EXHIBIT 4.01
UNIT PURCHASE AGREEMENT
This Unit Purchase Agreement (the "Agreement") is made and entered
into as of May 29, 1998, by and among Silicon Valley Research, Inc., a
California corporation (the "Company"), and those parties listed on the
signature pages hereof as "Investors" (who are referred to individually as an
"Investor" and collectively as the "Investors").
WHEREAS, the Company requires additional cash to fund its current
operations and for working capital and, therefore, is offering to sell the Units
(as defined below) to investors who qualify as purchasers in a private placement
transaction under federal and state securities laws; and
WHEREAS, each of such investors will have the right to subscribe for
any or all of the Maximum Amount (as defined below) of the Units at the Unit
Purchase Price (as defined below), subject to pro ration as described herein.
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. Sale of Units; Closing; Delivery.
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(a) Purchase and Sale of Units. Subject to the terms and conditions
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hereof, the Company will issue and sell to each Investor, and each Investor will
purchase from the Company, on the Closing Date (as defined below) the number of
Units subscribed for by such Investor as set forth on such Investor's signature
page hereof (the "Subscription Amount"), subject to reduction as specified in
Section 1(b) hereof. A "Unit" shall be composed of a share of common stock
("Share"), no par value, of the Company ("Common Stock"), and a warrant (the
"Warrant") to purchase a share of Common Stock ("Warrant Share"). The purchase
price per Unit (the "Unit Purchase Price") shall be determined at the close of
business on May 27, 1998 (the "Pricing Date"), and shall be based upon the sum
of (i) a purchase price per Share (the "Share Purchase Price") equal to the
average of the closing bid and ask prices of the Common Stock on the Nasdaq
National Market (the "NNM") for the five consecutive trading days ending on the
Pricing Date and (ii) a purchase price per Warrant of $0.125. The exercise
price per Warrant Share (the "Exercise Price") shall be 50% of the Share
Purchase Price. A form of the Warrant is attached hereto as Exhibit A.
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(b) Allocation of Units. The Company shall sell up to a maximum of
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2,380,000 Units (the "Maximum Amount"). In the event that the aggregate of the
Subscription Amounts of all Investors (the "Aggregate Subscription Amount")
shall exceed the Maximum Amount, Units shall be allocated, pro rata, among the
Investors based on the relation that an
Investor's Subscription Amount bears to the Aggregate Subscription Amount.
(c) Closing Notice. As soon as practicable following the close of the
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NNM on the Pricing Date, but in no event later than 3:00 p.m. Pacific Time on
such Date, the Company shall give each Investor written notice of the total
payment due from such Investor at the Closing (as defined below) based upon the
number of Units allocated to such Investor hereunder at the Unit Purchase Price
as determined pursuant to Section 1(a). In addition, such notice shall specify
the Exercise Price per Warrant as determined pursuant to Section 1(a). Such
notice shall also contain computations as to the allocation of Units among
Investors based upon the Aggregate Subscription Amount pursuant to Section 1(b)
hereof and as to the Unit Purchase Price.
(d) Closing. The closing of the purchase and sale of the Units (the
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"Closing") shall take place on May 29, 1998 (the "Closing Date"); provided,
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however, that the Company shall have the option to extend the Closing Date for
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up to fifteen (15) days. The Company shall provide the Investors with written
notice, prior to the close of business on May 27, 1998, of any such extension of
the Closing Date.
(e) Delivery. At the Closing, the Company will deliver to each
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Investor (or its agent, as hereinafter described) the Warrants and a stock
certificate representing the Shares included in the Units to be purchased by
such Investor, against payment of the purchase price therefor by check, payable
to the order of the Company, or by wire transfer of immediately available funds
to the bank account of the Company. For purposes of the Closing, the Company
shall deliver the Shares and Warrants included in the Units purchased hereunder
by each of the Investors to Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx and
Xxxxxxxxx, LLP, as agent of the Investors, unless the Company shall receive
other written instructions from an Investor at least two (2) business days prior
to the Closing.
2. Representations and Warranties of Investors. Each Investor
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represents and warrants, severally, to the Company that:
(a) Authorization. This Agreement constitutes the valid and legally
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binding obligation of such Investor, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency and similar
laws affecting the enforcement of creditors' rights generally and equitable
remedies, and except as indemnity provisions in the enforcement of Section 4 of
this Agreement (relating to registration rights) may be limited by law, and such
Investor (if an individual) is over eighteen (18) years of age, and such
Investor has full legal capacity, power and
authority to enter into and be bound by this Agreement.
(b) Purchase for Own Account for Investment. Such Investor is
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purchasing the Units (including, for this purpose, the Shares and the Warrants)
for investment purposes only and not with a view to, or for sale in connection
with, a distribution of the Units within the meaning of the Securities Act of
1933, as amended (the "1933 Act"). Such Investor has no present intention of
selling or otherwise disposing of all or any portion of the Units.
