Exhibit 10.49
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
November 6, 2006, between Epoch Holding Corporation, a Delaware corporation (the
"Company"), and General American Investors Company, Inc., a Delaware corporation
(the "Purchaser").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and in accordance with and in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder (the
"Securities Act"), including Regulation D ("Regulation D"), and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder,
the Company desires to issue and sell to the Purchaser, and the Purchaser
desires to purchase from the Company 10,000 shares of Series A Preferred Stock
(the "Preferred Shares") on the Closing Date for an aggregate purchase price of
$10,000,000 (the "Purchase Price");
WHEREAS, the Company has authorized the Series A Preferred Stock, having
the rights, privileges and preferences set forth in the Certificate of
Designations, Rights and Preferences attached hereto as Exhibit A (the
"Certificate of Designations");
WHEREAS, the Preferred Shares are convertible into shares of common stock,
par value $.01 per share (the "Common Stock"), of the Company upon the terms and
subject to the conditions set forth in the Certificate of Designations; and
WHEREAS, contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit B (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(j).
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.
For the purposes of this definition, "control" means, when used with
respect to any Person, the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract, or otherwise, and the terms "controlling" and "controlled" have
correlative meanings.
"Agreement" shall have the meaning set forth in the Preamble.
"Certificate of Designations" shall have the meaning set forth in
the Recitals.
"Closing" means the closing of the purchase and sale of the
Preferred Shares pursuant to Section 2.1.
"Closing Date" means the date on which all of the Transaction
Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) the Purchaser's obligation to
pay the Purchase Price and (ii) the Company's obligations to deliver the
Preferred Shares, in each such case in the preceding clause (i) and clause
(ii) as set forth in Section 2.3, have been satisfied or waived.
"Commission" means the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the Recitals.
"Common Stock Equivalents" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire at any
time Common Stock, including without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.
"Company" shall have the meaning set forth in the Preamble.
"Company Counsel" means Xxxxxxxxx Xxxxxxx, LLP with offices located
at The Met Life Building, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Conversion Shares" means the 1,666,667 shares (subject to
adjustment as provided in the Certificate of Designations) of Common Stock
of the Company issuable upon conversion of the Preferred Shares.
"Disclosure Schedules" means the disclosure schedules of the Company
delivered concurrently herewith.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
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"Exempt Issuance" means the issuance of (a) shares of Common Stock
or options to employees, officers or directors of the Company pursuant to
any stock or option plan duly adopted by a majority of the non-employee
members of the Board of Directors of the Company or a majority of the
members of a committee of non-employee directors established for such
purpose, (b) securities upon the exercise of or conversion of any
convertible securities, options or warrants issued and outstanding on the
date of this Agreement and disclosed in the SEC Reports or set forth on
the Disclosure Schedules, provided that such securities have not been
amended since the date of this Agreement, and (c) the Securities issued or
issuable hereunder.
"GAAP" shall have the meaning set forth in Section 3.1(h)
"Intellectual Property Rights" shall have the meaning ascribed to
such term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction.
"Margin Stock" shall have the meaning provided in Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221).
"Material Adverse Effect" shall have the meaning ascribed to such
term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term in
Section 3.1(m).
"OFAC" shall have the meaning set forth in Section 3.1(bb).
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"Preferred Shares" shall have the meaning set forth in the Recitals.
"Purchase Price" shall have the meaning set forth in the Recitals.
"Purchaser" shall have the meaning set forth in the Preamble.
"Purchaser Party" shall have the meaning set forth in Section 4.7.
"Registration Rights Agreement" shall have the meaning set forth in
the Recitals.
"Regulation D" shall have the meaning set forth in the Recitals.
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"Required Approvals" shall have the meaning ascribed to such term
in Section 3.1(e).
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Xxxxxxxx-Xxxxx" shall have the meaning set forth in Section 3.1(r).
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities" means, collectively, the Preferred Shares and the
Conversion Shares.
"Securities Act" shall have the meaning set forth in the Recitals.
"Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock, stated value $1,000 per share.
"Subsidiaries" shall mean the subsidiaries of the Company set forth
on Schedule 3.1(a).
