EXHIBIT 4.14
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ELECTRIC CITY CORP.
SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 29, 2001
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ARTICLE I DEFINITIONS......................................................................1
ARTICLE II ISSUE, PURCHASE AND SALE OF THE SECURITIES......................................5
2.1 Authorization of Issuance of Series A Preferred Stock............................5
2.2 Purchase and Sale of Securities..................................................5
ARTICLE III CONDITIONS OF CLOSING..........................................................6
3.1 Purchaser Conditions to Closing..................................................6
3.2 Company Conditions to Closing....................................................9
ARTICLE IV CERTAIN COVENANTS...............................................................9
4.1 Conduct of the Business..........................................................9
4.2 Financial Statements and Other Reports...........................................9
4.3 Corporate Existence; Licenses and Permits; Maintenance of Properties............10
4.4 Securities Exchange.............................................................10
4.4 Insurance.......................................................................10
ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES.......................................10
5.1 Organization; Standing and Qualification of Company and its Subsidiaries;
Corporate Authority.............................................................11
5.2 Capital Stock...................................................................12
5.3 No Defaults.....................................................................12
5.4 Burdensome and Conflicting Agreements and Charter Provisions....................12
5.5 Title to Assets, Etc............................................................13
5.6 Leases..........................................................................13
5.7 Contracts.......................................................................13
5.8 Financial Statements............................................................14
5.9 Actions Pending.................................................................14
5.10 Offering of Securities..........................................................15
5.11 Broker's or Finder's Commissions................................................15
5.12 Application of Proceeds.........................................................15
5.13 Intellectual Property...........................................................15
5.14 Taxes...........................................................................16
5.15 ERISA...........................................................................16
5.16 Environmental...................................................................18
5.17 Insurance.......................................................................19
5.18 Transactions with Affiliates....................................................19
5.19 Employees; Labor Matters........................................................20
5.20 Customers, Suppliers and Distributors...........................................20
5.21 Investor Rights Agreements......................................................20
5.22 Agreements with Stockholders....................................................20
5.23 Company Qualifies as a "Smaller Enterprise".....................................20
5.24 Commission Documents............................................................20
5.25 Disclosure......................................................................21
ARTICLE VI REPRESENTATIONS OF THE PURCHASERS..............................................21
6.1 Investment Purpose..............................................................21
6.2 Accredited Investor Status......................................................21
6.3 Authorization; Enforcement.....................................................21
6.4 Broker's or Finder's Commissions................................................22
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ARTICLE VII TERMINATION...................................................................22
7.1 Termination.....................................................................22
7.2 Effect of Termination...........................................................22
ARTICLE VIII INDEMNIFICATION..............................................................22
8.1 Indemnification by Company......................................................22
8.2 Notification....................................................................23
8.3 Investor Rights Agreement.......................................................24
8.4 Survival of Provisions of Article VIII..........................................24
ARTICLE IX MISCELLANEOUS..................................................................24
9.1 Dividend Payments...............................................................24
9.2 Expenses........................................................................24
9.3 Restrictive Legends.............................................................24
9.4 Consent to Amendments...........................................................25
9.5 Notices to Subsequent Holder....................................................25
9.6 Survival of Representations, Warranties and Indemnities.........................25
9.7 Successors and Assigns..........................................................25
9.8 Notices.........................................................................26
9.9 Accounting Terms................................................................26
9.10 Governing Law...................................................................26
9.11 Headings; Table of Contents.....................................................26
9.12 Counterparts....................................................................26
9.13 Non-Business Days...............................................................26
9.14 Further Assurances..............................................................26
9.15 Integration.....................................................................27
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement, is entered into as of
November 29, 2001 (as it may be amended from time to time, this "AGREEMENT")
between Electric City Corp., a Delaware corporation (the "COMPANY"), and Leaf
Mountain Company, LLC, an Illinois limited liability company (the "PURCHASER").
WITNESSETH
WHEREAS, the Company desires to sell and issue to Purchaser 300,000
shares of its Series A Convertible Preferred Stock, $.01 par value per share
("SERIES A PREFERRED STOCK"), together with warrants to purchase 75,000 shares
of Series A Preferred Stock, 45,122 shares of its common stock, par value
$0.0001 ("COMMON STOCK"), and warrants to purchase 421,875 shares of its Common
Stock; and
WHEREAS, Purchaser desires to purchase such securities, as set forth on
SCHEDULE I hereto, from the Company, on the terms and subject to the conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have the
following meanings, such meanings to be equally applicable to the singular and
plural forms thereof:
"AFFILIATE" means, as applied to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble of this
Agreement.
"ANCILLARY AGREEMENTS" means the Stockholders Agreement, the Investor
Rights Agreement, the Series A Preferred Stock Warrants, the Common Stock
Warrants and the Trading Agreement.
"ASSETS" shall have the meaning set forth in SECTION 5.5 hereof.
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"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or required by
law or executive order to close.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof of
Series A Convertible Preferred Stock of the Company, in the form attached hereto
as EXHIBIT "A".
"CERTIFICATE OF INCORPORATION" means the Amended Certificate of
Incorporation of the Company, as amended or restated from time to time.
"CLOSING" shall have the meaning set forth in SECTION 2.2 hereof.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.2 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange Commission
or any other governmental authority at the time administering the Securities Act
or the Exchange Act.
"COMMISSION DOCUMENTS" shall have the meaning set forth in SECTION 5.25
hereof.
"COMMON SHARES" means the shares of Common Stock to be issued by the
Company to the Purchaser hereunder.
"COMMON STOCK" shall have the meaning set forth in the Recitals hereof.
"COMMON STOCK WARRANTS" means the warrants to be issued by the Company
to Purchaser to purchase 421,875 shares of Common Stock, as evidenced by the
Warrant Certificate in the form of EXHIBIT "E" attached hereto, as the same may
be amended from time to time in accordance with the terms thereof.
"COMPANY" shall have the meaning set forth in the preamble of this
Agreement.
"COMPANY IP" shall have the meaning set forth in SECTION 5.13 hereof.
"COMPANY PERSONNEL" shall have the meaning set forth in SECTION 5.15(a)
hereof.
"CONSENT" means the Consent and Amendment of Securities Purchase
Agreement, Stock Trading Agreement, Stockholders Agreement and Investor Rights
Agreement by and among the Company, the Purchaser and the holders of Series A
Convertible Preferred Stock in the form of EXHIBIT "I" attached hereto.
"CONVERSION PRICE" shall have the meaning set forth in Section 7(a) of
the Certificate of Designations.
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"CONVERSION STOCK" shall have the meaning set forth in SECTION 6.1
hereof.
"CUSTOMERS" shall have the meaning set forth in SECTION 5.20 hereof.
"EMPLOYEE PLANS" shall have the meaning set forth in SECTION 5.15(a)
hereof.
"ENVIRONMENTAL CONDITION" shall have the meaning set forth in SECTION
5.16(i) hereof.
"ENVIRONMENTAL LAW" shall have the meaning set forth in SECTION 5.16(f)
hereof.
"ERISA" shall have the meaning set forth in SECTION 5.15(a) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar or successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in SECTION
5.16(g) hereof.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning set forth in
SECTION 5.8 hereof.
"INVESTOR RIGHTS AGREEMENT" means the Investor Rights Agreement,
substantially in the form of EXHIBIT "B" attached hereto, as the same may be
amended from time to time in accordance with the terms thereof.
"JOINDER AGREEMENT" means the joinder agreement to be entered into by
each Additional Purchaser, substantially in the form of EXHIBIT "H" attached
hereto, as the same may be amended from time to time in accordance with the
terms thereof.
"LIQUIDATION AMOUNT" shall have the meaning set forth in the
Certificate of Designations.
"LITIGATION" shall have the meaning set forth in SECTION 3.1(g) hereof.
"LOSSES" shall have the meaning set forth in SECTION 8.1 hereof.
"OFFICER'S CERTIFICATE" means a certificate of the Company signed by
its President, Chief Executive Officer or Chief Financial Officer.
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"PERSON" means an individual, a corporation, a limited liability
company, an association, a partnership, a trust or estate, a government or any
department or agency thereof.
"PLACEMENT AGENT" means Newcourt Capital Securities, Inc., a Delaware
corporation.
"PPM" means that certain Confidential Private Placement Memorandum of
the Company dated February 16, 2001, including any supplements thereto issued
prior to the Closing Date.
"PREFERRED SHARES" means shares of Series A Preferred Stock.
"PROPERTIES" shall have the meaning set forth in SECTION 5.16(c)
hereof.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2
hereof.
