Exhibit 10.8
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of May
5, 2005 among PICO Holdings, Inc., a California corporation (the "COMPANY"), and
the purchasers identified on the signature pages hereto (each, a "PURCHASER" and
collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser,
severally and not jointly, agrees as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"ADVICE" has the meaning set forth in Section 6.5.
"AGREEMENT" has the meaning set forth in the preamble.
"AFFILIATE" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed
under Rule 144 under the Securities Act.
"BENEFIT PLANS" means (i) all "employee pension benefit plans," as
defined in section 3(2) of ERISA, established, maintained, or contributed
to by the Company or its Subsidiaries for the benefit of any employees or
agents of the Company or its Subsidiaries; (ii) all "employee welfare
benefit plans," as defined in section 3(1) of ERISA, established,
maintained, or contributed to by the Company or its Subsidiaries for the
benefit of any employees or agents of the Company or its Subsidiaries; and
(iii) to the knowledge of the Company, all other material incentive,
employment, supplemental retirement, severance, deferred compensation and
other employee benefit plans, programs, agreements and arrangements
established, maintained, or contributed to by the Company or its
Subsidiaries for the benefit of any employees or agents of the Company or
its Subsidiaries, without regard to the coverage of any such plan,
program, agreement or arrangement by ERISA or any provision of the Code.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or
required by law to remain closed.
"CLOSING" means the closing of the purchase and sale of the Shares
pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value
$0.001 per share.
"COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.
"COMPANY" has the meaning set forth in the preamble.
"CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock.
"EFFECTIVE DATE" means the date that the Registration Statement is
first declared effective by the Commission.
"EFFECTIVENESS PERIOD" has the meaning set forth in Section 6.1(b).
"ELIGIBLE MARKET" means any of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ National Market or the NASDAQ SmallCap
Market.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EVENT" has the meaning set forth in Section 6.1(d)(i) through (v).
"EVENT PAYMENTS" has the meaning set forth in Section 6.1(d).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED STOCK" means Common Stock, Options, or any equity or
equity equivalent securities, including, without limitation, any debt,
preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock or Common Stock Equivalents
and that is issued or issuable: (A) pursuant to any employee benefit plan
or hereafter adopted by the Company and approved by its stockholders, (B)
in connection with any issuance of shares or grant of options to
employees, officers, directors or consultants of the Company pursuant to a
stock option plan, employee stock purchase plan or other incentive stock
plan duly adopted by the Board or in respect of the issuance of Common
Stock upon exercise of any such options, (C) pursuant to the Company's
bona fide acquisition of another corporation, or all or a portion of its
assets, by merger, purchase of assets or stock or other corporate
reorganization in each case, as approved by the Board and not for the
principal purpose of raising capital or (D) in connection with a bona fide
joint venture or development agreement or strategic partnership, in either
case not for the principal purpose of raising capital.
"FILING DATE" means the date that is 30 days after the Closing Date,
with respect to the initial Registration Statement required to be filed
hereunder, and, with respect to any additional Registration Statements
that may be required pursuant to Section 6.1, the 30th day following the
date on which the Company first knows, or reasonably should have known,
that such additional Registration Statement is required under such
Section.
"GAAP" has the meaning set forth in Section 3.1(g).
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.4(c).
"INDEMNIFYING PARTY" has the meaning set forth in Section 6.4(c).
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"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
3.1(t).
"LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"LOSSES" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including, without limitation, costs of
preparation and reasonable attorneys' fees.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section
3.1(b).
"MATERIAL PERMITS" has the meaning set forth in Section 3.1(u).
"NASD" has the meaning set forth in Section 3.1(i).
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"PERSON" means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or any court or other federal, state, local or other
governmental authority or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus including post
effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
"PURCHASER" or "PURCHASERS" has the meaning set forth in the
preamble.
"PURCHASER COUNSEL" has the meaning set forth in Section 6.2(a).
"REGISTRABLE SECURITIES" means any Common Stock (including the
Shares) issued or issuable pursuant to the Transaction Documents, together
with any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing.
"REGISTRATION STATEMENT" means each registration statement required
to be filed under Article VI, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"REGULATORY ORDER" has the meaning set forth in Section 3.1(i).
"RELATED PERSON" has the meaning set forth in Section 4.8.
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"REQUIRED EFFECTIVENESS DATE" means 90 days from the Closing Date
(120 days if the registration statement is reviewed by the SEC).
"RULE 144," "RULE 415," and "RULE 424" means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SCHEDULE" means the section numbers of the Disclosure Schedule that
correspond to the first, or principal, section of the Agreement to which
the disclosures relate.