"Trading Day" means a day on which the Common Stock is traded on a
Trading Market.
"Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question:
the American Stock Exchange, the New York Stock Exchange, the Nasdaq
Global Select Market, the Nasdaq Global Market or the Nasdaq Capital
Market.
"Transaction Documents" means this Agreement, the Certificate of
Designations, the Registration Rights Agreement and any other documents or
agreements executed in connection with the transactions contemplated
hereunder.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth in this Agreement, the Purchaser shall purchase from the
Company, and the Company shall issue and sell to the Purchaser, 10,000 shares of
Series A Preferred Stock for the Purchase Price. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at the offices of
Company Counsel or such other location as the parties shall mutually agree.
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2.2 Closing Deliveries.
(a) On the Closing Date, the Company shall deliver or cause to be
delivered to the Purchaser or its designee the following:
(i) the certificate evidencing the Preferred Shares registered
in the name of the Purchaser; and
(ii) the Registration Rights Agreement duly executed by the
Company.
(b) On the Closing Date, the Purchaser shall deliver or cause to be
delivered to the Company the following:
(i) the Registration Rights Agreement duly executed by the
Purchaser; and
(ii) once the Purchaser's custodian shall have acknowledged
receipt of the certificate for the Preferred Shares as provided in
Section 2.2(a)(i), the Purchase Price by wire transfer of
immediately available funds to such account as specified in writing
by the Company.
2.3 Closing Conditions.
(a) The Company's obligation to sell the Preferred Shares to the
Purchaser pursuant to this Agreement is conditioned upon satisfaction of
the following conditions precedent at or before the Closing on the Closing
Date (any or all of which may be waived by the Company in its sole
discretion):
(i) On the Closing Date, no Action shall be pending or
threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement; and
(ii) The representations and warranties of the Purchaser
contained in this Agreement shall have been true and correct on the
date of this Agreement and on the Closing Date as if made on the
Closing Date and on or before the Closing Date the Purchaser shall
have performed all covenants and agreements of the Purchaser
contained in this Agreement and required to be performed by the
Purchaser on or before the Closing Date.
(b) The Purchaser's obligation to purchase the Preferred Shares
pursuant to this Agreement is conditioned upon satisfaction of the
following conditions precedent on or before the Closing Date (any or all
of which may be waived by the Purchaser in its sole discretion):
(i) No Action shall be pending or threatened which seeks to
restrain or prohibit the transactions contemplated by this
Agreement;
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(ii) The representations and warranties of the Company
contained in this Agreement shall have been true and correct on the
date of this Agreement and shall be true and correct on the Closing
Date as if given on and as of the Closing Date, and on or before the
Closing Date the Company shall have performed all covenants and
agreements of the Company contained herein or in any of the other
Transaction Documents required to be performed by the Company on or
before the Closing Date;
(iii) The Certificate of Designations shall have been duly
filed with the Secretary of State of the State of Delaware and the
Purchaser shall have received satisfactory existence of such filing;
(iv) The Company shall have delivered to the Purchaser a
certificate, dated the Closing Date, duly executed by its Chief
Executive Officer, to the effect set forth in subparagraphs (i) and
(ii) of this Section 2.3(b);
(v) The Company shall have delivered to the Purchaser a
certificate, dated the Closing Date, of the Secretary of the Company
certifying (1) the Certificate of Incorporation and By-Laws of the
Company as in effect on the Closing Date, (2) all resolutions of the
Board of Directors (and committees thereof) of the Company relating
to this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby, (3) the incumbency and
signature of all officers executing any Transaction Document or
investment delivered pursuant to this Section 2.3(b) and (4) such
other matters as reasonably requested by the Purchaser;
(vi) On the Closing Date, the Purchaser shall have received an
opinion of Company Counsel, dated the Closing Date, addressed to the
Purchaser, in form, scope and substance reasonably satisfactory to
the Purchaser; and
(vii) From the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the Commission, and,
at any time from the date hereof to the Closing Date, trading in
securities generally on the relevant Trading Market shall not have
been suspended or limited, or minimum prices shall not have been
established on securities listed or traded on any such market or
exchange nor shall a banking moratorium have been declared either by
the United States or New York State authorities nor shall there have
occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect
on, or any material adverse change in, any financial market which,
in each case, in the reasonable judgment of the Purchaser, makes it
impracticable or inadvisable to purchase the Preferred Shares at the
Closing.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in
the SEC Reports or as otherwise set forth under any corresponding section of the
Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof,
the Company hereby makes the representations and warranties as of the date
hereof and as of the Closing Date to the Purchaser as follows:
(a) Subsidiaries. All of the Subsidiaries of the Company are set
forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of rights of first offer, rights of first refusal
and similar rights to subscribe for or purchase such shares.