"PURCHASER" shall have the meanings set forth in the preamble of this
Agreement.
"REGULATORY APPROVALS" means (i) any and all certificates, permits,
licenses, franchises, concessions, grants, consents, approvals, orders,
registrations, authorizations, waivers, variances, exemptions, declarations, or
clearances from, or filings or registrations with, or reports or notices to, any
Governmental Authority, and (ii) any and all waiting periods imposed by
applicable laws.
"RELEASE" shall have the meaning set forth in SECTION 5.16(h) hereof.
"SECURITIES" shall have the meaning set forth in SECTION 2.1 hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same may be in effect from time to time.
"SERIES A PREFERRED STOCK" shall have the meaning set forth in the
Recitals to this Agreement.
"SERIES A PREFERRED STOCK WARRANTS" means the warrants to be issued by
the Company to Purchaser to purchase 75,000 shares of Series A Preferred Stock,
as evidenced by the Warrant Certificate substantially in the form of EXHIBIT "D"
attached hereto, as the same may be amended from time to time in accordance with
the terms thereof.
"STATED VALUE" of the Series A Preferred Stock shall mean $10.00 per
share.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement,
substantially in the form of EXHIBIT "C" attached hereto, as the same maybe
amended from time to time in accordance with the terms thereof.
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"STOCK TRADING AGREEMENT" means the Stock Trading Agreement,
substantially in the form of EXHIBIT "F" attached hereto, as the same may be
amended from time to time in accordance with the terms thereof.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled, directly or indirectly, by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"TAXES" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including, without limitation, all
net income, gross income, sales and use, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt, capital stock,
business and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and, in the case
of the Company and its Subsidiaries, Taxes for which the Company or any of its
Subsidiaries may be liable in its own right, or as the transferee of the assets
of, or as successor to, any other corporation, association, partnership, joint
venture, or other entity, or under Treasury Regulation Section 1.1502-6 or any
similar provision of state or local law).
"TAX RETURN" means a report, return or other information required to be
supplied to a Governmental Authority with respect to Taxes including, where
permitted or required, combined, unitary, group or consolidated returns for any
group of entities that includes the Company or its Subsidiary.
"TRANSACTIONS" shall have the meaning set forth in SECTION 3.1(g).
"TRANSACTION DOCUMENTS" shall have the meaning set forth in SECTION
5.1(b) hereof.
"UNION PLAN" means the defined contribution plan described on Schedule
5.15(g) hereof.
ARTICLE II
ISSUE, PURCHASE AND SALE OF THE SECURITIES
2.1 AUTHORIZATION OF ISSUANCE OF SERIES A PREFERRED STOCK. The Company
has authorized the initial issuance of (a) the 300,000 Preferred Shares to be
issued hereunder, having the powers, designations, preferences and relative
rights and the qualifications, limitations and restrictions set forth in the
Certificate of Designations, plus such additional shares of Series A Preferred
Stock as may be necessary to pay in-kind accrued but unpaid dividends on the
Series A Preferred Stock and to issue up to 75,000 Preferred Shares upon
exercise of the Series A Preferred Stock Warrants; (b) 75,000 Series A Preferred
Stock Warrants; (c) 421,875 Common Stock Warrants; and (d) the 45,122 Common
Shares (collectively the "SECURITIES").
2.2 PURCHASE AND SALE OF SECURITIES. Subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to Purchaser, and
Purchaser agrees that it will
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purchase from the Company, at the Closing (as defined herein), for an aggregate
purchase price to be paid by Purchaser to the Company as set forth opposite the
Purchaser's name in the column entitled "Purchase Price" on SCHEDULE I (the
"PURCHASE PRICE") the number of shares of Series A Preferred Stock and Common
Stock and the number of Series A Preferred Stock Warrants and Common Stock
Warrants, as set forth opposite the Purchaser's name on SCHEDULE I. Concurrently
with the execution of this Agreement the Purchaser has delivered to the Company
(i) an amount of immediately available funds equal to its Purchase Price; and
(ii) counterpart signature pages of each of the Stockholders Agreement, the
Stock Trading Agreement and the Investor Rights Agreement. Subject to the
satisfaction or waiver of the parties' respective conditions to closing set
forth in SECTIONS 3.1 AND 3.2, the closing of the purchase and sale of the
Securities (the "CLOSING") shall take place on November 29, 2001, or at such
other time and on such other date as the Purchaser and the Company may agree
(the "CLOSING DATE"). At the Closing, the Company will deliver to Purchaser at
the offices of Purchaser, or at such other location as Purchaser and the Company
may agree, one or more stock certificates, as Purchaser may request, registered
in Purchaser's name or otherwise as Purchaser may direct, evidencing the shares
of Series A Preferred Stock and shares of Common Stock to be purchased by
Purchaser, together with 421,875 Common Stock Warrants and 75,000 Series A
Preferred Stock Warrants, against payment of the purchase price therefor by wire
transfer of immediately available funds to or upon the order of the Company by
the Company.
2.3 ADDITIONAL PURCHASE AND SALE OF SERIES A PREFERRED STOCK AND SERIES
A PREFERRED STOCK WARRANTS. Subsequent to the date of this Agreement, the
Company may enter into an additional securities purchase agreement, in a form
substantially similar to this Agreement and its exhibits and attachments,
providing for the sale by the Company to other investors (each, an "ADDITIONAL
PURCHASER") solely of not more than 100,000 shares of Series A Preferred Stock
in the aggregate and Series A Preferred Stock Warrants to purchase not more than
25,000 shares of Series A Preferred Stock in the aggregate, in exchange for an
aggregate cash purchase price for such preferred stock and warrants of not less
than $1,000,000, and containing such additional or different terms and
conditions as are set forth on SCHEDULE 2.3 attached hereto. At or prior to the
closing under the additional securities purchase agreement, each Additional
Purchaser shall execute and deliver to the Company a Joinder Agreement pursuant
to which such Additional Purchaser shall agree to be bound by and become a party
to the Stockholders Agreement, the Stock Trading Agreement and the Investor
Rights Agreement. The Company will conduct the closing under such additional
securities purchase agreement, if any. The Purchaser irrevocably consents to the
Company's entering into such additional securities purchase agreement and
consummating such purchase and sale. Any such purchase and sale shall be
conducted in accordance with all applicable laws, rules and regulations and the
rules of the American Stock Exchange. Neither the execution of an additional
securities purchase agreement nor the consummation of any such purchase and sale
shall be a condition to the parties' respective obligations under this
Agreement.
ARTICLE III
CONDITIONS OF CLOSING
3.1 PURCHASER CONDITIONS TO CLOSING. The Purchaser's obligation to
purchase and pay for the Securities to be purchased by it at the Closing is
subject to the satisfaction, as determined by, or waived by, the Purchaser on or
before the Closing Date, of the following conditions:
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(a) RECEIPT OF SECURITIES. The Purchaser shall have received delivery
of the Securities purchased by it in accordance with SECTION 2.2 and shall have
purchased the Securities pursuant to this Agreement.
(b) OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have received
from Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx, Chartered, special counsel to the
Company in connection with this transaction, an opinion, dated the Closing Date,
as to the matters set forth on EXHIBIT "G" attached hereto, in form and
substance reasonably satisfactory to the Purchaser and counsel.
(c) JOINDER AGREEMENT. The Joinder Agreement shall have been entered
into and delivered by the Purchaser and the Company.
(d) CONSENT. The Consent shall have been entered into and delivered by
the parties thereto other than Purchaser.
(e) EXPENSES. The Company shall have paid the reasonable fees and
expenses of the Purchaser's counsel up to $25,000.
(f) ISSUANCE OF CAPITAL STOCK SINCE SEPTEMBER 7, 2001. Neither the
Company nor any of its Subsidiaries shall have amended its certificate of
incorporation or by-laws nor issued any shares of capital stock or securities
exercisable for or convertible into shares of capital stock (other than options
or warrants to purchase Common Stock issued in the ordinary course of business
and on terms consistent with past practice not to exceed options or warrants to
purchase more than 100,000 shares of Common Stock and other than 23,733 shares
of Series A Convertible Preferred Stock issued on October 17, 2001 in payment of
a dividend on the outstanding shares of Series A Convertible Preferred Stock),
nor granted any additional stock appreciation rights or altered the terms of any
stock appreciation rights existing on the date hereof, in either case subsequent
to the date hereof and prior to the Closing.
