Warrants.
39
4.7 Notice of Adjustment. Upon any adjustment of the Exercise Price, and/or
any increase or decrease in the number of shares purchasable upon the exercise
of this Warrant, the Company shall issue a certificate prepared by the Company's
chief financial officer, stating the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company shall send a copy of such certificate to the
Holder of this Warrant, by first class mail, postage prepaid, at the address of
such Holder as shown on the books of the Company, promptly after the occurrence
of the event triggering an adjustment under this Section 4.
4.8 Other Notices. If at any time:
(a) the Company shall declare any cash dividend or distribution upon shares
of its Common Stock;
(b) the Company shall declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders of its
Common Stock;
(c) the Company shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or other rights, or
shall offer any of its securities pursuant to a public offering;
(d) there shall be any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with or
into, or sale of all or substantially all of its assets to, another corporation;
(e) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(f) the Company shall take or propose to take any other action, notice of
which is actually provided (or is required to be provided, pursuant to any
written agreement) to holders of Common Stock;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, written notice setting forth
the principal terms of such event (i) at least twenty (20) days prior to the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, or other action described
in clause (f) above and (ii) in the case of any such public offering,
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, or other action described in clause (f) above at
least twenty (20) days prior to the date when the same shall take place. Any
notice given in accordance with the foregoing clause (i) shall also specify, in
the case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause
40
(ii) shall also specify the approximate date after which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale dissolution, liquidation or winding-up, or other action described
in clause (f) above, as the case may be.
5. Cash Dividends. If the Company, at any time while this Warrant or any
portion hereof remains outstanding and unexpired, shall pay or elect to pay or
declare and set apart for payment a regular periodic cash dividend on any shares
of Common Stock, the Holder of this Warrant shall be entitled to receive such
dividend as if this Warrant had then been exercised.
6. Issue Tax. The issuance of certificates for shares of Common Stock upon
the exercise of this Warrant shall be made without charge to the Holder of this
Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder of the Warrant being exercised.
7. Closing of Books. The Company will at no time close its transfer books
against the transfer of this Warrant or of any shares of Common Stock issued or
issuable upon the exercise of this Warrant in any manner during normal business
hours which interferes with the timely exercise of this Warrant.
8. No Voting Rights; Limitation of Liability. Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote or to consent as a shareholder in respect of meetings of shareholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a shareholder of the Company. No provisions hereof, in the absence
of affirmative action by the Holder to purchase shares of Common Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by its creditors.
9. Registration Rights. The Holder hereof shall be entitled to the
registration rights set forth in the Purchase Agreement.
10. Transferability of Securities.
10.1 Transferability. The Warrant and Warrant Stock shall be transferable,
in whole or in part, without charge to the Holder hereof (except for transfer
taxes), upon surrender of this Warrant properly endorsed and upon delivery of
the Assignment in substantially the form attached hereto as Exhibit B, subject
to the conditions specified in this Section 10 and by any applicable
restrictions set forth in Section 6.3 of the Purchase Agreement, which
conditions and restrictions are intended to insure compliance with the
provisions of the Securities Act. Each Holder will cause any proposed transferee
of the Warrant or Warrant Stock to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Section 10
and by the restrictions set forth in the Purchase Agreement if and to the extent
that such securities continue to be restricted securities in the hands of the
transferee. Each taker and Holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when endorsed in blank, shall be
41
deemed negotiable, and that the Holder hereof, when this Warrant shall have been
so endorsed, may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant; but until the
transfer hereof on the books of the Company, the Company may treat the
registered owner hereof as the owner for all purposes.
10.2 Restrictive Legend and Restrictions on Transfer. The Warrant and
Warrant Stock shall be subject to the legend requirements and restrictions on
transfer as set forth in the Purchase Agreement.
10.3 Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the holder of the Warrant Stock contained in this Section 10 and
the Purchase Agreement shall survive the exercise of this Warrant.
11. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
12. Notices. Any notice, request or other document required or permitted to
be given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by certified or registered mail, postage prepaid, to each such
Holder at its address as shown on the books of the Company or to the Company at
the address indicated in the first paragraph of this Warrant or shall be sent by
facsimile transmission to any number provided by a Holder or the Company for the
purpose of this Section 12.
13. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Warrant Stock shall survive the exercise and termination
of this Warrant. All of the covenants and agreements of the Company shall inure
to the benefit of the successors and assigns of the Holder hereof.
14. Descriptive Headings and Governing Law. The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant.
15. Governing Law and Forum. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any choice of law provisions thereof, and the federal law of the
United States of America. The parties hereto agree to submit to the exclusive
jurisdiction of the federal and state courts of the State of New York with
respect to the interpretation of this Warrant or for the purposes of any action
arising out of or related to this Warrant.
16. Lost Warrants or Stock Certificates. The Company represents and
warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant or stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the
42
Company at its expense will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
17. Fractional Shares. No fractional shares shall be issued upon exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share, pay
to the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then fair market value of a share of Common Stock, which shall
be determined in accordance with the provisions of Section 3 of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
and delivered by its officers, thereunto duly authorized as of January 14, 2002.
COMPANY:
XXXXXXX NAVIGATION LIMITED
By: ________________________________
Print Name: _________________________
Title: ______________________________
ACKNOWLEDGED AND AGREED:
HOLDER:
_______________________________________
By: ___________________________________
Print Name: ___________________________
Title: ________________________________
Address: ______________________________
______________________________
______________________________
43
EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only upon exercise of warrant)
TO: Chief Financial Officer
Xxxxxxx Navigation Limited
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
thereunder:
(a) purchase _____________ shares of the Common Stock of Xxxxxxx
Navigation Limited and herewith tenders full payment of $________________,
representing the full purchase price for such shares at the Exercise Price
per share provided for in such Warrant;
(Leave blank if you choose the second alternative below.)
or
(b) effect Conversion Right provisions as provided for in Section 3 of
the Warrant with respect to _______________ shares otherwise exercisable
pursuant to the Warrant and receive that number of shares of Common Stock
of Xxxxxxx Navigation Limited as determined in accordance with terms of the
Conversion Right provided for in the Warrant, in lieu of exercising the
attached Warrant for cash, check or consideration as provided for in
Section 3 of the Warrant.
(Initial here if the undersigned elects this second alternative. _______)
The undersigned represents that it is acquiring such Common Stock for its
own account for investment and not with a view to or for sale in connection with
any distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within its control).
Dated: ___________________
__________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
___________________________________________
___________________________________________
(Address)
44
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant,
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, unto:
Name of Assignee(s) Address No. of Shares
Dated: ___________________
_________________________________________
(Signature must conform in all respects to
name of holder as specified on the face
of the Warrant)
45
EXHIBIT B
FORM OF LEGAL OPINION
January 14, 2002
To the Purchasers in the Second Closing Listed in
Schedule A to the Xxxxxxx Navigation Limited
First Amended and Restated
Stock and Warrant Purchase Agreement
Dated as of January 14, 2002
Ladies and Gentlemen:
Reference is made to the First Amended and Restated Stock and Warrant
Purchase Agreement dated as of January 14, 2002 (the "Agreement"), by and among
Xxxxxxx Navigation Limited, a California corporation (the "Company"), and the
persons and entities listed in Schedule A to the Agreement (the "Purchasers"),
which provides for the issuance by the Company to the Purchasers of shares of
Common Stock of the Company ("Shares") and Warrants to purchase Common Stock
("Warrants"). This opinion is rendered to the Purchasers in the Second Closing
pursuant to Section 2.2(b) of the Agreement, and all capitalized terms used
herein have the meanings defined for them in the Agreement unless otherwise
defined herein. Reference in this opinion to the Agreement excludes any schedule
or substantive agreement attached as an exhibit to the Agreement, unless
otherwise indicated herein.
We have acted as counsel for the Company in connection with the negotiation
of the Agreement and the Warrants (collectively, the "Transaction Documents").