(c) Access to Information. Such Investor has had an opportunity to
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ask questions of the Company's representatives concerning the Company, its
present and prospective business, assets, liabilities and financial condition
that such Investor reasonably considers important in making the decision to
purchase the Units. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement or
the rights of the Investors to rely thereon.
(d) Understanding of Risks. Such Investor is fully aware of: (i) the
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highly speculative nature of the investment in the Units; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and Warrant Shares
and the restrictions on the transferability of the Shares and Warrant Shares
(e.g., that such Investor may not be able to sell or dispose of the Shares and
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Warrant Shares); and (iv) the tax consequences of an investment in the Units.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 3 of this Agreement and the rights of the
Investors to rely thereon.
(e) Investor's Qualifications. Such Investor is an "accredited"
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investor as defined under Regulation D under the 1933 Act. Such Investor is
aware of the general business and financial circumstances of the Company and, by
reason of such Investor's business or financial experience, such Investor is
capable of evaluating the merits and risks of this investment and is financially
capable of bearing a total loss of this investment.
(f) Compliance with Securities Laws. Such Investor understands and
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acknowledges that, in reliance upon the representations and warranties made by
such Investor herein, the Shares and Warrant Shares are not currently registered
with the U.S. Securities and Exchange Commission (the "SEC") under the 1933 Act
or being qualified under the California Corporate Securities Law of 1968, as
amended (the "California Law"), but instead are being issued under an exemption
or exemptions from the registration and qualification requirements of the 1933
Act and the California Law or other applicable state securities laws which
impose
certain restrictions on such Investor's ability to transfer the Shares and
Warrant Shares.
(g) Restrictions on Transfer. Such Investor understands that such
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Investor may not transfer any of the Shares or Warrant Shares unless such Shares
or Warrant Shares are registered under the 1933 Act or unless, in the opinion of
counsel to the Company, exemptions from such registration and qualification
requirements are available. Such Investor understands that only the Company may
file a registration statement with the SEC. Such Investor has also been advised
that exemptions from registration and qualification may not be available or may
not permit such Investor to transfer all or any of the Shares or Warrant Shares
in the amounts or at the times proposed by such Investor.
(h) Rule 144. In addition, such Investor has been advised that SEC
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Rule 144 ("Rule 144") promulgated under the 1933 Act, which permits certain
limited sales of unregistered securities, is not presently available with
respect to the Shares and Warrant Shares solely due to the holding periods
required thereunder and, in any event, requires that the Shares and Warrant
Shares be held for a minimum of one year after they have been purchased and paid
for (within the meaning of Rule 144), before they may be resold under Rule 144.
Such Investor understands that Rule 144 may indefinitely restrict transfer of
the Shares and Warrant Shares if such Investor is an "affiliate" of the Company
and "current public information" about the Company (as defined in Rule 144) is
not publicly available.
(i) Legends and Stop-Transfer Orders. Such Investor understands that
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certificates or other instruments representing any of the Shares and Warrant
Shares acquired by such Investor may bear legends substantially similar to the
following, in addition to any other legends required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY OTHER STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS UNLESS SOLD PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT.
In order to ensure and enforce compliance with the restrictions imposed by
applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing the Shares and Warrant Shares, or if the Company transfers its own
securities, it may make appropriate notations to the same effect in the
Company's records. Any legend endorsed on a certificate pursuant to this
Subsection (i) and the related stop transfer instructions with respect to such
securities shall be removed, and the Company shall issue a certificate without
such legend to the holder thereof, if such securities are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available, if such legend may be properly removed under the
terms of Rule 144 promulgated under the Securities Act or if such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without registration.
3. Representations and Warranties of the Company. The Company
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hereby represents and warrants to each Investor that, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit B:
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(a) Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California. The Company has all necessary corporate power and authority to own
its assets and to carry on its business as now being conducted and presently
proposed to be conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which its
ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary.
(b) Requisite Power and Authorization. The Company has all necessary
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corporate power and authority under the laws of the State of California and all
other applicable provisions of law to execute and deliver this Agreement, to
issue the Shares, the Warrants and the Warrant Shares and to carry out the
provisions of this Agreement and the Warrants. All corporate action on the part
of the Company required for the lawful execution and delivery of this Agreement,
and issuance and delivery of the Shares, the Warrants and the Warrant Shares has
been duly and effectively taken. Upon
execution and delivery, this Agreement and the Warrants constitute valid and
binding obligations of the Company enforceable in accordance with their
respective terms, except as enforcement may be limited by insolvency and similar
laws affecting the enforcement of creditors' rights generally and equitable
remedies and except as the indemnity provisions of Section 4(g) of this
Agreement (relating to registration rights) may be limited by law. The Shares
and the Warrant Shares when issued in compliance with the provisions of this
Agreement or the Warrants, as the case may be, will be duly authorized and
validly issued, fully paid, non-assessable and issued in compliance with federal
securities laws and all applicable state securities laws. The Warrants, when
issued in compliance with this Agreement, will be duly authorized and validly
issued. No shareholder of the Company or other person has any preemptive right
of subscription or purchase or contractual right of first refusal or similar
right with respect to the Shares, Warrants or Warrant Shares. The Company has
reserved such number of shares of its Common Stock necessary for issuance of the
Warrant Shares.