(g) NO LITIGATION; NO ORDER. No action, suit or proceeding relating to
the transactions contemplated by this Agreement or any Ancillary Agreement (the
"TRANSACTIONS") shall be pending that in the reasonable good faith judgment of
Purchaser (i) seeks to restrain or prevent any of the Transactions and has a
reasonable probability of success or (ii) is reasonably likely to have a
material adverse effect on the assets, business, prospects, properties,
operations or conditions (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole and no order (including, without limitation, a
temporary restraining order), decree, writ, judgment or injunction shall be in
effect that restrains, enjoins or prevents the consummation of the transactions
contemplated by this Agreement or any Ancillary Agreement (collectively,
"LITIGATION").
(h) PROCEEDINGS. On or prior to the Closing Date, all corporate and
other proceedings required to be taken under applicable laws, rules and all
regulations and all rules of The American Stock Exchange in connection with the
transactions contemplated by this Agreement or any Ancillary Agreement shall
have been taken and all filings and documents incident thereto shall be
reasonably satisfactory in form and substance to the Purchaser and its special
counsel, and the Purchaser and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
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(i) COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
(j) OFFICER'S CERTIFICATE. Purchaser shall have received a certificate,
dated the Closing Date and signed by the Chief Executive Officer of the Company,
certifying that the conditions set forth in SECTIONS 3.1(e), 3.1(f), 3.1(g),
3.1(h), 3.1(i), 3.1(j), 3.1(m), 3.1(n) and 3.1(o) hereof have been satisfied on
and as of such date.
(k) SECRETARY'S CERTIFICATE. Purchaser shall have received a
certificate, dated the Closing Date and signed by the Secretary of the Company,
attaching good standing certificates from the Delaware Secretary of State with
respect to the Company and from the respective Secretaries of State for the
jurisdictions of incorporation for its Subsidiaries and certifying the
authenticity of attached copies of (i) the Certificate of Incorporation and
by-laws of the Company and the certificate of incorporation and by-laws of each
of its Subsidiaries, in each case as amended; (ii) resolutions of the Board of
Directors of the Company approving this Agreement and the Ancillary Agreements
and the transactions contemplated by this Agreement and the Ancillary
Agreements; (iii) evidence of the approval by the stockholders of the Company of
any matters for which stockholder approval is required under applicable laws,
rules and regulations and the rules of the American Stock Exchange or evidence
reasonably satisfactory to the Purchaser and its special counsel that such
approval is not required; and (iv) the Certificate of Designations, as filed
with the Secretary of State of the State of Delaware.
(l) PURCHASE PERMITTED BY APPLICABLE LAWS; LEGAL INVESTMENT. The
acquisition of and payment for the Securities and the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements (i)
shall not be prohibited by any applicable law or governmental regulation, (ii)
shall not subject Purchaser to any penalty or, in its reasonable judgment, other
onerous conditions under or pursuant to any applicable law or governmental
regulation and (iii) shall be permitted by the laws and regulations of the
jurisdictions to which Purchaser is subject.
(m) CONSENTS AND APPROVALS. All consents, waivers, approvals,
exemptions, authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons necessary or required in connection
with the execution, delivery or performance by the Company or enforcement
against the Company of this Agreement (including, without limitation, the
issuance of the Securities contemplated hereunder), any Ancillary Agreement or
any other document executed in connection with the consummation of the
transactions contemplated by this Agreement or any Ancillary Agreement shall
have been obtained and be in full force and effect, and the Purchaser shall have
been furnished with appropriate evidence thereof.
(n) INSOLVENCY. The Company shall not have made an assignment for the
benefit of creditors, nor shall it have filed with a court of competent
jurisdiction an application for appointment of a receiver or similar official
with respect to it or any substantial part of its assets, nor shall there have
been filed by the Company or any of its Subsidiaries a petition seeking relief
under any provision of the Federal Bankruptcy Code or any other federal or state
statute now or hereafter in effect affording relief to debtors, nor shall there
have been filed against the Company or any of its Subsidiaries any such
application or petition.
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(o) LISTING. The Company shall have obtained approval from the American
Stock Exchange to list for trading on the American Stock Exchange the Common
Stock issuable upon conversion of the Series A Preferred Stock (including shares
of Series A Preferred Stock issuable upon the exercise of the Series A Preferred
Stock Warrants), and the Common Shares issuable upon exercise of the Common
Stock Warrants.
3.2 COMPANY CONDITIONS TO CLOSING. The Company's obligation to issue
and sell the Securities at the Closing is subject to the satisfaction, on or
before the Closing Date, of the following conditions:
(a) RECEIPT OF PURCHASE PRICE. The Company shall have received payment
of the Purchase Price with respect to the Securities purchased hereunder.
ARTICLE IV
CERTAIN COVENANTS
4.1 CONDUCT OF THE BUSINESS. From the date of this Agreement to the
Closing, the Company shall refrain from taking any action that would render any
representation or warranty contained in this Agreement inaccurate in any
material respect.
4.2 FINANCIAL STATEMENTS AND OTHER REPORTS. After the Closing Date, the
Company agrees to send the following reports to the holder of Series A Preferred
Stock: (a) so long as the Company is subject to the requirements of, or
otherwise making filings pursuant to, Section 13 or 15(d) of the Exchange Act,
within three days after the filing with the Commission, a copy of its Annual
Report on Form 10-KSB or Form 10-K, its Quarterly Reports on Form 10-QSB or Form
10-Q, any proxy statements or information statements and any Current Reports on
Form 8-K, together in each case with amendments thereto; (b) within one day
after release, copies of all press releases issued by the Company or any of its
Subsidiaries; (c) promptly upon receipt thereof, copies of reports, if any,
submitted to the Company by independent accountants in connection with each
annual or interim audit of the books of the Company made by such accountants;
and (d) all other information sent to holders of the Common Stock or any other
equity security holder.
Without limiting the foregoing, the Company shall deliver to the
Purchaser until the Purchaser transfers, assigns (except in the case of an
assignment to an Affiliate) or sells all of its Series A Preferred Stock (a) as
soon as practicable and in any event within 45 days after the end of each fiscal
quarter, the following information: consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for such
fiscal period and for the period from the beginning of the then current fiscal
year to the end of such fiscal period and a comparison of each such item to the
then current budget, and the balance sheet of the Company and its Consolidated
Subsidiaries as at the end of such fiscal period, setting forth in each case in
comparative form figures for the corresponding periods in the preceding fiscal
year, all in reasonable detail, prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
certified as to fair presentation by the principal financial officer of the
Company and accompanied by a written discussion of operations in summary form;
and (b) as soon as practicable and in any event within 90 days after the end of
each fiscal year of the Company, the following information: statements of
income, stockholders' equity and cash flows of the Company and its consolidated
Subsidiaries for such
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year, and a consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding figures from the preceding fiscal year, prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and accompanied by an opinion of BDO Xxxxxxx
XX, or another firm of independent public accountants of recognized national
standing selected by the Company, to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in which such
accountants concur and as are noted therein) and present fairly the financial
condition of the Company and its consolidated Subsidiaries and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards and
accordingly included such tests of the accounting records and such other
auditing procedures as were considered necessary in the circumstances; and
accompanied by a written discussion of operations by management in summary form
with respect to such fiscal year, including a comparison to budget.
The Purchaser is hereby authorized to deliver a copy of any financial
statement delivered to it pursuant to this SECTION 4.2 to any regulatory body
having jurisdiction over it that requests such information. Subject to
compliance with reasonable confidentiality requirements imposed by the Company,
the Purchaser shall have reasonable access to the Company, including its
management, and its books and records during regular business hours and is
further authorized to request information from and to have access to, at the
Company's expense, the Company's independent public accountants. The Company
shall request such accountants to make available to the Purchaser such
information as the Purchaser may reasonably request.
4.3 CORPORATE EXISTENCE; LICENSES AND PERMITS; MAINTENANCE OF
PROPERTIES. The Company shall at all times use commercially reasonable efforts
to do or cause to be done all things necessary to maintain, preserve and renew
its existence as a corporation organized under the laws of a state of the United
States of America, and to preserve and keep in force and effect, and cause each
of its consolidated Subsidiaries to apply for on a timely basis, all licenses
and permits necessary and material to the conduct of the business of the Company
and its Subsidiaries, taken as a whole.
4.4 SECURITIES EXCHANGE. The Company shall use its reasonable best
efforts to maintain its Common Stock listing and to continue to have its Common
Stock be quoted on the American Stock Exchange or on another national securities
exchange, so long as it is subject to Section 13 or 15(d) of the Exchange Act.
4.5 INSURANCE. The Company shall at all times maintain customary
directors and officers insurance in amounts as are customary for other publicly
traded companies of similar size.