"SEC REPORTS" has the meaning set forth in Section 3.1(g).
"SECURITIES" means the Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELF-REGULATORY ORGANIZATION" has the meaning set forth in Section
3.1(i).
"SHARES" means an aggregate of 1,000,000 shares of Common Stock,
which are being issued and sold to the Purchasers at the Closing.
"SUBSEQUENT PLACEMENT" has the meaning set forth in Section 4.5.
"SUBSIDIARY" means any Person in which the Company, directly or
indirectly, owns at least 20% of the capital stock or holds an equity or
similar interest.
"TAXES" means any federal, state, county, local, or foreign taxes,
charges, fees, levies, imposts, duties, or other assessments, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties,
capital stock, paid-up capital, profits, withholding, Social Security,
single business and unemployment, disability, real property, personal
property, registration, ad valorem, value added, alternative or add-on
minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposes or required to be withheld by the United States or any
state, county, local or foreign government or subdivision or agency
thereof, including any interest, penalties, and additions imposed thereon
or with respect thereto.
"TAX RETURN" means any report, return, information return, or other
information required to be supplied to a governmental authority in
connection with Taxes, including any return of an affiliated or combined
or unitary group that includes the Company and any amendments thereof.
"TRADING MARKET" means the NASDAQ National Market or any other
Eligible Market, or any national securities exchange, market or trading or
quotation facility on which the Common Stock is then listed or quoted.
"TRANSACTION DOCUMENTS" means this Agreement and any other documents
or agreements executed in connection with the transactions contemplated
hereunder.
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ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares, each as indicated below such Purchaser's name on the
signature page of this Agreement, for an aggregate purchase price for such
Purchaser as indicated below such Purchaser's name on the signature page of this
Agreement. The Closing shall take place at such location and time as the parties
may agree.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) a copy of one or more stock certificates, free and clear
of all restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing such number of Shares equal to the
number of Shares indicated below such Purchaser's name on the signature
page of this Agreement, registered in the name of such Purchaser;
(ii) a legal opinion of DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP,
counsel to the Company, in the form of Exhibit A, executed by such
counsel.
2.3 At the Closing, each Purchaser shall deliver or cause to be delivered
to the Company the purchase price indicated below such Purchaser's name on the
signature page of this Agreement, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing to such
Purchaser by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. Other than as set forth in the SEC Reports (as
defined in Section 3.1(g)) the Company has no material Subsidiaries.
(b) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not, individually or in the aggregate, (i) adversely affect the legality,
validity or enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole on a consolidated basis, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
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transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company, its officers, Board and
stockholders and no further consent or action is required by the Company, its
officers, Board or its stockholders. Each of the Transaction Documents has been
(or upon delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute, the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as may be limited by (1) applicable
bankruptcy, insolvency, reorganization or others laws of general application
relating to or affecting the enforcement of creditors' rights generally and (2)
the effect of rules of law governing the availability of equitable remedies and
(ii) as rights to indemnity or contribution may be limited under federal or
state securities laws or by principles of public policy thereunder.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company's or any Subsidiary's certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any material agreement, credit
facility, debt or other instrument (whether evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any of its
Subsidiaries is a party or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations and the
rules and regulations of the principal market, system or exchange on which the
Common Stock is traded, quoted or listed), or by which any property or asset of
the Company or a Subsidiary is bound or affected.
(e) Issuance of the Securities. The Securities are duly authorized
and, when issued and paid for in accordance with the Transaction Documents, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens and shall not be subject to preemptive rights or similar rights of
stockholders.
(f) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is as set forth in the
SEC Reports (as defined in Section 3(g) below). All outstanding shares of
capital stock are duly authorized, validly issued, fully paid and nonassessable
and have been issued in compliance with all applicable securities laws, and none
of such issuances were, and the issuance of the Securities will not be, made in
violation of any preemptive rights or other rights. Except for issuances
pursuant to plans or programs described in the SEC Reports, there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. There are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders) and the issue and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities. To the knowledge of the Company and except as specifically
disclosed in the SEC Reports or in any Schedule 13D or Schedule 13G filed with
the Commission, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to
acquire, by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the outstanding
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Common Stock, ignoring for such purposes any limitation on the number of shares
of Common Stock that may be owned at any single time. The Shares, when issued,
will conform in all material respects to the description of the Company's Common
Stock contained in the Company's SEC Reports and other filings with the SEC.
(g) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law to file such material)
(the foregoing materials (together with any materials filed by the Company under
the Exchange Act, whether or not required, within the two years preceding the
date hereof) being collectively referred to herein as the "SEC REPORTS") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations of the Commission promulgated thereunder, and none of the
SEC Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments. All material agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any
Subsidiary are subject, and which are required to be filed by the rules and
regulations of the Commission are included as part of or specifically identified
in the SEC Reports.