(b) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to carry
on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default 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 conduct business and is in good standing
as a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, could not have or reasonably be
expected to result in a material adverse effect on (i) the legality,
validity or enforceability of any Transaction Document, (ii) the results
of operations, assets, business, properties, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a
whole, or (iii) the Company's ability to perform in any material respect
on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a "Material Adverse Effect") and no Action has been
instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or
qualification.
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(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to file and perform its obligations under
the Certificate of Designations and to enter into and perform this
Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby and to issue the Preferred
Shares, in accordance with the terms hereof and thereof. The execution and
delivery of the Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Conversion Shares) have been duly
authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith other
than in connection with the Required Approvals. Each Transaction Document
has been (or upon delivery and filing, as the case may be, will have been)
duly executed by the Company and, assuming this Agreement constitutes the
valid and binding obligation of the Purchaser and when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or similar laws relating to or affecting the rights of creditors'
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and by
an implied covenant of good faith and fair dealing.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the
Preferred Shares and the consummation by the Company of the other
transactions contemplated thereby (including, without limitation, the
filing of the Certificate of Designations and the issuance and reservation
for issuance, as applicable, of the Preferred Shares and the Conversion
Shares) do not and will not (i) conflict with or violate any provision of
the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or
(ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company
or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including
federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected, or
(iv) conflict with or violate the terms of any agreement by which the
Company or any Subsidiary is bound or to which any property or asset of
the Company or any Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.
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(e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section
4.4 of this Agreement, (ii) the filing with the Commission of the
Registration Statement, (iii) application to the applicable Trading Market
for the listing of the Conversion Shares for trading thereon in the time
and manner required thereby, (iv) the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware, and (v)
the filing of Form D with the Commission and such other filings as are
required to be made under applicable state securities laws (collectively,
the "Required Approvals").
(f) Issuance of the Series A Preferred Stock. The Series A Preferred
Stock is duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully paid and
non-assessable, free and clear of all Liens (other than restrictions
generally imposed on securities under U.S. federal, state or foreign
securities laws or any restrictions on transfer provided for in the
Transaction Documents). The Conversion Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully
paid and non-assessable, free and clear of all Liens (other than
restrictions generally imposed on securities under U.S. federal, state or
foreign securities laws or any restrictions on transfer provided for in
the Transaction Documents). The Company has reserved from its duly
authorized capital stock the maximum number of Preferred Shares and
Conversion Shares issuable pursuant to this Agreement and the other
Transaction Documents. The terms, designations, powers, preferences and
relative, participating and optional or special rights, and the
qualifications, limitations and restrictions of each series of preferred
stock of the Company (other than the Series A Preferred Stock) are as
stated in the Company's certificate of incorporation, filed prior to the
date hereof, and its bylaws. The terms, designations, powers, preferences
and relative, participating and optional or special rights, and the
qualifications, limitations and restrictions of the Series A Preferred
Stock are as stated in the Certificate of Designations.