As such counsel, we have made such legal examination as we have deemed advisable
or necessary for the purpose of rendering this opinion. As to matters of fact
material to the opinions expressed herein, we have relied, with your permission,
solely upon the representations and warranties as to factual matters contained
in, and made by the Company and the Purchasers, in the Agreement and the
Warrants, and certificates of certain government officials and of officers of
the Company as required by the Agreement. In such examinations, we have assumed
the genuineness of all signatures on original documents, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all copies submitted to us and the due execution and
delivery of all documents (except as to due execution and delivery by the
Company) where due execution and delivery are a prerequisite to the
effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to us"
or similar language with reference to matters of fact refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
the Company in connection with the Agreement and the transactions contemplated
thereby. Except to the extent expressly set forth herein or as we otherwise
believe to be necessary to our opinion, we have not undertaken any independent
investigation to determine the existence or absence of any fact, and no
inference as to our knowledge of the existence or absence of any fact should be
drawn from our representation of the Company or the rendering of the opinion set
forth below.
-1-
46
The Purchasers in the Second Closing
in the Xxxxxxx Navigation Limited
First Amended and Restated
Stock and Warrant Purchase Agreement
January 14, 2002
Page 2
In rendering this opinion, we have assumed, with your permission: (a) the
authenticity and completeness of all documents submitted to us as originals, (b)
the conformity to original documents of all copies submitted to us as copies
thereof, (c) the genuineness of all signatures, (d) the legal capacity of
natural persons, (e) the truth, accuracy, and completeness of the information,
factual matters, representations and warranties contained in all of the
documents related to this transaction, (f) the due execution and delivery by the
Purchasers of all documents when due execution and delivery are a prerequisite
to the effectiveness thereof, (g) that the parties will act in accordance with
their respective representations, warranties, covenants, and agreements as set
forth in the Agreement, the Warrants, and the other documents to the
transaction, (h) that there are no extrinsic agreements or understandings among
any of the parties to the Agreement that would modify any of the terms thereof
or the respective rights or obligations of any of the parties thereunder, (i)
the Agreement and the Warrants are binding and enforceable obligations of the
Purchasers in accordance with their terms, and (j) that there has been no fraud,
duress, undue influence, or mutual mistake of fact or misunderstanding. We are
also assuming that the Purchasers have purchased the Shares and Warrants for
value, in good faith and without notice of any adverse claims within the meaning
of the California Uniform Commercial Code.
We are members of the Bar of the State of California and we express no
opinion as to any matter relating to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the State of
California. We note that the parties to the Transaction Documents have
designated the laws of the State of New York as the laws governing the
Transaction Documents. We assume for purposes of this opinion that the laws of
the State of New York are identical to the laws of the State of California.
We do not assume any responsibility for the accuracy, completeness or
fairness of any information, including, but not limited to, financial
information, furnished to you by the Company, or any of their agents or
representatives concerning the business or affairs of the Company or any other
information of a factual nature. This opinion is provided as a legal opinion
only, and not as a guaranty or warranty of the matters discussed herein. This
opinion is limited to the matters stated herein, and no opinion is implied or
may be inferred beyond the matters expressly stated.
The opinions hereinafter expressed are subject to the following additional
qualifications:
(a) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
federal or state laws affecting the rights of creditors;
-2-
47
The Purchasers in the Second Closing
in the Xxxxxxx Navigation Limited
First Amended and Restated
Stock and Warrant Purchase Agreement
January 14, 2002
Page 3
(b) We express no opinion as to the effect of limitations that may be
imposed as a matter of public policy, or as to the effect of rules of law
governing specific performance, injunctive relief or other equitable remedies or
principles, including, without limitation, considerations of materiality,
reasonableness, good faith and fair dealing (regardless of whether any such
remedy or principle is considered in a proceeding at law or in equity);
(c) We express no opinion as to compliance with the anti-fraud provisions
of applicable securities laws;
(d) We express no opinion as to the enforceability of the indemnification,
reimbursement or contribution provisions of the Agreement;
(e) We express no opinion as to the enforceability of choice of law
provisions or provisions that exclude conflicts of law principles under certain
circumstances (conflicts of law principles may require the application of the
law of another jurisdiction if the agreement violates a public policy of another
jurisdiction related to the transaction or another jurisdiction has a stronger
governmental interest in having its own laws applied);
(f) We express no opinion as to the enforceability of provisions that waive
jury trials, service of process or objections to venue or forum, establish