(h) Material Changes. Since December 31, 2004 (i) there has been no
event, occurrence or development that, individually or in the aggregate, has had
or that would result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business and (B)
liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, except as disclosed in its SEC Reports or as required
by changes in GAAP, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock (other than pursuant to written agreements with employees to repurchase
stock upon the termination of such employee's employment) and (v) the Company
has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock-based plans or as disclosed in the SEC
Reports.
(i) Absence of Litigation. Except as set forth in the SEC Reports,
(A) there are no actions, suits, claims, proceedings, inquiries or
investigations before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective assets that could (i) adversely affect or challenge
the legality, validity or enforceability of any of the Transaction Documents,
individually or in the aggregate, (ii) have a Material Adverse Effect or (iii)
if adversely decided, would have a Material Adverse Effect on, or delay the
issuance of, the Securities or the consummation of the transactions contemplated
by the Agreement, (B) no action, suit, proceeding, claim, investigation or
inquiry by the Company or any Subsidiary is currently pending nor does the
Company intend to initiate any action, suit, proceeding, claim, investigation or
inquiry, in each case, that if resolved in a manner adverse to the Company,
would have a Material Adverse Effect, (C) neither the Company
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nor any Subsidiary (i) is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or commitment letter or similar
submission to, or (ii) has received any extraordinary supervisory letter from,
or adopted any board resolutions at the request of, any Self-Regulatory
Organization or governmental entity charged with the supervision or regulation
of broker-dealers or the supervision or regulation of its business (each such
item referred to in clauses "(i)" and "(ii)" of this Section 3.1(i), a
"REGULATORY ORDER"), including any such Regulatory Order that restricts
materially the conduct of the business of the Company or any Subsidiary, or in
any manner relates to the capital adequacy, credit policies or management of the
Company or any Subsidiary, and (D) neither the Company nor any Subsidiary has
received written notice from any governmental entity or Self-Regulatory
Organization that such organization or authority is contemplating issuing or
requesting any such Regulatory Order. For purposes of this Agreement, the term
"SELF-REGULATORY ORGANIZATION" shall mean the National Association of Securities
Dealers, Inc. (or any successor entity thereto) ("NASD"), the American Stock
Exchange, the National Futures Association, the Chicago Board of Trade, the New
York Stock Exchange, any national securities exchange (as defined in the
Exchange Act), any other securities exchange, futures exchange, contract market,
commodities market, any other such exchange, clearinghouse or corporation or
other similar federal, state or foreign self-regulatory body or organization.
(j) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body or (iii) to the Company's knowledge, is in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as would not,
individually or in the aggregate, have or result in a Material Adverse Effect.
None of the Company or any Subsidiary is in default under, or in violation of
any of the listing or quotation requirements of the NASDAQ National Market (or
of any other Eligible Market on which the Common Stock is currently traded,
listed or quoted) as in effect on the date hereof, and the Company is not aware
of any facts which could reasonably lead to de-listing or suspension of trading
in the Common Stock by the NASDAQ National Market (or any other Eligible Market
on which the Common Stock is then traded, listed or quoted) in the foreseeable
future.
(k) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and good and marketable title in all
personal property owned by them that is material to the business of the Company,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company. Any real property
and facilities held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.
(l) Private Placement. Neither the Company nor any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to buy
the Securities by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any Person acting on the
Company's behalf has, directly or indirectly, at any time within the past six
months, made any offer or sale of any security or solicitation of any offer to
buy any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale of the Securities as contemplated hereby
or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of
any applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market. The
Company is
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not a United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.
(m) Form S-3 Eligibility. The Company is eligible to register its
Common Stock for resale by the Purchasers using Form S-3 promulgated under the
Securities Act.
(n) Listing and Maintenance Requirements. The Company has not, in
the two years preceding the date hereof, received notice (written or oral) from
any Trading Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements. The approval of the
Company's stockholders is not required under the listing or maintenance
requirements of the NASDAQ National Market or any Trading Market for the
consummation of the transactions contemplated herein.
(o) Registration Rights. The Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied. No Person, including
current or former stockholders of the Company, underwriters, brokers or agents,
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents or to require that the Company include any such securities in the
registration of Securities as contemplated herein.
(p) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
charter documents or the laws of its state of incorporation that is or could
become applicable to any of the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities.