ARTICLE V
REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company represents, covenants and warrants to Purchaser as follows:
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5.1 ORGANIZATION; STANDING AND QUALIFICATION OF COMPANY AND ITS
SUBSIDIARIES; CORPORATE AUTHORITY.
(a) Each of the Company and each of its Subsidiaries, is a corporation
duly organized and existing in good standing under the laws of the jurisdiction
of its organization, and has the corporate power to own its property and to
carry on its business as now being conducted, is duly qualified and in good
standing as a foreign corporation to do business in every jurisdiction where the
character of the properties owned or leased by it or the nature of any business
transacted by it makes such qualification necessary, except where such
nonqualification or lack of good standing would not have a material adverse
effect on the business of the Company and its Subsidiaries, taken as a whole.
Each of the Company and its Subsidiaries have delivered to the Purchaser true,
complete and correct copies of their respective certificates of incorporation
and their respective by-laws, as amended through the date hereof, which are in
full force and effect on the date hereof.
(b) The execution and delivery by the Company of this Agreement and the
Ancillary Agreements (collectively, the "TRANSACTION DOCUMENTS"), and the
performance by the Company of all transactions and obligations contemplated
hereby and thereby are within its corporate authority. The execution, delivery
and performance of the Transaction Documents and each other agreement
contemplated by the terms hereof and thereof and the issuance of the Securities
have been duly authorized by all necessary corporate proceedings on the part of
the Company. Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and to equitable principles relating to enforceability. The Preferred Shares and
the Common Shares are duly authorized and, when issued, will be validly issued,
fully paid and nonassessable and subject to no preemptive rights. Assuming the
accuracy of the representations of Purchaser in this Agreement, the Preferred
Shares and the Common Shares issuable hereunder will be issued in compliance
with all applicable federal and state securities laws. The shares of Common
Stock issuable upon the conversion of the Preferred Shares and the Series A
Preferred Stock that is issuable upon exercise of the Series A Preferred Stock
Warrants, and the shares of Common Stock issuable upon the exercise of the
Common Stock Warrants, are duly authorized and reserved for issuance, will be
subject to no preemptive rights and, when issued upon such conversion or
exercise, will be validly issued, fully paid and nonassessable. Assuming the
accuracy of the representations of the Purchaser in this Agreement, when such
shares of Common Stock are issued, such shares will be issued in compliance with
all applicable federal and state securities laws. The Company has reserved for
issuance 3,700,000 shares of Series A Preferred Stock (of which 1,600,000 shares
were issued on September 7, 2001 and 23,733 shares were issued on October 17,
2001) and 37,000,000 shares of Common Stock for issuance upon conversion
thereof. In addition, the Company has reserved for issuance 6,314,830 shares of
Common Stock issuable upon exercise of the Common Stock Warrants and the
Placement Agent Warrants.
(c) Great Lakes Controlled Energy Corporation and Switchboard
Apparatus, Inc. are the only Subsidiaries of the Company. Each such Subsidiary
is wholly owned by the Company.
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5.2 CAPITAL STOCK.
(a) As of the date hereof, the Company has authorized 85,000,000 shares
of Common Stock and 5,000,000 shares of preferred stock, of which 3,700,000
shares have been designated Series A Preferred Stock. As of the date hereof, the
Company has 31,043,036 issued and outstanding shares of Common Stock and
1,623,733 issued and outstanding shares of Series A Preferred Stock. All
outstanding shares of the Company Common Stock and Series A Preferred Stock have
been duly authorized, validly issued and are fully paid and nonassessable and
free of preemptive rights. All outstanding shares of Common Stock and Series A
Preferred Stock were issued in compliance with all applicable federal and state
securities laws.
(b) Except as otherwise stated in this SECTION 5.2 or in SCHEDULE 5.2
and except for shares of capital stock reserved for issuance in connection with
the transactions contemplated by this Agreement and the Ancillary Agreements,
the Company has not granted or issued, or agreed to grant or issue, any options,
warrants or similar rights to acquire or receive any of the authorized but
unissued shares of its capital stock of any class or any securities convertible
into shares of its capital stock of any class or any stock appreciation rights.
Except as stated in SCHEDULE 5.2, no adjustment to the exercise price of any
outstanding options or warrants of the Company will be required as a result of
the issuance of any of the Securities.
(c) Except as set forth in SCHEDULE 5.2(c), no holder of shares of
Common Stock (or securities convertible into or exchangeable or exercisable for
Common Stock) has any rights to purchase or receive additional or other
securities upon the occurrence of an event that might dilute such holder's
percentage interest in the Company.
5.3 NO DEFAULTS. Except as set forth in SCHEDULE 5.3, neither the
Company nor any of its Subsidiaries is in violation of, or in default under, nor
has there been any waiver given with respect to, any term or provision of any
charter, by-law, mortgage, indenture, agreement, instrument, statute, rule, law,
regulation, judgment, decree, order, writ, or injunction applicable to it, such
that such violations and defaults in the aggregate could reasonably be expected
to result in any material adverse change in the business, assets, properties,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a whole, or materially adversely affect the ability
of the Company to perform in any material respect its obligations under this
Agreement. All Regulatory Approvals required by the Company and its Subsidiaries
to conduct their respective business as now conducted by them have been obtained
and are in full force and effect, and the Company and its Subsidiaries are in
compliance with the terms and requirements of such Regulatory Approvals. Except
as set forth on SCHEDULE 5.3 hereto, since December 31, 2000, none of the
Company or any of its Subsidiaries has received any written notice or other
written communication from any Governmental Entity regarding (i) any revocation,
withdrawal, suspension, termination or modification of, or the imposition of any
material conditions with respect to, any Regulatory Approval, (ii) any violation
of any law by the Company or any of its Subsidiaries, or (iii) any other
limitations on the conduct of business by the Company or any of its
Subsidiaries.
5.4 BURDENSOME AND CONFLICTING AGREEMENTS AND CHARTER PROVISIONS.
Neither the execution or delivery of the Transaction Documents by the Company,
nor the offering, issuance and sale of the Securities by the Company, nor
fulfillment of, or compliance with, the terms and provisions of the Transaction
Documents and the Series A Preferred Stock by the
12
Company, nor the issuance of Series A Preferred Stock upon exercise of the
Series A Preferred Stock Warrants, nor the issuance by the Company of shares of
Common Stock upon conversion of the Series A Preferred Stock as provided in the
Certificate of Designations, or upon exercise of the Common Stock Warrants or
the Placement Agent Warrants, will, except as set forth in SCHEDULE 5.4,
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any lien upon any of the properties or assets of the Company or any
of its Subsidiaries, or require any consent, approval or other action by, or
notice to, or filing with, any court or administrative or governmental body or
any other Person or pursuant to the Certificate of Incorporation or by-laws of
the Company or the certificate of incorporation or by-laws of any of the
Company's Subsidiaries, any award of any arbitrator or any material agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company or any of its
Subsidiaries is subject, except for (a) approval of the holders of at least 66
2/3 % of the outstanding shares of Series A Convertible Preferred Stock and (b)
approvals or waivers as may be required in connection with fulfillment of, or
compliance with, the Investor Rights Agreement, in each case, which approvals or
waivers shall have been obtained by the Closing Date.
5.5 TITLE TO ASSETS, ETC. The Company has good and marketable fee
simple title to the assets reflected on the balance sheet set forth on SCHEDULE
5.5 (the "ASSETS"). Except as set forth in SCHEDULE 5.5, none of the Assets is
subject to any encumbrances, except for minor liens that in the aggregate are
not substantial in amount, do not materially detract from the value of the
property or assets subject thereto or interfere with the present use thereof and
have not arisen other than in the ordinary course of business. There are no
pending or threatened condemnation proceedings relating to any of the facilities
of the Company. The real property improvements (including leasehold
improvements) and fixtures and equipment of the Company are adequately insured
and are structurally sound with no known material defects. The facilities,
fixtures and equipment of the Company are in good operating condition and repair
(except for ordinary wear and tear and any defect for which the cost of
repairing would not be material), are sufficient for the operation of the
Company's business as presently conducted and are in conformity in all material
respects with all applicable laws, ordinances, orders, regulations and other
requirements (including applicable zoning, environmental, motor vehicle safety
or standards, occupational safety and health laws and regulations) relating
thereto currently in effect, except where the failure to conform would not have
a material adverse effect on the business or financial condition of the Company.