(c) SEC Documents. The Company has furnished to each Investor: the
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Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1997,
and all documents that the Company was required to file, which it represents and
warrants it did timely file, with the SEC under Sections 13 or 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since March
31, 1997 (collectively, the "SEC Documents"). As of their respective filing
dates, or such later date on which such reports were amended, the SEC Documents
complied in all material respects with the requirements of the Exchange Act.
The SEC Documents as of their respective dates, or such later date on which such
reports were amended, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements included in the SEC Documents
(the "Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. Except as may be indicated in the notes to the
Financial Statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
(d) Capital Stock. The authorized capital stock
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of the Company consists of 40,000,000 shares of Common Stock, without par value,
and 1,000,000 shares of Preferred Stock, without par value. As of May 1, 1998,
there were 23,812,204 shares of Common Stock issued and outstanding, and there
are no issued and outstanding shares of Preferred Stock. Except as set forth on
Schedule 1, there are no other outstanding rights, plans, options, warrants,
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conversion rights or agreements for the purchase, exercise or acquisition from
the Company of shares of its capital stock.
(e) No Prior Liens. There are no persons or entities with a lien
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against, or secured interest in, any of the tangible or intangible assets of the
Company.
(f) Compliance with Other Agreements. Neither the execution and
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delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by, this Agreement, nor the issuance of the Shares, the
Warrants and the Warrant Shares, has constituted or resulted in, or will
constitute or result in, a default under or breach or violation of any term or
provision of the Company's Bylaws, Articles of Incorporation, or material
contracts with third parties, state or federal laws, rules or regulations,
writs, orders or judgments or decrees which are applicable to the Company or its
properties.
(g) Consents. All consents necessary for the Company to perform its
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respective obligations hereunder have been obtained.
(h) No Material Adverse Change. Since December 31, 1997, there has
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not been:
(i) any changes in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Company's Form 10Q for
the quarter ended December 31, 1997, except changes in the ordinary course
of business which have not been, either in any individual case or in the
aggregate, materially adverse;
(ii) any material change, except in the ordinary course of business,
in the contingent obligations of the Company whether by way of guarantee,
endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of
the Company;
(iv) any declaration or payment of any dividend or other distribution
of the assets of the Company;
(v) any labor organization activity; or
(vi) any other event or condition of any character which has
materially and adversely affected the Company's business, assets,
liabilities, financial condition, operations or prospects.
(i) Intellectual Property. The Company has sufficient title and
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ownership of all patents, patent applications, copyrights, trade secrets,
trademarks, proprietary information, proprietary rights and processes necessary
for its business as now conducted and as now proposed to be conducted by the
Company without any conflict with or infringement of the rights of others. The
research, development, manufacture, sale and use of products presently made,
used or sold by, or contemplated for future manufacture, sale or use by the
Company do not and would not constitute or involve a significant risk of
infringement of any patent or misappropriation of any trade secret of any third
party. There are no outstanding options, licenses, or agreements of any kind
relating to any material use of the foregoing, nor is the Company bound by or a
party to any options, licenses, encumbrances or liens, or any outstanding
orders, judgments, decrees, stipulations or agreements of any kind with respect
to the patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights and processes of any other
person or entity that are material to the Company's business as currently
conducted or proposed to be conducted. The Company has not received any
communications alleging that the Company, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights, or trade secrets or any other proprietary rights of any other
person or entity. The Company is not aware that any of its employees or
consultants is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order on any court or administrative agency, that is violated by or
would materially interfere with the current or prospective services provided to
the Company by the employee or consultant or the use of his best efforts to
promote the interests of the Company or that would materially conflict with the
Company's business as currently being conducted or as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the
Company's business as currently conducted or proposed to be conducted will, to
the Company's knowledge, conflict with or result in a material breach of the
terms, conditions or provisions of, or constitute a material default under, any
contract, covenant or instrument under which any of such employees is now
obligated.