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(g) Capitalization. The capitalization of the Company is as
described in the Company's most recent periodic report filed with the
Commission. The Company has not issued any capital stock since such filing
other than pursuant to the exercise of stock options under the Company's
stock option plans and the issuance of shares of Common Stock to employees
pursuant to the Company's employee stock plan. No Person has any right of
first refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the Transaction
Documents. Except as a result of the purchase and sale of the Preferred
Shares, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire, any
shares of Common Stock or Series A Preferred Stock or securities or rights
convertible or exchangeable into shares of Common Stock or Series A
Preferred 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 Series A Preferred Stock or
securities or rights convertible or exchangeable into shares of Common
Stock or Series A Preferred Stock. The issuance and sale of Preferred
Shares will not obligate the Company to issue shares of Common Stock,
Series A Preferred Stock or other securities to any Person (other than the
Purchaser) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price
under such securities. All of the outstanding shares of capital stock of
the Company are validly issued, fully paid and non-assessable, have been
issued in compliance with all federal and state securities laws, and none
of such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities. No
further approval or authorization of any stockholder, the Board of
Directors of the Company or any other Person is required for the issuance
and sale of the Preferred Shares. Except as disclosed in the SEC Reports,
there are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company's capital stock to which the
Company is a party or, to the knowledge of the Company, between or among
any of the Company's stockholders.
(h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials, including the exhibits thereto, being collectively referred to
herein as the "SEC Reports") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior
to the expiration of any such extension. As of their respective dates, the
SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect 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 except that
unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position
of the Company and its consolidated subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
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(i) Material Changes. Since the date of the latest financial
statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities 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, (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 and (v) the Company has not issued
any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
(j) Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or
any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability
of any of the Transaction Documents or the Securities or (ii) could, if
there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of the Company which could reasonably be expected to result in a Material
Adverse Effect.
(l) 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 (whether or not such default or violation has
been waived), (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business except in each case as could not have a Material Adverse Effect.
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(m) 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 could not have or
reasonably be expected to result in 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.
(n) 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 the Subsidiaries and good and
marketable title in all Personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and
clear of all Liens, except for Liens as do not materially affect the value
of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries
and Liens for the payment of federal, state or other taxes, the payment of
which is neither delinquent nor subject to penalties. 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.
(o) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses
and other similar rights necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could have a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). Neither the Company nor any Subsidiary
has received a written notice that the Intellectual Property Rights used
by the Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by
another Person of any of the Intellectual Property Rights of others.
(p) Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. To the best of
Company's knowledge, such insurance contracts and policies are accurate
and complete. Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
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(q) Transactions With Affiliates and Employees. Except as set forth
in the SEC Reports, 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, in each case in excess of
$60,000 in any twelve (12) month period other than (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company and (iii) for other employee
benefits, including stock agreements under any stock plan of the Company.
(r) Xxxxxxxx-Xxxxx Act. The Company is in substantial compliance
with the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act"), and the rules and regulations promulgated
thereunder, that are effective and intends to comply substantially with
other applicable provisions of the Xxxxxxxx-Xxxxx Act, and the rules and
regulations promulgated thereunder, upon the effectiveness of such
provisions.
(s) Certain Fees. No brokerage or finder's fees or commissions are
or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement.
The Purchaser shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.
(t) Private Placement. Assuming the accuracy of the Purchaser's
representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchaser as contemplated hereby. The
issuance and sale of the Securities hereunder does not contravene the
rules and regulations of the Trading Market.
(u) Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Shares, will not be
or be an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
13
(v) Registration Rights. No Person has any right to cause the
Company to effect the registration under the Securities Act of any
securities of the Company.
(w) Listing and Maintenance Requirements. The Company's Common Stock
is registered pursuant to Section 12(b) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is
likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification
that the Commission is contemplating terminating such registration. The
Company has not, in the 12 months preceding the date hereof, received
notice 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.
(x) Application of Takeover Protections. The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company's Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchaser as a
result of the Purchaser and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Purchaser's
ownership of the Securities. The Company does not have in effect any
stockholder rights plan or similar plan or arrangement that would be
triggered by accumulation of shares of the Company's capital stock or
voting power or an offer to purchase shares of the Company's capital
stock.
(y) No Integrated Offering. Assuming the accuracy of the Purchaser's
representations and warranties set forth in Section 3.2, neither the
Company, nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Series A Preferred Stock to be
integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of any
Trading Market on which any of the securities of the Company are listed or
designated.
(z) Taxes. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal,
state and foreign income and franchise tax returns and has paid or accrued
all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company or
any Subsidiary.