(q) Disclosure. The Company confirms that it has not provided to the
Purchasers any material non-public information other than information related to
the transactions contemplated by the Transaction Documents. The Company
understands and confirms that each of the Purchasers will rely on the foregoing
representations in effecting the transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business and
the transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed. The Company acknowledges and
agrees that no Purchaser makes or has made (i) any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 or (ii) any statement, commitment or
promise to the Company or, to its knowledge, any of its representatives which is
or was an inducement to the Company to enter into this Agreement or otherwise.
(r) Acknowledgment Regarding Purchasers' Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm's length purchaser with respect to the Company and to
this Agreement and the transactions contemplated hereby.
9
(s) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, have a
Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(t) Transactions With Affiliates and Employees. Except as set forth
in the SEC Reports or as otherwise below the SEC disclosure thresholds, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.
(u) Employee Benefits. Each of the Benefit Plans has been
administered in accordance with its terms and any federal, state or local
statute, law, ordinance, regulation, order, writ, injunction, directive,
judgment or decree applicable to the Company, the Subsidiaries, or any of their
respective properties, or assets, as the case may be (including, where
applicable, ERISA and the Code), except where the failure to so administer such
Benefit Plan would not have a Material Adverse Effect. Each of the Benefit Plans
intended to be "qualified" within the meaning of section 401(a) of the Code has
been determined by the United States Internal Revenue Service to be so
qualified, except where the failure to so qualify such Benefit Plan would not
have a Material Adverse Effect.
(v) Taxes. (i) The Company has filed (or joined in the filing of)
when due all Tax Returns required by applicable law to be filed with respect to
the Company and all Taxes shown to be due on such Tax Returns have been paid;
(ii) all such Tax Returns were true, correct and complete in all material
respects as of the time of such filing; or (iii) any liability of the Company
for Taxes not yet due and payable, or which are being contested in good faith,
in each case as of December 31, 2004, has been accrued or reserved for on the
financial statements of the Company in accordance with GAAP, in each case except
in the case that any such failure to file or pay Taxes would not result in a
Material Adverse Effect.
(w) Customer Complaints. Neither the Company nor any of the
Subsidiaries has received any customer complaints concerning such entity's
services, other than immaterial, nonrecurring problems.
(x) No Manipulation of Stock. The Company has not taken, in
violation of applicable law, any action designed to or that might cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the transactions contemplated hereby or the sale or resale of the
shares of Common Stock.
(y) Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
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(z) Xxxxxxxx-Xxxxx Act. The Company is in compliance with applicable
requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules and
regulations promulgated by the Commission thereunder in effect as of the date of
this Agreement.
(aa) Registrations. All federal, self-regulatory and state
registration requirements have been complied with in all material respects, and
such registrations as currently filed, and all periodic and other reports,
including notice filings, required to be filed with respect thereto, are
accurate and complete in all material respects. The information contained in
such registrations, forms and reports was true and complete in all material
respects as of the date of the filing thereof, and timely amendments were filed,
as necessary, to correct or update any information reflected in such
registrations, forms or reports.
3.2 Representations, Warranties and Certain Agreements of the Purchasers.
Each Purchaser hereby, as to itself only and for no other Purchaser, represents
and warrants to the Company and agrees that:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares hereunder has been duly authorized by all necessary action on the part of
such Purchaser. This Agreement has been duly executed and delivered by such
Purchaser and constitutes the valid and binding obligation of such Purchaser,
enforceable against it in accordance with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities
for investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof, without prejudice, however, to
such Purchaser's right, subject to the provisions of this Agreement, at all
times to sell or otherwise dispose OF all or any part of such Securities
pursuant to an effective registration statement under the Securities Act or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Securities for any period
of time.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(d) Reliance on Exemptions. Such Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire such securities.
(e) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(f) Information. Such Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by such Purchaser. Such Purchaser and its advisors, if
any, have been afforded the opportunity to ask questions of the Company. Such
Purchaser understands that its investment in the Securities involves a high
degree of risk. Neither such inquiries
11
nor any other investigation conducted by or on behalf of such Purchaser or its
advisors shall modify, amend or affect such Purchaser's right to rely on the
truth, accuracy and completeness of the disclosure made to such Persons in
respect of the Company or this transaction and the Company's representations and
warranties contained in this Agreement. Each Purchaser acknowledges and agrees
that the Company has not made (i) any representations or warranties to such
Purchaser with respect to the transactions contemplated hereby other than those
specifically set forth in the Transaction Documents or (ii) any oral statement,
commitment or promise that is or was an inducement to such Purchaser to enter
into this Agreement or otherwise.