(j) Litigation. There is no action, suit, proceeding or investigation
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pending or, to the Company's best knowledge, currently threatened against the
Company that
questions the validity of this Agreement or the Warrants, or the right of the
Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the business, assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company. The foregoing includes,
without limitation, actions, suits, proceedings or investigation pending or
threatened involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company intends to initiate.
(k) Registration Rights. The Company has not granted or agreed to
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grant any registration rights, including piggyback rights, to any person or
entity. None of the registration rights disclosed on the Schedule of Exceptions
are senior to the registration rights provided for in this Agreement.
(l) Compliance with Laws. The Company is in compliance and has
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conducted its business and operations so as to comply with all laws, ordinances,
rules and regulations, judgments, decrees or orders of any court, administrative
agency, commission, regulatory authority or other governmental or administrative
body or instrumentality, whether domestic or foreign ("Governmental Entity"),
except to the extent that failure to comply would not have a material adverse
effect on the Company's financial or other condition, business, prospects,
property, results of operations or assets as presently conducted or proposed to
be conducted. There are no judgments or orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration) against the Company or against any of its properties or
businesses, and none are pending or threatened. The Company has not during the
past four (4) years received any governmental notice from any Governmental
Entity for any violation of applicable laws or regulations.
(m) Taxes. The Company has filed all tax returns and reports as
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required by law, and there are no waivers of applicable statutes of limitations
with respect to taxes for any year. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith. The provision for
taxes of the Company as shown in
the Financial Statements is adequate for taxes due or accrued as of the date
hereof. The Company has not elected pursuant to the Internal Revenue Code of
1986, as amended (the "Code"), to be treated as a Subchapter S corporation, nor
has it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation or amortization) that would
have a material effect on the Company's present business, assets, liabilities
and financial condition. The Company has not been subject to a federal or state
tax audit of any kind.
(n) Nasdaq. The Common Stock has been designated for inclusion in the
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NNM upon prior application. The issuance and sale of the Shares and the
Warrants, when issued and sold in accordance with this Agreement, and the
issuance and sale of the Warrant Shares when issued and sold in accordance with
the Warrants, will not violate any applicable rule of The Nasdaq Stock Market
("Nasdaq"), including, without limitation, Nasdaq Marketplace Rule 4460(i) which
requires shareholder approval prior to the issuance of designated securities.
(o) No Default. The Company is not in default under any provision of
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its Articles of Incorporation or Bylaws or in material default under any
material contract, commitment or restriction to which the Company is a party or
by which the Company or any of its properties or assets is bound or affected or
in material default under any term or condition of any judgment, decree, order,
injunction or stipulation applicable to the Company. To the best of the
Company's knowledge, no other party is in material default under or in material
breach or violation of any material contract, commitment, or restriction to
which the Company is a party or by which the Company or any of its properties or
assets is bound or affected.
(p) Registration Statement. To the best of the Company's knowledge,
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there exist no facts or circumstances that would inhibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Registrable Securities (as defined below) in accordance with Section 4(b)
hereof.
(q) No Misrepresentation. No representation or warranty by the
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Company in this Agreement and no statements in the SEC Documents, as amended, or
any other document, statement, certificate or schedule furnished or to be
furnished by or on behalf of the Company pursuant to this Agreement, when taken
together with the foregoing, contains or shall contain any untrue statement of
material fact or omits or shall omit to state a material fact required to be
stated therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading. The Company has
delivered true and complete
copies of all documents requested by the Investors.
(r) Anti-dilution Shares. Issuance of the Shares and the Warrants
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under this Agreement, and the issuance of the Warrant Shares under the Warrants,
will not trigger any anti-dilution, preemptive or similar rights contained in
any options, warrants or other agreements or commitments of the Company or
otherwise result in the issuance of any additional shares of Common Stock.
4. Registration Rights.
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(a) Definitions. For purposes of this Section 4:
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(i) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means all shares of Common Stock of the
Company issued under this Agreement, including all shares of Common Stock
issued or issuable pursuant to the exercise of the Warrants, excluding in
all cases, however, all Registrable Securities sold pursuant to Rule 144.
(iii) "Holder" means any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record
of such Registrable Securities to whom rights under this Section 4 have
been assigned in accordance with this Agreement.
(b) Shelf Registration.
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(i) Within six (6) months following the Closing Date, the Company will
file a registration statement or amend a currently effective registration
statement (in either event, a "registration statement") under the 1933 Act
for, and all such qualifications and compliances as may be so required and
as would permit the sale and distribution of, all of the Holders'
Registrable Securities, and thereafter shall use its best efforts to secure
the effectiveness of such registration statement within six (6) months
following the Closing Date.
(ii) The Company will pay all expenses incurred in connection with any
registration, qualification and compliance requested hereunder (excluding
underwriters' or brokers' discounts and commissions), including, without
limitation, all filing, registration and qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel
for
the selling Holder or Holders and counsel for the Company.