The Assets are valued on the Company's books at or below actual cost less an
adequate and proper depreciation charge. The Company has not depreciated any of
the Assets on an accelerated basis or in any other manner inconsistent with
applicable Internal Revenue Service tax and fiscal guidelines, if any.
5.6 LEASES. Each of the Company and its Subsidiaries enjoy peaceful and
undisturbed possession of all leases material to them. All such leases are valid
and subsisting and are in full force and effect.
5.7 CONTRACTS. Except as set forth in SCHEDULE 5.7, there is no
contract, agreement or understanding required to be described in or filed as an
exhibit to any Commission Documents that is not described in or filed as
required by the Securities Act or the Exchange Act, as the case may be. Except
as set forth in SCHEDULE 5.7, each such contract, agreement and understanding is
valid and binding and is in full force and effect and enforceable in accordance
13
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally or as may be limited by equitable principles relating to
enforceability), except in the case of such contracts, agreements or
understandings that are by their terms no longer in force or effect. Except as
set forth on SCHEDULE 5.7, (a) no approval or consent of, or notice to, any
Person is needed in order that such contract, agreement or understanding shall
continue in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination following the consummation of the
transactions contemplated by the Transaction Documents, other than such notices,
consents and approvals as have been obtained and (b) the Company and/or its
Subsidiaries are not in violation of, breach of, or default under any such
contract, agreement or understanding nor, to the Company's knowledge, is any
other party to any such contract, agreement or understanding.
5.8 FINANCIAL STATEMENTS. The Company has furnished Purchaser with (a)
the balance sheet of the Company and its consolidated Subsidiaries as at
December 31, 2000 and the related statements of income, stockholders' equity and
cash flows of the Company and its consolidated Subsidiaries for the fiscal year
ended December 31, 2000, all certified by BDO Xxxxxxx XX, including in each case
the related schedules and notes, and (b) an unaudited balance sheet of the
Company and its consolidated Subsidiaries as at September 30, 2001 and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated Subsidiaries for the interim period ended on such date, prepared by
the Company and certified by its principal financial officer (item (b) is
referred to as the "INTERIM FINANCIAL STATEMENTS").
All such financial statements (including any related schedules and
notes) have been prepared in accordance with generally accepted accounting
principles consistently applied, except to the extent set forth in the notes to
such financial statements and except for the absence of footnotes to the Interim
Financial Statements and except that the Interim Financial Statements are
subject to normal year-end adjustments and to adjustments made in the course of
an audit that would not in the aggregate be material, throughout the periods
involved and to the extent required by such principles show all liabilities,
direct and contingent, of the Company and its Subsidiaries required to be shown
thereon in accordance with generally accepted accounting principles. The balance
sheets and the related schedules and notes fairly present the financial
condition of the Company and its consolidated Subsidiaries. Except as set forth
in SCHEDULE 5.8, the Company has incurred no material liabilities since March
31, 2001, other than those incurred in the ordinary course. The net income and
stockholders' equity statements and the related schedules and notes fairly
present the results of the operations of the Company and its consolidated
Subsidiaries for the periods indicated.
Except as set forth in SCHEDULE 5.8, there has been no material adverse
change in the assets, business, prospects, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole,
since December 31, 2000.
5.9 ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries before any court, arbitrator or
administrative or governmental body that (a) seeks to enjoin or otherwise
prevent the consummation of the sale or issuance of the Securities or (b)
materially and adversely affects, or as to which there is a reasonable
possibility of an adverse decision that would materially and adversely affect,
either individually or collectively, the assets, business, properties,
prospects, operations or condition, financial or otherwise, of the Company
14
and its Subsidiaries, taken as a whole. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, order, writ, injunction, decree,
rule or regulation of any court or governmental department, commission, board,
bureau, agency or instrumentality, the violation of which reasonably could be
expected to, either individually or collectively, materially and adversely
affect the business, property, assets, prospects, operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole.
5.10 OFFERING OF SECURITIES. Assuming the accuracy of the
representations of the Purchase in this Agreement, the offer, sale and issuance
of the Securities are exempt from the registration requirements of the
Securities Act. Neither the Company nor any agent on its behalf has solicited or
will solicit any offers to sell or has offered to sell or will offer to sell all
or any part of the Securities to any Person so as to bring the offering and sale
of such Securities by the Company within the registration provisions of the
Securities Act. The Company has filed all notices and satisfied all registration
or qualification requirements of any state securities or Blue Sky law of any
applicable jurisdiction with respect to the offer, issuance and sale of the
Securities or required by the Ancillary Agreements.
5.11 BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's or
placement fee or commission will be payable with respect to the sale or the
issuance of the Securities contemplated hereby or by the Ancillary Agreements as
a result of any act or omission by the Company, and the Company will hold
Purchaser harmless from any claim, demand or liability for broker's or finder's
or placement fees or commissions alleged to have been incurred in connection
with the sale or the issuance of the Securities, due to any actions or omissions
by the Company or its Subsidiaries or any of their respective directors,
officers or agents.
5.12 APPLICATION OF PROCEEDS. The net proceeds of the sale of the
Series A Preferred Stock will be used by the Company in the manner described in
SCHEDULE 5.12.
5.13 INTELLECTUAL PROPERTY
(a) The Company and its Subsidiaries exclusively own or possess the
requisite licenses or rights (on reasonable commercial terms) to use all
patents, trade secrets, trademarks, service marks, service names, trade names,
copyrights and other intellectual property rights necessary to enable each of
them to conduct their respective businesses as now operated (collectively, the
"COMPANY IP"). SCHEDULE 5.13(a) sets forth a full and complete list of all
intellectual property rights of the Company and its Subsidiaries. There is no
claim or action by any Person pertaining to, or proceeding pending, or to the
Company's knowledge threatened, that challenges the rights of the Company or its
Subsidiaries with respect to any Company IP. To the Company's knowledge, neither
the Company's nor any of its Subsidiaries' current and intended products and
services infringe on any patents, licenses, trademarks, service marks, service
names, trade names, copyrights or other intellectual property rights held by any
Person and neither the Company nor any of its Subsidiaries is aware of any facts
or circumstances that might give rise to any of the foregoing.
(b) Except as set forth in SCHEDULE 5.13(b), no proceedings or claims
in which the Company alleges that any Person is infringing upon, or otherwise
violating, any Company IP are pending, and none has been served by, instituted
or asserted by the Company or any of its Subsidiaries, nor are any proceedings
threatened alleging any such violation or infringement.
15
(c) The Company has taken and will take all commercially reasonable
actions that are necessary or advisable in order to fully protect the Company
IP, in a manner consistent with prudent commercial practice.
5.14 TAXES. The Company and each of its Subsidiaries has timely filed
(or caused to be filed) all Tax Returns that are required to be filed by (or
with respect to) it on or before the date hereof and has paid all Taxes due on
or before the date hereof whether or not reflected on such Tax Returns,
including pursuant to any assessment received by it. All such Tax Returns were
true, correct and complete in all material respects. None of such Tax Returns
has been audited by the relevant taxing authority, and no taxing authority has
notified (or threatened) the Company or any of its Subsidiaries, orally or in
writing, that such taxing authority will or may audit any such return. The
Company and its Subsidiaries have complied with all requirements of the Code,
the Treasury Regulations and any state, local or foreign law relating to the
payment and withholding of Taxes relating to them, and the Company and each of
its Subsidiaries have, within the time and in the manner prescribed by
applicable law, paid over to the proper taxing authorities all amounts required
to be so withheld and paid over relating to them. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of Taxes or
other governmental charges are adequate to cover any liability of the Company
and its Subsidiaries for Taxes through the date hereof. There are no liens for
Taxes with respect to any asset of the Company or any of its Subsidiaries,
except for liens with respect to Taxes that are not yet due and payable. No
taxing authority in a jurisdiction where the Company or any of its Subsidiaries,
as the case may be, does not file tax returns has made a claim, assertion or
threat that the Company or any of its Subsidiaries is or may be subject to
taxation in such jurisdiction.
5.15 ERISA.
(a) SCHEDULE 5.15 sets forth each plan, agreement, arrangement or
commitment that is an employment or consulting agreement, executive or incentive
compensation plan, bonus plan, deferred compensation agreement, employee
pension, profit sharing, savings or retirement plan, employee stock option or
stock purchase plan, group life, health, or accident insurance or other employee
benefit plan, agreement, arrangement or commitment, including, without
limitation, any severance, holiday, vacation, Christmas or other bonus plans
(including, but not limited to, "employee benefit plans," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), maintained by the Company or any of its Subsidiaries for any present
or former employees, officers or directors of the Company or any of its
Subsidiaries ("COMPANY PERSONNEL") or with respect to which the Company or any
of its Subsidiaries has liability or makes or has an obligation to make
contributions ("EMPLOYEE PLANS").