(g) Purchaser Questionnaire. Such Purchaser has completed or caused
to be completed the Purchaser Questionnaire in the form as set forth on Exhibit
B, and the information provided by each Purchaser in such Purchaser's Purchaser
Questionnaire is true and correct as of the date of this Agreement and shall be
true as of the Effective Date.
(h) Acknowledgement Regarding Purchasers' Purchase of Securities.
Such Purchaser acknowledges and agrees that it is acting solely in the capacity
of an arm's length purchaser with respect to the Company and to this Agreement
and the transactions contemplated hereby.
(i) Prohibited Transactions.
(i) During the last thirty (30) days prior to the date hereof,
neither such Purchaser nor any Affiliate of such Purchaser, foreign or
domestic, has, directly or indirectly, effected or agreed to effect any
"short sale" (as defined in Rule 200 under Regulation SHO), whether or not
against the box, established any "put equivalent position" (as defined in
Rule 16a-1(h) under the 0000 Xxx) with respect to the Common Stock,
borrowed or pre-borrowed any shares of Common Stock, or granted any other
right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates
to or derived any significant part of its value from the Common Stock or
otherwise sought to hedge its position in the Securities (each, a
"PROHIBITED TRANSACTION").
(ii) Prior to the earliest to occur of (i) the termination of
this Agreement, (ii) the Effective Date or (iii) the Required
Effectiveness Date, such Purchaser shall not, and shall cause its
Affiliates not to, engage, directly or indirectly, in (a) a Prohibited
Transaction nor (b) any sale, assignment, pledge, hypothecation, put,
call, or other transfer of any of the shares of Common Stock, warrants or
other securities of the issuer acquired hereunder. Each Purchaser
acknowledges that the representations, warranties and covenants contained
in this Section 3.2(i) are being made for the benefit of the Purchasers as
well as the Company and that each of the other Purchasers shall have an
independent right to assert any claims against such Purchaser arising out
of any breach or violation of the provisions of this Section 3.2(i).
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k), except as otherwise set
forth herein, the Company may require the transferor to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby
12
consents to and agrees to register on the books of the Company and with its
transfer agent, without any such legal opinion, any transfer of Securities by a
Purchaser to an Affiliate of such Purchaser, provided that the transferee
certifies to the Company that it is an "accredited investor" as defined in Rule
501(a) under the Securities Act and make the representations set forth in 3.2.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 4.1(b), of the following legend on any certificate evidencing
Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR
BLUE SKY LAWS.
Certificates evidencing Securities shall not be required to contain such legend
(i) following any sale of such Securities pursuant to Rule 144, or (ii) if such
Securities are eligible for sale under Rule 144(k) or (iii) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). Until a Registration Statement covering the resale of the
Securities is effective under the Securities Act, the Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock.
4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. Upon the request of
any Purchaser, the Company shall deliver to such Purchaser a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as any Purchaser owns Securities, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Purchasers and make publicly available in accordance with
paragraph (c) of Rule 144 such information as is required for the Purchasers to
sell the Securities under Rule 144. The Company further covenants that it will
take such further action as any holder of Securities may reasonably request to
satisfy the provisions of Rule 144 applicable to the issuer of securities
relating to transactions for the sale of securities pursuant to Rule 144.
4.3 Integration. The Company shall not, and shall use commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.
4.4 Reservation of Securities. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at any
time the then authorized shares of Common Stock are insufficient for the Company
to satisfy its obligations in full under the Transaction Documents, the Company
shall promptly take such actions as may be required to increase the number of
authorized shares.
4.5 Securities Laws Disclosure; Publicity. The Company shall, no later
than 5:30 a.m., Pacific Time, on the first Business Day following the Closing
Date, issue a press release (a copy of which will be
13
provided to the Investors or their counsel for review as early as practicable
prior to its filing) disclosing the material terms of the transactions
contemplated hereby (the "PRESS Release"). Thereafter, the Company shall timely
file any filings and notices required by the Commission or applicable law with
respect to the transactions contemplated hereby and provide copies thereof to
the Purchasers or Purchaser's counsel for review. The Company and the Purchasers
shall consult with each other in issuing any press releases or otherwise making
public statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Purchasers, or include the name of the
Purchasers in any filing with the Commission or any regulatory agency or Trading
Market, without the prior consent of the Purchasers, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by subpoena, applicable law or Trading Market regulations, in which
case the Company shall provide each of the Purchasers with prior notice of such
disclosure.