(iii) The Company will use its best efforts to cause the registration
statement to remain effective until the earlier of (A) the date ending
three years after the effective date of the registration statement filed
pursuant to this Section 4(b) or (B) the date on which each Holder of
Registrable Securities is able to sell all of such Holder's Registrable
Securities in any single three (3) month period without registration under
the 1933 Act pursuant to Rule 144, provided that if the Company determines
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that it may terminate the effectiveness of the registration statement under
(B), the Company shall prior to such termination provide each Holder an
opinion of counsel, based on factual representations of the Holders, that
each such Holder is able to sell all of the Registrable Securities held by
such Holder and its affiliates in any single three (3) month period without
registration under the 1933 Act pursuant to Rule 144.
(c) Piggyback Registrations.
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(i) At such time(s) as a registration statement pursuant to Section
4(b) herein is unavailable to the Holders, the Company will be required to
notify all Holders of Registrable Securities in writing at least thirty
(30) days prior to the Company filing any registration statement after the
sixth (6th) month following the Closing Date under the 1933 Act for
purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding
registration statements relating to any employee benefit plan or a
corporate reorganization), and will afford each such Holder after the sixth
(6th) month following the Closing Date an opportunity to include in such
registration statement (and any related qualification under or compliance
with "blue sky" or other state securities laws) all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the
Registrable Securities held by such Holder will, within thirty (30) days
after receipt of the above-described notice from the Company, so notify the
Company in writing, and in such notice will inform the Company of the
number of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of such
Holder's Registrable Securities in any registration statement thereafter
filed by the Company, such Holder will nevertheless continue to have the
right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with
respect to offerings of its securities, all upon the terms and conditions
set forth herein.
(ii) If the registration statement under which the Company gives notice
under this Section 4(c) is for an underwritten offering, the Company will
so advise the Holders of Registrable Securities. In such event, the right
of any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 4(c) will be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities
through such underwriting will enter into an underwriting agreement in
customary form with the managing underwriter or underwriters selected for
such underwriting. Notwithstanding any other provision of this Agreement,
if the managing underwriter determines
in good faith that marketing factors require a limitation of the number of
shares to be underwritten, the number of shares that may be included in the
underwriting will be allocated (A) first, to the Company, (B) second, to
any (1) Holders or (2) other persons who have piggyback registration rights
granted by the Company that are at parity with the rights of the Holders
under this Section 4(c) and, in each case, who request the inclusion of
their securities in the registration statement, and (C) third, to any
persons with piggyback rights subordinate to those of the Holders who
request the inclusion of their securities in the registration statement;
provided, however, that the number of Registrable Securities proposed to
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be registered by the Holders hereunder may not be reduced to less than
twenty percent (20%) of the total value of the securities to be distributed
through the underwriting. If not all securities of Holders or other persons
described in clause (B) above can be included in a registration, the
allocation among such Holders and other persons will be on a pro rata basis
according to the relation that the number of securities which each such
Holder or other person owns bears to the total number of shares
outstanding. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter, delivered at least five (5) business
days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting will be
excluded and withdrawn from the registration. For any Holder which is a
partnership or corporation, the partners, retired partners and shareholders
of such Holder, or the estates and family members of any such partners,
retired partners and shareholders, and any trusts for the benefit of any of
the foregoing persons will be deemed to be a single "Holder", and any pro
rata reduction with respect to such "Holder" will be based upon the
aggregate amount of shares owned by all entities and individuals included
in such "Holder", as defined in this sentence.
(iii) All reasonable expenses incurred in connection with a piggyback
registration pursuant to this Section 4(c) (excluding underwriters' and
brokers' discounts and commissions), including, without limitation, all
federal and "blue sky" or other state securities registration and
qualification fees, printers' and accounting fees, fees and disbursements
of one counsel for the selling Holder or Holders and counsel for the
Company will be borne by the Company.
(d) Obligations of the Company. Whenever required to effect the
--------------------------
registration of any Registrable
Securities under this Agreement, the Company will, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and deliver such
registration statement, at the time of such filing, to each Holder.
(ii) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the 1933 Act with respect to the disposition of all Registrable Securities
covered by such registration statement.
(iii) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the 1933 Act, and such other documents as they may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
them that are included in such registration.
(iv) Use its best efforts to register and qualify the Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as will be reasonably
requested by the Holders, provided that the Company will not be required in
--------
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions.
(v) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Holder of Registrable Securities participating in such underwriting will
also enter into and perform its obligations under such an agreement.
(vi) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event
as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then
existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to each Holder
copies of such corrected prospectus. The Company shall have the right, upon
such notice, to suspend the delivery of prospectuses included in such
registration statement from the date of notice until the date of such
correction. The period during which the Company is required to keep any
registration statement filed pursuant to Section 4(b) or 4(c) effective
shall be extended for the amount of time required to amend such
registration statement and deliver such prospectus relating thereto.