(b) Except as to the Union Plan, the Company has provided Purchaser
with access to (i) copies of all Employee Plans or, in the case of an unwritten
plan, a written description thereof, (ii) copies of any annual, financial or
actuarial reports and Internal Revenue Service determination letters relating to
such Employee Plans and (iii) copies of all summary plan descriptions (whether
or not required to be furnished under ERISA) and employee communications
relating to such Employee Plans that materially modify an existing summary plan
description and have been distributed to Company Personnel, in each case under
this clause (iii), existing or in effect during or within the past five years.
16
(c) Except as set forth on SCHEDULE 5.15(c), no Employee Plan except
the Union Plan (which is excluded from this SECTION 5.15(c) representation and
warranty) entitles Company Personnel to (i) any pension benefit that is unfunded
or (ii) any pension or other benefit to be paid after termination of employment
other than required by Section 601 of ERISA or pursuant to plans intending to be
qualified under Section 401(a) of the Code and listed on the SCHEDULE 5.15(c),
and no other benefits whatsoever are payable to any Company Personnel after
termination of employment (including retiree medical and death benefits).
(d) Each Employee Plan, except the Union Plan (which is excluded from
this SECTION 5.15(d) representation and warranty), that is an employee welfare
benefit plan under Section 3(1) of ERISA is either (i) funded through an
insurance company contract and is not a "welfare benefit fund" within the
meaning of Section 419 of the Code or (ii) unfunded.
(e) Each Employee Plan, except the Union Plan (which is excluded from
this SECTION 5.15(e) representation and warranty) by its terms and operation is
in compliance in all material respects with all applicable laws (including, but
not limited to, ERISA, the Code and the Age Discrimination in Employment Act of
1967, as amended).
(f) There are no actions, suits or claims pending or, to the Company's
knowledge, threatened against any Employee Plan or administrator or fiduciary of
any such Employee Plan (other than routine noncontested claims for benefits)
nor, to the Company's knowledge, does any set of circumstances exist that may
reasonably give rise to such a claim. As to each Employee Plan for which an
annual report is required to be filed by the Company under ERISA or the Code,
all such filings, including schedules, have been made on a timely basis and with
respect to the most recent report regarding each such Employee Plan liabilities
do not exceed assets, and no material adverse change has occurred with respect
to the financial materials covered thereby.
(g) Except as set forth on SCHEDULE 5.15(g), neither the Company nor
any entity that is or was at any time treated as a single employer with the
Company under Section 414(b), (c), (m) or (o) of the Code has at any time (i)
maintained, contributed to or been required to contribute to any plan under
which more than one employer makes contributions (within the meaning of Section
4064(a) of ERISA) or any plan that is a multiemployer plan, (ii) incurred or
expects to incur any liability to the Pension Benefit Guaranty Corporation or
otherwise under Title IV of ERISA or (iii) incurred or expects to incur
liability in connection with an "accumulated funding deficiency" within the
meaning of Section 412 of the Code whether or not waived.
(h) Each Employee Plan except the Union Plan (which is excluded from
this SECTION 5.15(h) representation and warranty) intended to be qualified under
Section 401(a) of the Code and, if applicable, Section 401(k) of the Code has
received a favorable determination letter from the Internal Revenue Service
stating that such Employee Plan is qualified under Section 401(a) and, if
applicable, Section 401(k) of the Code and the related trust is exempt from tax
under Section 501(a) and nothing has occurred since the date of such letter to
cause the letter to be no longer valid or effective.
(i) Neither the Company nor, to the knowledge of the Company, any other
Person, including any fiduciary, has engaged in any "prohibited transaction" (as
defined in
17
Section 4975 of the Code or Section 406 of ERISA), that could subject any of the
Employee Plans (or their trusts), the Company, or any Person who the Company has
an obligation to indemnify, to any tax or penalty imposed under Section 4975 of
the Code or Section 502 of ERISA. No "reportable event" (as such term is defined
in Section 4043 of ERISA) for which the notice requirement has not been waived
by the Pension Benefit Guaranty Corporation has occurred or is expected to occur
with respect to any Employee Plan and the Company will provide each Purchaser
notice of any reportable events upon learning of the same.
(j) Except as set forth on SCHEDULE 5.15(j), the events contemplated by
this Agreement (either alone or together with any other event) will not (i)
entitle any Company Personnel to severance pay, unemployment compensation, or
other similar payments under any Employee Plan or law, (ii) accelerate the time
of payment or vesting or increase the amount of benefits due under any Employee
Plan or compensation to any Company Personnel, (iii) result in any payments
(including parachute payments) under any Employee Plan or law becoming due to
any Company Personnel or (iv) terminate or modify or give a third party a right
to terminate or modify the provisions or terms of any Employee Plan.
(k) Except as set forth in SCHEDULE 5.15(k), neither the Company nor
any of its Subsidiaries (nor any entity that is or was at any time treated as a
single employer with the Company or any Subsidiary under Section 414(b), (c),
(m) or (o) of the Code or ERISA) has any obligation or liability (contingent or
otherwise) relating to or in connection with the Union Plan. The Union Plan is
not subject to Title IV of ERISA. Except as set forth in SCHEDULE 5.15(k), all
contributions required to be made by the Company or any Subsidiary to the Union
Plan have been made when due and, to the best of the Company's knowledge, if the
Company and/or any of its Subsidiaries were to withdraw from the Union Plan on
the Closing Date, neither the Company nor any of its Subsidiaries would incur
any liability relating to or in connection with the Union Plan.
5.16 ENVIRONMENTAL.
(a) Except as set forth on SCHEDULE 5.16(a), the Company and its
Subsidiaries comply, and the Company, its Subsidiaries and their respective
predecessors at all times during their existence have complied, with all
applicable Environmental Laws (as defined below).
(b) There is not now pending or, to the knowledge of the Company or any
of its Subsidiaries, threatened, any action, claim, proceeding or investigation,
nor has the Company, its Subsidiaries, or any of their respective predecessors
received any notice, claim, demand letter or request for information at any
time, alleging that the Company, any of its Subsidiaries, or any of their
respective predecessors may be or is in violation of, or liable under, any
Environmental Law, nor does there exist any basis for any such action, claim,
proceeding or investigation.
(c) Except as disclosed on SCHEDULE 5.16(c), there are no Hazardous
Substances (as defined below) located on any of the properties currently or
formerly owned or operated by the Company, any of its Subsidiaries or any of
their respective predecessors (including soil, groundwater and surface features
and buildings and structures thereon) (the "PROPERTIES"), and none of the
Properties contains, or has contained, any underground improvements, including,
but not limited to, treatment or storage tanks, sumps, water, gas or oil xxxxx,
or associated piping.
18
(d) The Company and its Subsidiaries do not have any contingent
liability in connection with a Release (as defined below) or threatened Release
of any Hazardous Substance at any location.
(e) To the knowledge of the Company and its Subsidiaries, there are no
present or past Environmental Conditions (as defined below) in any way related
to the Company, any of its Subsidiaries, or any of their respective predecessors
that have, or may have, individually or in the aggregate, a material adverse
effect with respect to any Property or the business or condition of the Company
and its Subsidiaries, taken as a whole.
(f) As used herein, "ENVIRONMENTAL LAW" means any federal, state, local
or foreign law, regulation, order, decree, judgment, opinion, common law or
binding equitable principle or agency requirement relating to pollution,
contamination, wastes, hazardous material or the protection of the environment,
human health or safety.
(g) As used herein, "HAZARDOUS SUBSTANCE" means any substance that is
listed, classified under or regulated by any governmental authority pursuant to
any Environmental Law, including, without limitation, any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive material or radon.
(h) As used herein, "RELEASE" means any release, spill, emission,
leaking, pumping, injection, deposit, discharge, dispersal, leaching or
migrating into the indoor or outdoor environment of any Hazardous Substance.
(i) As used herein, "ENVIRONMENTAL CONDITION" means the Release or
threatened Release of any Hazardous Substance upon, under, in or about any of
the Properties, or any other circumstance involving any Property or the Company,
any of its Subsidiaries, or any of their respective predecessors that could be
expected to result in any claim, liability, costs or losses, or any restriction
on the ownership, use or transfer of any Property pursuant to any Environmental
Law.