14
(aa) General Solicitation. Neither the Company nor any Person acting
on behalf of the Company has offered or sold any of the Series A Preferred
Stock by any form of general solicitation or general advertising. The
Company has offered the Series A Preferred Stock for sale only to the
Purchaser and certain other "accredited investors" within the meaning of
Rule 501 under the Securities Act.
(bb) Foreign Corrupt Practices. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any corrupt funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or
made by any person acting on its behalf of which the Company is aware)
which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.
Neither the Company nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(cc) Acknowledgment Regarding Purchaser's Purchase of Preferred
Shares. The Company acknowledges and agrees that the Purchaser is acting
solely in the capacity of an arm's length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby. The
Company further acknowledges that the Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement and the transactions contemplated hereby
and any advice given by the Purchaser or any of its respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Purchaser's
purchase of the Preferred Shares. The Company further represents to the
Purchaser that the Company's decision to enter into this Agreement has
been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(dd) Acknowledgment of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of or otherwise pursuant
to the Preferred Shares. The Company further acknowledges that its
obligation to issue the Conversion Shares upon conversion of or otherwise
pursuant to the Preferred Shares in accordance with the Transaction
Documents is absolute, subject only to the terms and conditions set forth
in the Transaction Documents, regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.
15
(ee) Disclosures. None of the representations or warranties made by
the Company under any of the Transaction Documents and no written
information furnished by the Company pursuant hereto, or in any other
document, certificate or written statement furnished by the Company to the
Purchaser or any authorized representative of the Purchaser pursuant to
the Transaction Documents or in connection therewith, contains any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in light of
the circumstances under which they were made, not misleading.
3.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:
(a) Organization; Authority. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by the
Purchaser of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate or similar action on the part
of the Purchaser. Each Transaction Document to which it is a party has
been duly executed by the Purchaser, and, assuming this Agreement
constitutes the valid and binding obligation of the Company and when
delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws relating
to or affecting the rights of creditors' generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by an implied covenant
of good faith and fair dealing.
(b) Circumstances of Purchase. The Purchaser understands that the
Securities are "restricted securities" and have not been registered under
the Securities Act or any applicable state securities law and is acquiring
the Securities as principal for its own account and not with a view to or
for distributing or reselling such Securities or any part thereof, has no
present intention of distributing any of such Securities and has no
arrangement or understanding with any other Persons regarding the
distribution of such Securities (this representation and warranty not
limiting the Purchaser's right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal
and state securities laws). The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. The Purchaser does not
have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.
16
(c) Rule 144. The Purchaser understands that the Securities must be
held indefinitely unless such Securities are registered under the
Securities Act or an exemption from registration is available. The
Purchaser acknowledges that it is familiar with Rule 144, and that the
Purchaser has been advised that Rule 144 permits resales only under
certain circumstances. The Purchaser understands that to the extent that
Rule 144 is not available, the Purchaser will be unable to sell any
Securities without either registration under the Securities Act or the
existence of another exemption from such registration requirement.
(d) Purchaser Status. At the time the Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on
which it converts any Preferred Shares, it will be either: (i) an
"accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7)
or (a)(8) under the Securities Act or (ii) a "qualified institutional
buyer" as defined in Rule 144A(a) under the Securities Act. The Purchaser
is not required to be registered as a broker-dealer under Section 15 of
the Exchange Act.
(e) General. The Purchaser understands that the Securities are being
offered and sold in reliance on a transactional exemption from the
registration requirements of federal and state securities laws and the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the
Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the Securities.
The Purchaser understands that no United States federal or state agency or
any government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
(f) General Solicitation. The Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
17
(g) Patriot Act. If the Purchaser is an individual, the Purchaser
certifies that he or she is not nor to his or her knowledge has been
designated, a "suspected terrorist" as defined in Executive Order 13224.