(vii) Furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, or if such securities are not being sold through
underwriters, on the date that the registration statement with respect to
such securities becomes effective, (i) an opinion, dated as of such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to each of
the Holders requesting registration, addressed to the underwriters and to
the Holders requesting registration of Registrable Securities and (ii) a
"comfort" letter, dated as of such date, from the independent certified
public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the
underwriters and to the Holders requesting registration of Registrable
Securities.
(viii) Use its best efforts promptly to secure the designation and
quotation of all Registrable Securities covered by a registration statement
on the NNM (or such other principal market or exchange on which the Common
Stock is listed, or, if not so listed, to secure trading of the Common
Stock on the Nasdaq OTC Bulletin Board), including, without limitation, the
filing of any notification, application or other information and the
payment of any fees relating thereto.
(e) Furnish Information. It will be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Sections 4(b) and 4(c)
hereof that the selling Holders will furnish to the Company such information
regarding themselves, the Registrable Securities held by them
and the intended method of disposition of such securities as will be required to
effect the registration of their Registrable Securities.
(f) Delay of Registration. No Holder will have any right to obtain or
---------------------
seek an injunction restraining or otherwise delaying any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 4.
(g) Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Sections 4(b) or 4(c) hereof:
(i) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, shareholders, officers and
directors of each Holder, any underwriter (as defined in the 0000 Xxx) for
such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the Exchange Act (each,
an "Indemnified Person") against any losses, claims, damages or liabilities
(joint or several) to which an Indemnified Person may become subject under
the 1933 Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions
or violations (collectively, a "Violation"):
---------
(A) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto:
(B) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(C) any violation or alleged violation by the Company of the 1933
Act, the Exchange Act, any federal or state securities law or any rule
or regulation promulgated under the 1933 Act, the Exchange Act or any
federal or state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each such Indemnified Person for any legal
or other expenses reasonably incurred by them, as incurred, in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that
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the indemnity agreement contained in this Section 4(g)(i) will not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the prior written consent of
the Company (which consent will not be unreasonably withheld), nor will the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by such Indemnified Person.
(ii) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers
who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the Exchange
Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners,
shareholders, directors, officers or shareholders or any person who
controls such Holder within the meaning of the 1933 Act or the Exchange Act
(each, an "Indemnified Party"), against any losses, claims, damages or
liabilities (joint or several) to which an Indemnified Party may become
subject under the 1933 Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation that arises
solely as a result of and in conformity with written information furnished
by such Holder expressly for use in connection with such registration; and
each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director, shareholder or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided,
--------
however, that the indemnity agreement contained in this Section 4(g)(ii)
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will not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
prior written consent of the Holder, which consent will not be unreasonably
withheld; and provided, further, that the total amounts payable in
-------- -------
indemnity by a Holder under this Section 4(g)(ii) in respect of any
Violation will not exceed the lesser of (A) the aggregate proceeds (net of
discounts and commissions) received by such Holder upon the sale of the
Shares or Warrant Shares and (B) that proportion of aggregate losses,
claims, damages, liabilities or expenses indemnified against which
equals the proportion which the number of Shares and Warrant Shares being
sold by such Holder bears to the total number of Shares and Warrant Shares
being sold under such registration statement by the Company and all
Holders.
(iii) Promptly after receipt by an Indemnified Person or an Indemnified
Party (the "Indemnitee") under this Section 4(g) of notice of the
commencement of any action (including any governmental action), such
Indemnitee will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4(g), deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying
party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly given notice, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnitee will
-------- -------
have the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if the indemnifying party fails to assume
the defense of an action within a reasonable time or if representation of
such Indemnitee by the counsel retained by the indemnifying party, in such
counsel's reasonable opinion, would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if the indemnifying party is materially
prejudiced thereby, will relieve such indemnifying party of liability, but
only to the extent that such indemnifying party is prejudiced with respect
to a specific claim.
(iv) The foregoing indemnity agreement with respect to any prospectus
shall not inure to the benefit of any Holder or underwriter, or any person
controlling such Holder or underwriter, from whom the person asserting any
losses, claims, damages or liabilities purchased shares, if a copy of the
prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) provided by the Company
was not sent or given by or on behalf of such Holder or underwriter to such
person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the purchased shares to such person,
and if the prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections 4(g)(i) or
4(g)(ii) hereof shall be unavailable to hold harmless an Indemnitee in
respect of any liability under the 1933 Act, then, and in each such case,
the indemnifying party, in lieu of indemnifying such Indemnitee hereunder,
shall contribute to the amount paid or payable by such Indemnitee as a
result of such loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative fault of the indemnifying party
on the one hand and of the Indemnitee on the other in connection with the
statement or omissions that resulted in such loss, liability, claim, damage
or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the Indemnitee shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or
by the Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission; provided that in no event shall any contribution under this
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subsection (v) by any Holder exceed the gross proceeds from the offering
received by such Holder. No person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx)
will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under this Section
4(g) will survive the completion of any offering of Registrable Securities
in a registration statement, and otherwise.