particular courts, laws or evidentiary standards for the adjudication of
disputes, or provide for arbitration of disputes;
(g) We express no opinion as to the enforceability of provisions that
provide that rights or remedies may be exercised without notice or are
cumulative or that the failure to exercise particular rights or remedies will
not operate as a waiver of such right or remedy;
(h) We express no opinion as the legality, validity, binding nature, or
enforceability of (i) provisions regarding a party's ability to collect
attorneys' fees and costs, (ii) any provision imposing penalties, late charges,
increases in the interest rate, or forfeitures, upon delinquency in payment or
the occurrence of a default to the extent that they constitute penalties,
forfeitures, or are contrary to public policy, or (iii) any provision to the
effect that a statement, certificate, determination of record shall be deemed
conclusive or prima facie evidence of a fact;
(i) We express no opinion as to the enforceability of provisions that waive
broadly or vaguely stated rights, unknown future rights or rights or defenses to
obligations granted by law;
-3-
48
The Purchasers in the Second Closing
in the Xxxxxxx Navigation Limited
First Amended and Restated
Stock and Warrant Purchase Agreement
January 14, 2002
Page 4
(j) We express no opinion as to matters of patent, trademark, copyright or
antitrust law; and
(k) We express no opinion regarding the effect of exercise of judicial
discretion, whether in a proceeding at law or in equity.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each of the Company and the Subsidiaries is a corporation duly
incorporated and validly existing under, and by virtue of, the laws of the
jurisdiction of its incorporation and is in good standing (to the extent such
concept is applicable) under such laws, and based solely upon the certificate of
good standing or equivalent issued by each of the Company and Subsidiary's
jurisdiction of incorporation, each of the Company and Subsidiaries has the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted.
2. The Company has all requisite legal and corporate power to enter into
and consummate the transactions contemplated by the Transaction Documents and to
carry out and perform its obligations under the terms of the Transaction
Documents.
3. All corporate action on the part of the Company necessary for the
authorization, execution and delivery of the Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares and Warrants and the
performance by the Company of its obligations under the Transaction Documents
has been taken. Each of the Agreement and Warrants has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
4. The Shares, when issued in compliance with the provisions of the
Agreement, will be validly issued, fully paid and nonassessable and free of any
liens, encumbrances and preemptive or similar rights contained in the Articles
of Incorporation or Bylaws of the Company, except as specifically provided in
the Agreement; provided, however, that the Shares may be subject to restrictions
on transfer under applicable state and federal securities laws. The Warrants,
when issued in compliance with the provisions of the Agreement, will be validly
issued, nonassessable and free of any liens, encumbrances and preemptive or
similar rights contained in the Articles of Incorporation or Bylaws of the
Company, except as specifically provided in the Agreement; provided, however,
that the Warrants may be subject to restrictions on transfer under applicable
state and federal securities laws. The Common Stock issuable upon the exercise
of the Warrants (the "Warrant Stock") has been duly and validly reserved, and
when issued in accordance with the
-4-
49
The Purchasers in the Second Closing
in the Xxxxxxx Navigation Limited
First Amended and Restated
Stock and Warrant Purchase Agreement
January 14, 2002
Page 5
Warrants and the Company's Articles of Incorporation will be validly issued,
fully paid and nonassessable.
5. The execution and delivery by the Company of the Transaction Documents
and the performance by the Company of its obligations under the Transaction
Documents do not violate any provision of the Company's Articles of
Incorporation or Bylaws or, to our knowledge, result in a violation of any
statute, rule or regulation applicable to the Company that an attorney
practicing in California exercising customary professional diligence would
reasonably recognize to be typically applicable to similar transactions.
6. No consent, approval or authorization of or designation, declaration or
filing with any federal or State of California governmental authority on the
part of the Company is required in connection with the execution and delivery of
the Agreement, or the offer, sale or issuance of the Shares and Warrants.
7. Subject to the accuracy of the Second Closing Purchasers'
representations and warranties in Section 4 of the Agreement, the offer, sale
and issuance in the Second Closing of the Shares, Warrants and Warrant Stock in
conformity with the terms of the Agreement and Warrants constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended.
This opinion is rendered as of the date hereof and addresses only the
matters specifically set forth herein, and we undertake no, and hereby disclaim
any, obligation to update or advise you of any circumstances or events, or any
changes in the law, that may hereafter be brought to our attention even if they
may affect or modify the opinions expressed herein. This opinion is furnished by
us, as counsel to the Company, to you solely for your benefit, and it may not be
relied upon by any other person or for any other purpose and may not be quoted,
disclosed, filed with any public or governmental entity, without our prior
written consent.