5.17 INSURANCE. The Company maintains or is covered by valid policies
of workers' compensation insurance, product liability insurance, and of
insurance with respect to its properties and business. The Company currently
maintains in full force insurance covering the respective risks of the Company
and its Subsidiaries of such types and in such amounts, with such deductibles
and with such insurance companies as are customary for other companies engaged
in similar lines of business. The Company currently maintains key man life
insurance for each of Xxxx Xxxxxx and Xxxxx Xxxxxxxx in the amount of
$5,000,000, which is and will remain in full force and effect through December
31, 2005. SCHEDULE 5.17 lists all insurance policies, the name of the insurer, a
description of the policy, the amount of coverage, the amount of any deductible,
the amount of the premium and the expiration date of the policy.
5.18 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
5.18, neither the Company nor any of its Subsidiaries is directly or indirectly
a party to or otherwise involved in any transaction including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service, with any Affiliate. The Company has delivered to the
Purchasers copies of all agreements and documents related to all transactions
listed on SCHEDULE 5.18.
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5.19 EMPLOYEES; LABOR MATTERS. Except as set forth in SCHEDULE 5.19,
the Company is not a party to any labor agreement with respect to its employees
with any labor organization, group or association. Except as set forth on
SCHEDULE 5.19, the Company is not delinquent in payments to any of the employees
of the Company for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. The Company is in material
compliance with all applicable laws respecting employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practice. Except as set forth in SCHEDULE 5.19, there is no unfair labor
practice charge or complaint against the Company pending before any Governmental
Authority arising out of the Company's activities, and the Company has no
knowledge of any facts or information that would give rise thereto. There is no
labor strike or labor disturbance pending or threatened against the Company nor,
except as set forth in SCHEDULE 5.19, is any grievance currently being asserted,
and the Company has not experienced a work stoppage or other labor difficulty.
The Company has not received any information indicating that any of its
employment policies or practices is currently being audited or investigated by
any Governmental Authority. The Company is, and at all times has been, in
compliance with the requirements of the Immigration Reform Control Act of 1986.
5.20 CUSTOMERS, SUPPLIERS AND DISTRIBUTORS. SCHEDULE 5.20 sets forth a
listing of each customer that accounted for more than $100,000 in revenue for
the Company for the year ended December 31, 2000 (collectively, the
"CUSTOMERS"). The relationships of the Company with its Customers, suppliers,
distributors and manufacturer's representatives are good commercial working
relationships. To the knowledge of the Company, no Customer, supplier,
distributor or manufacturer's representative of the Company intends to terminate
or materially reduce its business relationship with the Company for any reason.
5.21 INVESTOR RIGHTS AGREEMENTS. SCHEDULE 5.21 lists all agreements
with any Person in which the Company has granted registration rights with
respect to its capital stock. The Company will not, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to Purchasers in the Investor Rights
Agreement or otherwise conflicts with the provisions thereof.
5.22 AGREEMENTS WITH STOCKHOLDERS. SCHEDULE 5.22 lists all agreements,
arrangements or understandings between the Company and one or more stockholders
of the Company relating to the transfer of any class of securities of the
Company (including, without limitation, tag-along rights, drag-along rights,
rights of first offer or any similar rights or obligations) or voting of any
class of securities of the Company. The Company has delivered to Purchaser
copies of all agreements and documents relating thereto.
5.23 COMPANY QUALIFIES AS A "SMALLER ENTERPRISE". The Company qualifies
as a "smaller enterprise" under the Code of Federal Regulations, such that a
small business investment company is permitted to make an investment in the
Company.
5.24 COMMISSION DOCUMENTS. Except as set forth in SCHEDULE 5.24, the
Company has filed all registration statements, proxy statements, information
statements, reports and other documents required to be filed by it under the
Securities Act or the Exchange Act, and all amendments thereto (collectively,
the "COMMISSION DOCUMENTS") Each Commission Document when filed with the
Commission was true and accurate in all material respects and in
20
compliance in all material respects with the requirements of its respective
report form and the rules and regulations of the Commission. No Commission
Document 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 contained therein, in light of the circumstances under which made,
not misleading.
5.25 DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement prepared by or on behalf of the Company by its
authorized representatives or agents and furnished to or made available to the
Purchasers in writing by or on behalf of the Company by its authorized
representatives or agents in connection herewith, including without limitation,
the PPM, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements contained herein and therein, in the light of the circumstances under
which made, not misleading.
ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
Purchaser represents and warrants as follows:
6.1 INVESTMENT PURPOSE. Purchaser is purchasing the Securities for
Purchaser's own account for investment only and not with a view toward or in
connection with the public sale or distribution thereof. Purchaser will not
resell the Securities or the capital stock issued upon conversion of any such
Securities (the "CONVERSION STOCK") except pursuant to sales that are exempt
from the registration requirements of the Securities Act and all applicable
state securities laws, and/or sales registered under the Securities Act and all
applicable state securities laws. Purchaser understands that Purchaser may bear
the economic risk of this investment indefinitely, unless the Securities and/or
the Conversion Stock are registered pursuant to the Securities Act and any
applicable state securities laws or an exemption from such registration is
available, and that the Company has no present intention of registering the
Securities or the Conversion Stock other than as contemplated by the Investor
Rights Agreement.
6.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act. By reason of its business and financial experience,
sophistication and knowledge, Purchaser is capable of evaluating the risks and
merits of the investment made pursuant to this Agreement.
6.3 AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of Purchaser and is the
legally valid and binding agreement of Purchaser enforceable in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability. As of the
Closing Date, each Ancillary Agreement to which Purchaser will become a party
pursuant to the Joinder Agreement will be the legally valid and binding
agreement of Purchaser enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
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6.4 BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's or
placement fee or commission will be payable with respect to the sale or the
issuance of the Securities as a result of any act or omission by Purchaser, and
Purchaser will hold the Company harmless from any claim, demand or liability for
broker's or finder's or placement fees or commissions alleged to have been
incurred in connection with the sale or the issuance of the Securities, due to
any actions of Purchaser.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time with
respect to the applicable parties prior to the Closing:
(a) by mutual written agreement of the Company and the Purchaser;
(b) by Purchaser, on the one hand, or the Company, on the other hand,
if a court of competent jurisdiction or a governmental, regulatory or
administrative agency or commission shall have issued a non-appealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to SECTION 7.1, except as set forth below, this Agreement
shall forthwith become void with respect to the applicable parties and there
shall be no liability on the part of any such party hereto (or any stockholder,
director, officer, partner, employee, agent, consultant or representative of
such party); PROVIDED, HOWEVER, that nothing contained in this Agreement shall
relieve any party from liability for any breach of this Agreement and provided
further that ARTICLE VIII shall survive termination of this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY COMPANY. In addition to all other sums due
hereunder or provided for in this Agreement, the Company agrees to indemnify and
hold harmless Purchaser and its Affiliates and their respective officers,
directors, agents, employees and partners (each, an "INDEMNIFIED PARTY") to the
fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel), damages or other liabilities ("LOSSES") resulting from (i) any breach
of any representation or warranty, covenant or agreement of the Company in this
Agreement, or (ii) any legal, administrative or other actions (including actions
brought by any equityholders of the Company or derivative actions brought by any
Person claiming through the Company or in the Company's name), proceedings or
investigations (whether formal or informal), or written threats thereof, based
upon, relating to or arising out of any of the Transaction Documents or the
Securities, the transactions contemplated hereby or thereby, or any indemnified
person's role therein; PROVIDED, HOWEVER, that the Company shall not be liable
under this SECTION 8.1: (a) for any amount paid in settlement of claims without
the Company's consent (which consent shall not be unreasonably withheld or
delayed), or (b) to the extent that it is finally judicially determined
22
that such Losses resulted primarily from the willful misconduct, bad faith or
gross negligence of such indemnified party or a breach of Purchaser's
representations in ARTICLE VI; PROVIDED, FURTHER, that if and to the extent that
such indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
liability that shall be permissible under applicable laws. In connection with
the obligation of the Company to indemnify for expenses as set forth above, the
Company further agrees to reimburse each indemnified party for all such expenses
(including reasonable fees, disbursements and other charges of counsel) as they
are incurred by such indemnified party; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this ARTICLE VIII
for more than one firm of attorneys in addition to the firm of attorneys
representing the Company in any jurisdiction in any one legal action or group of
related legal actions; PROVIDED, further, that if an indemnified party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall be
refunded to the extent it is finally judicially determined that the Losses in
question resulted primarily from the willful misconduct, bad faith or gross
negligence of such indemnified party.