(h) "Market Stand-Off" Agreement. In connection with a public
----------------------------
offering of securities by the Company pursuant to Section 4(c), each Holder who
participates in the registration statement filed under the 1933 Act for such
offering will not, to the extent requested in good faith by an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities included in such registration statement (other than to
donees or partners of the Holder who agree to be similarly bound) for up to that
period of time, not to exceed ninety (90) days, following the effective date of
such registration statement of the Company filed under the 1933 Act as is
requested by the managing underwriter(s) of such offering; provided that the
--------
officers and directors of the Company who own stock of the Company and any
shareholder holding more than five percent (5%) of the outstanding voting
securities
of the Company also agree to such restrictions. In order to enforce the
foregoing covenant, the Company may impose stop transfer instructions with
respect to the Registrable Securities of each such Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
(i) Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, while a
public market exists for the Common Stock of the Company, the Company will:
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act, at all times while
the Company is reporting under the 1934 Act;
(ii) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the 1933 Act and
the 1934 Act (at any time it is subject to such reporting requirements);
and
(iii) So long as a Holder owns any Registrable Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the 1933
Act and the Exchange Act (at any time it is subject to the reporting
requirements of the Exchange Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of
the Company as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration (at any time the Company is subject to the reporting
requirements of the Exchange Act).
(j) Termination of the Company's Obligations. The Company will have
----------------------------------------
no obligations pursuant to Section 4(c) hereof with respect to: (A) any request
or requests for registration made by any Holder on a date more than eight (8)
years after the date of this Agreement or (B) Registrable Securities held by a
Holder if in the opinion of counsel to the Company at the time of filing a
registration statement such Holder may sell all of such Holder's Registrable
Securities in any single three (3) month period without registration under the
1933 Act pursuant to Rule 144, provided that if the Company shall determine that
--------
it may terminate its obligations to any Holder under (B), the Company shall
prior to such termination provide the Holder as to which it shall have
determined to terminate its
obligations under (B) an opinion of counsel, based on factual representations of
the Holder, that such Holder is able to sell all of the Registrable Securities
held by such Holder and its affiliates in any single three (3) month period
without registration under the 1933 Act pursuant to Rule 144.
5. Covenants.
---------
(a) Proposed or Threatened Change in Control: Equity Purchases. The
-----------------------------------------------------------
Company shall promptly notify the Holders in writing, to the same extent as any
member of the Company's Board of Directors, of any proposed or threatened 20%
Change in Control or 50% Change of Control of which the Company is aware and
which has been communicated to the Company's President or Chief Executive
Officer, or a member of the Company's Board of Directors, verbally or in writing
(or which the Board has, acting as a Board, proposed or authorized), as well as
any purchase of or right to purchase five percent (5%) or more of any class of
capital stock of he Company from the Company, or as reported to the SEC or of
which the Company is aware, by any person, entity or group. For the purposes of
this Section 5(a), a "20% Change In Control" means an event in which after the
date hereof any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (or persons) becomes the "beneficial owner" or "beneficial
owners" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of securities of the Company representing in the aggregate twenty
percent (20%) or more of either (A) the then outstanding shares of capital stock
of the Company, or (B) the combined voting power of all then outstanding
securities of the Company having the right under ordinary circumstances to vote
in an election of the Board of Dircetors of the Company. For the purposes of
this Section 5(a), a "50% Change in Control" means an event in which after the
date hereof (A) the shareholders of the Company approve (1) any consolidation or
merger of the Company or any subsidiary of the Company where the shareholders of
the Company, immediately after the consolidation or merger, beneficially own,
directly or indirectly, shares representing in the aggregate less than fifty
percent (50%) of all votes to which all shareholders of the corporation issuing
cash or securities in the consolidation or merger (or of its ultimate parent
corporation, if any), would be entitled under ordinary circumstances in the
election of directors and where the aggregate value of such transaction is not
less than $1,000,000.00; (2) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party as
a single plan) of all or substantially all of the assets of the Company, or (3)
any plan or proposal for the liquidation or dissolution of the Company; or (B)
any "person", as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, together with all "affiliates" and "associates" (as defined by Sections
13d-3 and 13d-5 under the Exchange Act), of such person, shall become the
"beneficial owner" or beneficial owners" (as defined by Sections 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate fifty percent (50%) or more of either (1) the then
outstanding shares of capital stock of the Company or (2) the combined voting
power of all then outstanding securities of the Company having the right under
ordinary circumstances to vote in an election of the Board of Directors of the
Company.