4.6 Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents, the
Company will indemnify and hold harmless such Purchaser or Related Person for
its reasonable legal and other expenses (including the costs of any
investigation, preparation and travel) and for any Losses incurred in connection
therewith, as such expenses or Losses are incurred, excluding only Losses that
result directly from such Purchaser's or Related Person's gross negligence or
willful misconduct. In addition, the Company shall indemnify and hold harmless
each Purchaser and Related Person from and against any and all Losses, as
incurred, arising out of or relating to any breach by the Company of any of the
representations, warranties or covenants made by the Company in this Agreement
or any other Transaction Document, or any allegation by a third party that, if
true, would constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from (1) the gross
negligence or willful misconduct of the applicable Purchaser or Related Person
in connection with such transactions or, (2) as a result of any breach by the
Purchaser of any of the representations, warrants and covenants made by such
Purchaser in this Agreement or in any of the Transaction Documents. If the
Company breaches its obligations under any Transaction Document, then, in
addition to any other liabilities the Company may have under any Transaction
Document or applicable law, the Company promptly shall pay or reimburse the
Purchasers for all costs of collection and enforcement, including the
indemnification obligations under this paragraph and reasonable attorneys' fees
and expenses.
4.7 Delivery of Certificates. Within three Business Days following the
Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser one or more stock certificates, free and clear of all restrictive and
other legends (except as expressly provided in Section 4.1(b) hereof),
evidencing the number of Shares indicated below such Purchaser's name on the
signature page of this Agreement, registered in the name of such Purchaser.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction or waiver by such Purchaser, at or before the Closing, of each
of the following conditions:
14
(a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing as though made on and as
of such date;
(b) Performance. The Company and each other Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by it at or prior to the Closing ;
(c) Securities Exemptions. The offer and sale of the Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws;
(d) No Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement;
(e) No Suspensions of Trading in Common Stock. The trading in the
Common Stock shall not be restricted or suspended by the Commission or the
Trading Market (except for any restriction or suspension of trading of limited
duration solely to permit dissemination of material information regarding the
Company);
(f) Litigation. No Proceeding shall have been instituted or threatened
against the Company that would, individually or in the aggregate, have a
Material Adverse Effect;
(g) Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company executed by the President of the
Company, dated as of the Closing, certifying to the fulfillment of the
conditions specified in Sections 5.1(a) and 5.1(b) of this Agreement;
(h) Secretary's Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company executed by an officer of the Company,
dated as of the Closing, certifying (i) resolutions adopted by the Board
authorizing the execution of the Transaction Documents, the issuance of the
Securities, the filing of the Registration Statement, and the transactions
contemplated hereby; and (ii) the Certificate of Incorporation and Bylaws of the
Company, each as amended, and copies of any required third party consents,
approvals and filings required in connection with the consummation of the
transactions contemplated by this Agreement;
(i) Other Documents. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated by this
Agreement as the Purchasers or their counsel may reasonably request; and
(j) Listing Approvals. The Company shall have obtained any necessary
approvals for the listing of the Shares on the NASDAQ National Market, which are
required to be obtained prior to closing and shall have undertaken to obtain any
other necessary approvals for the listing of the Shares on the NASDAQ National
Market.
5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell Shares at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following
conditions:
15
(a) Representations and Warranties. The representations and warranties
of the Purchasers contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on
and as of such date;
(b) Performance. The Purchasers shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Purchasers at or prior to the Closing;
(c) Securities Exemptions. The offer and sale of the Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws;
(d) Payment of Purchase Price. Each Purchaser shall have delivered to
the Company by wire transfer of immediately available funds, full payment of the
purchase price for the Shares as indicated below each Purchaser's name on such
Purchaser's signature page;
(e) Receipt of Purchaser Questionnaires. Each Purchaser shall have
delivered to the Company a completed Purchaser Questionnaire in the form
attached hereto as Exhibit B;
(f) No Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement; and
(g) Other Documents. The Purchasers shall have delivered to the
Company such other documents relating to the transactions contemplated by this
Agreement as the Company or counsel may reasonably request.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Registration.
(a) As promptly as possible, the Company shall prepare and file with
the Commission a Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3.
(b) The Company shall use all commercially reasonable efforts to cause
the Registration Statement to be filed with the Commission by the Filing Date,
and declared effective on or before the Required Effectiveness Date. The Company
shall use all commercially reasonable efforts to keep the Registration Statement
continuously effective under the Securities Act from the date such Registration
Statement becomes effective until the later of (i) the first anniversary of the
Effective Date or such earlier date when all Registrable Securities have been
resold under such Registration Statement, and (ii) the date on which all
Registrable Securities may be resold without restriction or limitation under the
federal securities laws or may be sold pursuant to paragraph (k) of Rule 144
(the "EFFECTIVENESS PERIOD").
(c) The Company shall notify each Purchaser in writing promptly (and
in any event within one Business Day) after receiving notification from the
Commission that the Registration Statement has been declared effective.