8.2 NOTIFICATION. Each indemnified party under this ARTICLE VIII shall,
promptly (and in any event within 20 days), after the receipt of notice of the
commencement of any action or other proceeding against such indemnified party in
respect of which indemnity may be sought from the Company under this ARTICLE
VIII, notify the Company in writing of the commencement thereof. The failure of
any indemnified party so to notify the Company of any such action shall not
relieve the Company from any liability that it may have to such indemnified
party pursuant to this ARTICLE VIII, except to the extent that such failure
causes material prejudice to the Company. In case any such action or other
proceeding shall be brought against any indemnified party and it shall notify
the Company of the commencement thereof, the Company shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, that any indemnified party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
in any action or proceeding in which both the Company and an indemnified party
is, or is reasonably likely to become, a party, such indemnified party shall
have the right to employ separate counsel at the Company's expense and to
control its own defense of such action or proceeding if, in the reasonable
written opinion of counsel to such indemnified party (obtained at the expense of
the Company), (a) there are or may be legal defenses available to such
indemnified party or to other indemnified parties that are different from or
additional to those available to the Company or (b) any conflict or potential
conflict exists between the Company and such indemnified party that would make
such separate representation advisable; PROVIDED, HOWEVER, that in no event
shall the Company be required to pay fees and expenses under this ARTICLE VIII
for more than one firm of attorneys in addition to the firm of attorneys
representing the Company in any jurisdiction in any one legal action or group of
related legal actions. The Company shall not, without the consent of the
indemnified party (which consent shall not be unreasonably withheld), consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation or that requires action other than the payment of money by the
Company. The rights accorded to indemnified parties hereunder shall be in
addition to any rights that any indemnified party may have at common law, by
separate agreement or otherwise.
23
8.3 INVESTOR RIGHTS AGREEMENT. Notwithstanding anything to the contrary
in this ARTICLE VIII, the indemnification and contribution provisions of the
Investor Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
8.4 SURVIVAL OF PROVISIONS OF ARTICLE VIII. The obligations of the
Company under this ARTICLE VIII shall survive indefinitely.
ARTICLE IX
MISCELLANEOUS
9.1 DIVIDEND PAYMENTS. The Company agrees that, so long as Purchaser
shall hold any Series A Preferred Stock, the Company will make any cash payments
with respect thereto pursuant to the terms of the Certificate of Designations by
wire transfer of immediately available funds for credit to the Purchaser's
account in the United States of America as Purchaser may designate in writing,
notwithstanding any contrary provision herein or in any share of Series A
Preferred Stock with respect to the place of payment. The Company agrees to
afford the benefits of this SECTION 9.1 to any permitted transferee of any
Series A Preferred Stock purchased by Purchaser hereunder.
9.2 EXPENSES. The Company agrees to pay, and save Purchaser harmless
against liability for the payment of, all reasonable out-of-pocket expenses
arising in connection with (a) the negotiation and execution of the Transaction
Documents and the Certificate of Designations and the issuance of the
Securities, including all taxes (including any intangible personal property tax,
together in each case with interest and penalties, if any, and also including
any filing fees payable to any governmental authority, and any income tax
payable by any Purchaser in respect of any reimbursement for any such tax or
fee) that may be payable in respect of the execution and delivery of the
Transaction Documents or the issuance, delivery or acquisition (but not the
holding, ownership or transfer) of any of the Securities issued pursuant to this
Agreement or any Common Stock issuable upon conversion of any Series A Preferred
Stock or upon exercise of the Common Stock Warrants or the Placement Agent
Warrants, and (b) the cost and expenses, including reasonable attorney's fees,
incurred by Purchaser in enforcing any of its rights hereunder, including,
without limitation, costs and expenses incurred in any bankruptcy case. The
obligations of the Company under this SECTION 9.2 shall survive the transfer of
any Securities by the Purchaser.
9.3 RESTRICTIVE LEGENDS. The Securities shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED, QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS AND NEITHER THE UNITED STATES
24
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE
REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE
SECURITIES.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE [CONVERSION] [EXERCISE] OF
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AN INVESTOR RIGHTS
AGREEMENT, A STOCKHOLDERS AGREEMENT AND A TRADING AGREEMENT, AS EACH OF
THE SAME MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICES OF THE COMPANY.
9.4 CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
of Purchaser to such amendment, action or omission to act. Any consideration
given to any holder to obtain his, her or its consent under this Agreement or
any Ancillary Agreement or with respect to the Series A Preferred Stock shall be
given pro rata to all holders of shares of Series A Preferred Stock whether or
not they give consent. Each holder of any shares of Series A Preferred Stock at
the time or thereafter outstanding (or of shares of Common Stock entitled to any
rights hereunder) shall be bound by any consent authorized by this SECTION 9.4,
whether or not such shares of Series A Preferred Stock shall have been marked to
indicate such consent, but any shares of Series A Preferred Stock issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any shares of Series A Preferred
Stock nor any delay in exercising any rights hereunder or under any shares of
Series A Preferred Stock shall operate as a waiver of any rights of any holder
of such shares of Series A Preferred Stock. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.
9.5 NOTICES TO SUBSEQUENT HOLDER. Except as otherwise provided herein,
if any shares of Series A Preferred Stock shall have been transferred to another
holder and that holder shall have designated in writing the address to which
communications with respect to such shares of Series A Preferred Stock shall be
mailed, all notices, certificates, requests, statements and other documents
required to be delivered to the Purchaser by any provision hereof shall also be
delivered to each such holder.
9.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES. All
representations, warranties, covenants and agreements contained herein or made
in writing by the Company in connection herewith shall survive the execution,
delivery and performance of this Agreement and the Ancillary Agreements,
regardless of any investigation made by the Purchaser or on the Purchaser's
behalf.
9.7 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
25
9.8 NOTICES. All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telecopier (with receipt confirmed), provided
that a copy is mailed by certified or registered mail, return receipt requested
or (c) when received by the addressee, if sent by Express Mail, Federal Express
or other express delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate as to itself by notice
to the other parties):
(i) If to the Company:
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, XX 00000
Fax No. 000-000-0000
Attention: General Counsel.
(ii) If to Purchaser: at the address set forth on SCHEDULE I.
9.9 ACCOUNTING TERMS. Unless otherwise set forth herein, all accounting
terms and provisions in this Agreement or any Ancillary Agreement shall be
construed to be as determined in accordance with generally accepted accounting
principles in the United States then in effect.
9.10 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement is sought.
9.11 HEADINGS; TABLE OF CONTENTS. The descriptive headings of the
several paragraphs of this Agreement and the table of contents are inserted for
convenience only and do not constitute a part of this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be deemed but one and the same instrument and
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart for each of the parties
hereto. Delivery by facsimile by any of the parties hereto of an executed
counterpart of this Agreement shall be effective as an original executed
counterpart hereof and shall be deemed a representation that an original
executed counterpart hereof will be delivered.
9.13 NON-BUSINESS DAYS. If the date for making any payment or the last
date for performance of any act or the exercising of any right, as provided in
this Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day, with the same
force and effect as if done on the nominal date provided in this Agreement.
9.14 FURTHER ASSURANCES. The Company shall from time to time and at all
times hereafter make, do, execute or cause or procure to be made, done and
executed such further acts,
26
deeds, conveyances, consents and assurances, without further consideration, that
may reasonably be required to effect the transactions contemplated by this
Agreement or any Ancillary Agreement.
9.15 INTEGRATION. This Agreement and the Ancillary Agreements, together
with the exhibits hereto and thereto, embody the entire agreement by and among
the parties hereto with respect to the matters set forth herein and supersede
any and all previous agreements, whether oral or written, on the same subject
matter.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY PURCHASER
ELECTRIC CITY CORP., LEAF MOUNTAIN COMPANY, LLC,
a Delaware corporation an Illinois limited liability company
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------------- --------------------------------
Name: Xxxx Xxxxxx Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer --------------------------------
Title: Manager
--------------------------------
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
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SCHEDULE I
-----------------------------------------------------------------------------------------------------------------
PURCHASER NO. OF SHARES NO. OF NO. OF NO. OF TOTAL AGGREGATE
--------- ------------- ------ ------ ------ ---------------
OF SERIES A SERIES A SHARES OF COMMON PURCHASE PRICE
----------- -------- --------- ------ --------------
PREFERRED PREFERRED COMMON STOCK
--------- --------- ------ -----
STOCK STOCK STOCK WARRANTS
----- ----- ----- --------
WARRANTS
--------
-----------------------------------------------------------------------------------------------------------------
Leaf Mountain Company, LLC 300,000 75,000 45,122 421,875 $3,000,000
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
-----------------------------------------------------------------------------------------------------------------
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