If the Purchaser is a corporation, trust, partnership, limited liability
company or other organization, the Purchaser certifies that, to the best
of the Purchaser's knowledge, the Purchaser has not been designated, and,
to the knowledge of the Purchaser after due inquiry, is not owned or
controlled, by a "suspected terrorist" as defined in Executive Order
13224. The Purchaser hereby acknowledges that the Company seeks to comply
with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, the Purchaser hereby
represents, warrants and agrees that: (i) to its knowledge after due
inquiry, none of the cash or property that the Purchaser will pay or will
contribute to the Company has been or shall be derived from, or related
to, any activity that is deemed criminal under United States law; and (ii)
to its knowledge, no contribution or payment by the Purchaser to the
Company, to the extent that they are within the Purchaser's control shall
cause the Company to be in violation of the United States Bank Secrecy
Act, the United States International Money Laundering Control Act of 1986
or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001. The Purchaser understands and agrees
that if at anytime while the Purchaser holds any of the Securities it is
discovered that any of the foregoing representations are incorrect, it
shall promptly notify the Company.
(h) Information. The 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 which have been requested by the Purchaser and its
advisors, if any. The Purchaser and its advisors, if any, have been
afforded the opportunity to ask questions of the Company.
The Company acknowledges and agrees that the Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions. (a) The Securities may only be sold in
compliance with state and federal securities laws. In connection with any
transfer of Securities, other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of the Purchaser and
other than in connection with any pledge of Securities, the Company may require
the transferor thereof to provide to the Company an opinion of counsel selected
by the transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement
with respect to the Securities so transferred and shall have the rights of the
Purchaser under this Agreement and the Registration Rights Agreement with
respect to such Securities.
(b) The Purchaser agrees to the imprinting, so long as is required
by this Section 4.1(b), of a legend on any of the Securities in the following
form:
18
"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 AS EVIDENCED BY A
LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS ."
Once the registration statement required to be filed by the Company with the
Commission pursuant to the Registration Rights Agreement has been declared
effective or particular Securities are eligible for resale pursuant to Rule
144(k) under the Securities Act, thereafter (a) upon request of the Purchaser
the Company will substitute certificates without restrictive legend for
certificates for any such Securities issued prior to the effective date of such
registration statement or prior to the time of such eligibility, as the case may
be, which bear such restrictive legend and remove any stop-transfer restriction
relating thereto in each case promptly, but in no event later than three (3)
Trading Days after surrender of such certificates by the Purchaser and (b) the
Company shall not place any restrictive legend on certificates for any
Securities issued upon conversion or transfer of the Preferred Shares or impose
any stop-transfer restriction thereon.
4.2 Furnishing of Information. As long as the Purchaser owns any
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as the Purchaser owns any Securities, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchaser and make publicly available in accordance with Rule
144(c) such information as is required for the Purchaser to sell the Securities
under Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchaser or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval of such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction.
19
4.4 Securities Laws Disclosure; Publicity. The Company and the Purchaser
shall consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor the Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
the Purchaser, or without the prior consent of the Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Purchaser, or include the
name of the Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of the Purchaser (which
consent shall not unreasonably be withheld) except (a) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (b) to the extent such disclosure is required
by law (including, without limitation, any reporting obligations under the
Securities Act or Exchange Act) or Trading Market regulations, in which case the
Company shall provide the Purchaser with prior notice of such disclosure
permitted under subclause (a) or (b).
4.5 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide the Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto the Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that the Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.6 Use of Proceeds. The Company shall use the net proceeds from the sale
of the Preferred Shares hereunder for working capital and general corporate
purposes. The Company represents and warrants to the Purchaser, and covenants
and agrees with the Purchaser, that: (a) the Company does not own or have any
present intention of acquiring any Margin Stock; (b) none of the proceeds of
sale of the Preferred Shares will be used for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock or for the
purpose of maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any stock that is currently a Margin
Stock or for any other purpose which might constitute the transactions
contemplated by this Agreement a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; and (c)
neither the Company nor any agent acting on its behalf has taken or will take
any action which might cause this Agreement or the transactions contemplated
hereby to violate Regulation T, Regulation U or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange Act,
in each case as in effect now or as the same may hereafter be in effect.