Very truly yours,
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
-5-
50
EXHIBIT C
TRANSFER AGENT INSTRUCTIONS
January 14, 2002
Mellon Investor Services
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxx
Re: Issuance of Xxxxxxx Navigation Limited Stock Certificates
Dear Xx. Xxxxx:
In connection with a private offering of securities by Xxxxxxx Navigation
Limited (the "Company"), enclosed please find the following:
1. Deliverable Shares: Attached as Exhibit A is a list of new shareholders
("Purchasers") of the Company who will be issued shares of common stock
of the Company, including shareholder name, address, and the number of
deliverable shares of the Company. The date of issuance will be January
14, 2002, and the share certificates will bear the legends as described
below.
You have agreed to prepare the share certificates no later than 1:00
p.m., January 15, 2002, and upon our instruction to deliver the final
share certificates via overnight courier to the respective Purchasers,
with a copy of each certificate to:
Xxxx X. XxXxxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
2. Legend: All of the share certificates will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED,
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT OR UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER
IS OTHERWISE EXEMPT FROM REGISTRATION AND ANY APPLICABLE STATE
SECURITIES LAWS. THE COMPANY MAY REQUEST A
51
Mellon Investor Services
January 14, 2002
Page 2
WRITTEN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH
SALE OR OTHER TRANSFER. THIS CERTIFICATE MUST BE SURRENDERED TO THE
CORPORATION OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE
OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES REPRESENTED
BY THIS CERTIFICATE.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY SUCH SECURITIES.
3. As Exhibit B, a copy of the Board resolution of the Company approving
the transaction, along with an executed secretarial certificate
affirming the copy.
4. As Exhibit C, a copy of the Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
legal opinion regarding the share certificates, dated January 14, 2002.
Additionally, we offer the following instructions:
Reference is made to that certain First Amended and Restated Stock and
Warrant Purchase Agreement dated January 14, 2002, by and among the Company and
the Purchasers, pursuant to which the Company is issuing to the Purchasers
shares (the "Shares") of its common stock (the "Common Stock") together with and
certain warrants that are exercisable for additional shares of Common Stock (the
"Warrants"). The shares of Common Stock sold to the Purchasers together with the
shares of Common Stock issuable upon the exercise of the Warrants are
collectively referred hereto as the "Underlying Shares". We have agreed with the
Purchasers that we will deliver to them the certificates evidencing the
Underlying Shares free of all restrictive legends when there is an effective
registration statement covering the resale of the Underlying Shares.
Accordingly, if our outside counsel shall have previously informed you through a
form of legal opinion (attached as Exhibit D) that a registration statement was
declared effective with respect to the Underlying Shares, then you are hereby
irrevocably authorized and directed to deliver to the Purchasers certificates
evidencing the Underlying Shares free of all restrictive legends upon receiving
notice to issue new shares upon the exercise of the Warrants or upon the
surrender of such original certificates for the Shares. You need not require
further letters from us or our counsel to effect the issuance of certificates
evidencing the shares, and in the future this letter shall serve as our standing
instructions with regard to this matter.
52
Mellon Investor Services
January 14, 2002
Page 3
We may notify you to place stop-transfer restrictions on the
certificates evidencing the shares in the event, but only in the event, a
registration statement is subject to amendment for events then current. In such
cases, we will notify you when such stop order may be properly lifted.
Please feel free to contact me should you have any questions regarding
the enclosed.
Sincerely,
Xxxxxxx Navigation Limited
By:____________________________________
Xxxx Xxxxx Xxxxxxxx
Chief Financial Officer
53
EXHIBIT D
PLAN OF DISTRIBUTION
The Selling Shareholders and any of their pledgees, assignees and
successors-in-interest named in the Registration on Form S-3 may, from time to
time, sell any or all of their shares of Common Stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling
Shareholders may use any one or more of the following methods when selling
shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Shareholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Shareholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Shareholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Shareholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the Selling Shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Shareholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in
54
connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of one counsel to
the Selling Shareholders. The Company has agreed to indemnify the Selling
Shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act, and the Selling Shareholders have agreed
to indemnify the Company against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
55