(d) As long as the occurrence of any Event (as defined below) was not
a result of a Purchaser's actions or failure to act (including the failure to
provide needed information to the
16
Company), on every monthly anniversary of any Event until the applicable Event
is cured, as partial relief for the damages suffered therefrom by the Purchasers
(which remedy shall not be exclusive of any other remedies available under this
Agreement, at law or in equity), the Company shall pay to each Purchaser an
amount in cash, as liquidated damages and not as a penalty, equal to 1.0% of the
aggregate purchase price paid by such Purchaser hereunder for every month,
prorated for any partial month. The payments to which a Purchaser shall be
entitled pursuant to this Section 6.1(d) are referred to herein as "EVENT
PAYMENTS." Any Event Payments payable pursuant to the terms hereof shall apply
on a pro-rata basis for any portion of a month prior to the cure of an Event.
For such purposes, each of the following shall constitute an "EVENT":
(i) the Registration Statement is not declared effective by the
Required Effectiveness Date, except if the Registration Statement has not
been declared effective as a result of a Purchaser's actions or failure to
act (including the failure to provide needed information to the Company);
(ii) subject to Section 6.1(e), after the Effective Date, a
Purchaser is not permitted to sell Registrable Securities under the
Registration Statement (or a subsequent Registration Statement filed in
replacement thereof) for any reason (other than for any reason that is
within the control of such Purchaser) for 20 consecutive Business Days,
unless such Purchaser may sell the Registrable Securities pursuant to Rule
144(k);
(iii) after the Effective Date, any Registrable Securities
covered by such Registration Statement are not listed on an Eligible Market
directly or indirectly due to an action or inaction of the Company, except
if such action or inaction is a result of a Purchaser's actions or failure
to act (including the failure to provide needed information to the
Company); or
(iv) the Common Stock is not listed or quoted, or is suspended
from trading, on an Eligible Market for a period of five consecutive
Trading Days.
(e) The Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement (other than a Registration Statement filed on a Form S-4 or S-8)
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities.
6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than three Business Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment, or not less
than one Business Day for any supplement thereto, the Company shall furnish to
each Purchaser and any counsel designated by any Purchaser (each, a "PURCHASER
COUNSEL") copies of all such documents proposed to be filed. The Company shall
not file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which Purchasers holding a majority of the Registrable
Securities shall reasonably object in writing, prior to the contemplated filing
date.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten Business
Days, to any comments
17
received from the Commission with respect to the Registration Statement or any
amendment thereto and, at the request of any Purchaser, as promptly as
reasonably possible provide such Purchaser who may so request true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Purchasers thereof set forth in the Registration Statement as
so amended or in such Prospectus as so supplemented.
(c) Notify the Purchasers of Registrable Securities to be sold and
each Purchaser Counsel as promptly as reasonably possible, and (if requested by
any such Person) confirm such notice in writing no later than one Business Day
thereafter, of any of the following events: (i) the initial filing of the
Registration Statement with the Commission; (ii) the Commission notifies the
Company whether there will be a "review" of any Registration Statement; (iii)
any Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for
that purpose; (v) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation of any Proceeding; or (vi) the
financial statements included in any Registration Statement become ineligible
for inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(d) Use commercially reasonable efforts to avoid the issuance of or,
if issued, obtain the withdrawal of (i) any order suspending the effectiveness
of any Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as possible.
(e) Promptly deliver to each Purchaser and Purchaser Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.
(f) (i) In the time and manner required by each Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on
each Trading Market as soon as possible thereafter; and (iii) maintain the
listing of such Registrable Securities on each such Trading Market.
(g) Use commercially reasonable efforts to register or qualify or
cooperate with the selling Purchasers and respective Purchaser Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as any Purchaser reasonably requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented.
18
(h) Cooperate with the Purchasers to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall
be free, to the extent permitted by law, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Purchasers may request.
(i) Upon the occurrence of any event described in Section 6.2(c)(vii),
as promptly as reasonably possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(j) Cooperate with any due diligence investigation undertaken by the
Purchasers in connection with the sale of Registrable Securities, including,
without limitation, by making available any documents and information; provided
that the Company will not deliver or make available to any Purchaser material,
nonpublic information unless such Purchaser specifically requests in advance to
receive material, nonpublic information in writing.
(k) Comply with all applicable rules and regulations of the
Commission.
6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or blue sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company, (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement and (f) all listing fees to be paid
by the Company to the Trading Market.