20
4.7 Indemnification of Purchaser. Subject to the provisions of this
Section 4.7, the Company will indemnify and hold the Purchaser and its
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any the Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of the Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of the Purchaser's representation, warranties or covenants
under the Transaction Documents or any agreements or understandings the
Purchaser may have with any such stockholder or any violations by the Purchaser
of state or federal securities laws or any conduct by the Purchaser which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, the Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Purchaser Party except to the extent that (a) the
employment thereof has been specifically authorized by the Company in writing,
(b) the Company has failed after a reasonable period of time to assume such
defense and to employ counsel or (c) in such action there is, in the reasonable
opinion of such separate counsel, a material conflict on any material issue
between the position of the Company and the position of the Purchaser Party. The
Company will not be liable to any Purchaser Party under this Agreement (a) for
any settlement by an Purchaser Party effected without the Company's prior
written consent, which shall not be unreasonably withheld or delayed; or (b) to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party's breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in this Agreement or
in the other Transaction Documents.
4.8 Reservation of Common Stock. As of the date hereof, the Company has
reserved, and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue the Conversion Shares.
4.9 Listing of Common Stock. The Company hereby agrees to use commercially
reasonable efforts to maintain the listing of its Common Stock on a Trading
Market, and to list all of the Conversion Shares on such Trading Market as
promptly as possible after the Closing. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Trading Market, it
will include in such application all of the Conversion Shares, and will take
such other action as is necessary to cause all of the Conversion Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Trading Market.
21
4.11 No Shorting. Since the Securities were first offered to the
Purchaser, the Purchaser has not engaged and, so long as the Purchaser directly
or indirectly beneficially owns any of the Securities, the Purchaser will not
engage, in any "short sales" (as defined in Regulation SHO under the Exchange
Act) of the Common Stock.
ARTICLE V.
MISCELLANEOUS
5.1 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
(including, without limitation, that certain Mutual Non-Disclosure Agreement
dated August 15, 2006) and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules.
5.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by a
nationally recognized overnight delivery service, by fax or by certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specification notice given in accordance with this Section 5.2:
If to the Company:
Epoch Holding Corporation
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxx Xxxxx, Chief Financial Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxxxx Traurig, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Annex, Esq.
Fax No.: (000) 000-0000
22
If to the Purchaser:
General American Investors Company, Inc.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:President and Chief Executive Officer
Fax No.: (000) 000-0000
with a copy to:
Law Offices of Xxxxx X Xxxxx
00 Xxxx 00xx Xxxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
5.3 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.4 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.
5.5 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 sell, assign, transfer or otherwise convey any of its rights or
delegate any of its duties under this Agreement, except to a Person which has
succeeded to substantially all of the business and assets of the Company and has
assumed in writing its obligations, if any, under this Agreement, and this
Agreement shall be binding on the Company and such successor. The Purchaser may
assign any or all of its rights under this Agreement to any Person to whom the
Purchaser assigns or transfers any Securities; provided such assignment or
transfer is in compliance with applicable law and; provided, further such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the "Purchaser." In
connection with any such assignment by the Purchaser, the Company shall confirm
to such assignee or transferee by written instrument, in such form as reasonably
requested by the Purchaser, that the Company accepts such assignment and
transfer and will perform its obligations under the Transaction Documents for
the benefit of such assignee or transferee.
23
5.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.
5.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. 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 parties hereby waive all rights to a trial by jury in any
action arising from or relating to this Agreement and the transactions
contemplated hereby. If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys' fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.8 Survival. The representations and warranties herein shall survive for
eighteen (18) months after the Closing and delivery of the Preferred Shares.
5.9 Execution. This Agreement may be executed in two (2) or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.10 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.
24
5.11 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then the
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.12 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable out-of-pocket third-party
costs associated with the issuance of such replacement Securities.
5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction
Documents, including, without limitation, specific performance by the Company of
the issuance of Conversion Shares upon conversion of the Preferred Shares in
accordance with the Certificate of Designations. 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.
5.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to the Purchaser pursuant to any Transaction Document or the Purchaser
enforces or exercises its rights 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, 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.
5.15 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
(Signature Page Follows)
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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.
EPOCH HOLDING CORPORATION
By:__/s/ Xxxxxxx X. Priest____________
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
GENERAL AMERICAN INVESTORS COMPANY, INC.
By:__/s/ Xxxxxxx Davidson_____________
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
26
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK
See Exhibit 4.2
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
See Exhibit 4.3