6.4 Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Purchaser,
the officers, directors, partners and members and each Person who controls any
such Purchaser (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the fullest extent permitted by applicable
law, from and against any and all Losses, as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (i) such untrue statements, alleged
untrue statements, omissions or alleged omissions are based solely upon
information regarding such Purchaser furnished in writing to the Company by such
Purchaser expressly for use therein, or to the extent that such information
relates to such Purchaser or such Purchaser's proposed method of distribution of
Registrable Securities and was provided to such Purchaser in the draft
Registration Statement or Prospectus or (ii) in the case of an occurrence of an
event of the type specified in Section 6.2(c)(v)-(vi), the use by such Purchaser
of an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to
the receipt by such Purchaser of the
19
Advice contemplated in Section 6.5. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Purchasers. Notwithstanding any termination of
this Agreement, each Purchaser shall, severally and not jointly, indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) to the fullest extent permitted by applicable law, from and
against all losses, as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, but only to the
extent, that (i) such untrue statements, alleged untrue statements, omissions or
alleged omissions are based solely upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use therein,
or to the extent that such information relates to such Purchaser or such
Purchaser's proposed method of distribution of Registrable Securities and was
provided to such Purchaser in the draft Registration Statement or Prospectus, or
(ii) in the case of an occurrence of an event of the type specified in Section
6.2(c)(iv)-(vi), the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the
Prospectus is outdated or defective and prior to the receipt by such Purchaser
of the Advice contemplated in Section 6.5. In no event shall the liability of
any selling Purchaser hereunder be greater in amount than the dollar amount of
the net proceeds received by such Purchaser upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised in writing by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding. Each
20
Indemnified Party shall furnish such information regarding itself or the claim
that is the subject matter of such Proceeding in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the investigation and defense of such claim.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within thirty (30)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 6.4(a)
or (b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. The obligations of the
Purchasers under this Section 6.4(d) shall be several and not joint.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement and, upon written request of the Company, will represent to the
Company that it has so complied. Each Purchaser further agrees that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Sections 6.2(c)(v), (vi) or (vii), such Purchaser will discontinue
disposition of such Registrable Securities under the Registration Statement
until such Purchaser's receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement contemplated by Section 6.2(j), or until
it is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any
21
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
6.6 No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Purchasers in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other than
the Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right to any of its security
holders.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
Registration Statement all or any part of such Registrable Securities such
Purchaser requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third Business Day following the date of this Agreement;
provided that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
7.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Securities.
7.3 Entire Agreement. The Transaction Documents, together with the Exhibits
and Schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Purchasers such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents. Notwithstanding anything to the contrary
herein, Securities may be assigned to any Person in connection with a bona fide
margin account or other loan or financing arrangement secured by such
Securities.
7.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile prior to 5:00 p.m. on a
Business Day, (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile on a day that is not a
Business Day or later than 5:00 p.m. on any Business Day, (c) the Business Day
following the date of deposit with a nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given. The addresses and facsimile numbers for such notices and
communications are those set forth on
22
the signature pages hereof, or such other address or facsimile number as may be
designated in writing hereafter, in the same manner, by any such Person.
7.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the holders of
a majority of the Shares. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the "Purchasers."
7.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver Of Jury Trial. ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
AND COUNTY OF SAN DIEGO FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE
COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY.
7.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that
23
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.11 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.12 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
7.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
7.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or any Purchaser enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
7.15 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.16 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction
24
Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of such Purchaser in connection with monitoring its
investment hereunder. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser represents that it has been
represented by its own separate legal counsel in its review and negotiations of
this Agreement and the Transaction Documents.
[SIGNATURE PAGES TO FOLLOW]
25
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
PICO HOLDINGS, INC.
By: __________________________
Name: Xxxx Xxxx
Title: President and Chief Executive Officer
Address for Notice:
000 Xxxxxxxx Xx.
Xx Xxxxx, XX 00000
Phone - (000) 000-0000
Fax - (000) 000-0000
With a copy to:
DLA Xxxxx Xxxxxxx Xxxx Xxxx
0000 Xxxxxxxxx Xx.
Xxxxx 0000
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxxxx Xxxx
Xxxxx Xxxxxxx
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
Signature Page to Securities Purchase Agreement
PURCHASER NAME: __________________________________
By: ___________________________________
Name:
Title:
Purchase Price: $25.00
Number of Shares to be acquired:
Tax ID #:
Full Address: __________________________________
__________________________________
__________________________________
Facsimile #:
Telephone #:
Attn:
With a copy to
(Purchaser Counsel):
Full Address: __________________________________
__________________________________
__________________________________
Facsimile #:
Telephone #:
Attn:
Signature Page to Securities Purchase Agreement
Exhibits:
A Form of Legal Opinion
B Purchaser Questionnaire