(b) Authorized Shares. The Company's Board of Directors shall approve
-----------------
and shall use its best efforts to obtain shareholder approval to increase the
Company's authorized shares of Common Stock in a sufficient number at its next
annual shareholder meeting to cover the issuance of shares of Common Stock upon
exercise of the Warrants, any issuances of shares of Common Stock upon the
exercise, conversion or exchange of any options, warrants, securities or rights
convertible or exchangeable for shares of Common Stock, any issuances of shares
of Common Stock pursuant to any other rights commitments or agreements of the
Company and any shares reserved for issuance under the Company's stock plans as
set forth in Schedule 1 to the Schedule of Exceptions. The Company shall, from
and at all times after the Closing, maintain a reserve of authorized shares of
Common Stock sufficient to cover the exercise in full of the outstanding
Warrants until the expiration or earlier exercise of all Warrants.
(c) Nasdaq Requirements. The Company shall use its best effort to
-------------------
meet all requirements necessary for the inclusion of the Common Stock in the
NNM, including, without limitation, the quantitative maintenance criteria set
forth in Nasdaq Marketplace Rule 4450 (Quantitative Maintenance Criteria) and
Nasdaq Marketplace Rule 4460 (Quantitative Designation Criteria), as long as the
Company shall have an obligation to maintain the effectiveness of the
registration statement filed pursuant to Section 4(b).
(d) Exchange Act Filings. The Company shall continue to file with the
--------------------
SEC all reports and other filings required under the rules of the SEC and such
documents shall comply in all material respects with the requirements of the
Exchange Act or the 1933 Act, as applicable, as long as the Company continues to
be subject to reporting requirements under Section 13 or 15(d) of the Exchange
Act.
(e) Agreement Not to Exercise Warrants. The Company will not issue
----------------------------------
shares of Common Stock pursuant to the exercise of a warrant subject to an
Agreement not to Exercise Warrants (the "Lockup Agreement") so long as such
agreement is in effect.
(f) Future Issuances of Common Stock. The Company shall not grant or
--------------------------------
issue any additional shares, options, warrants, securities or rights exercisable
into, convertible or exchangeable for shares of Common Stock or enter into any
other commitments or agreements which call for the issuance of shares of Common
Stock, ("Future Issuances") until the earlier of (i) the amendment of the
Company's Amended and Restated Articles of Incorporation to increase its
authorized shares in sufficient number to cover all existing Warrant Shares and
all outstanding options, warrants or other rights and all commitments or
agreements to issue common stock and all reserves set forth under any stock
option or stock purchase plan, all as set forth in Schedule 1 to the Schedule of
Exceptions, (ii) the expiration of Warrants, or (iii) the exercise in full of
all outstanding Warrants; provided that the Company may make Future Issuances
specifically provided for on Schedule 1 to the Schedule of Exceptions and Future
Issuances out of the reserves set forth on Schedule 1, except for those shares
of Common Stock subject to an Agreement Not to Exercise Warrants.
(g) Termination of Covenants. The covenants set forth in this Section
------------------------
5 will terminate with respect to a Holder upon the earlier of (A) three years
from the effective date of the Registration Statement filed pursuant to Section
4(b), or (B) the date on which the registration rights under this Agreement are
terminated by the Company because each Holder of Registrable Securities is able
to sell all of such Holder's Registrable Securities in any single three (3)
month period without registration under the 1933 Act pursuant to Rule 144,
provided that if the Company shall determine it may terminate its obligations to
--------
any Holder for the reasons set forth in (B), the Company shall provide the
Holder as to which it shall have determined to terminate its obligations prior
to such termination an opinion of counsel, based on factual representations of
the Holders, that such Holder is able to sell all of the Registrable Securities
held by such Holder and its affiliates in any single three (3) month period
without registration under the 1933 Act pursuant to Rule 144.
6. Conditions to Obligations of the Investors. The obligation of
------------------------------------------
each Investor to purchase the Units at the Closing is subject to the fulfillment
on or prior to the Closing Date of the following conditions, any of which may be
waived by such Investor:
(a) Representations and Warranties Correct; Performance of
------------------------------------------------------
Obligations. The representations and warranties made by the Company in Section
3 hereof shall be true and correct when made, and shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of said date, except for representations and warranties made as of a specific
date
which shall be true and correct as of such date; the Company's business and
assets shall not have been adversely affected in any material way prior to the
Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it under this
Agreement on or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained any and all
--------------------
consents (including all governmental or regulatory consents, approvals or
authorizations required in connection with the valid execution and delivery of
this Agreement), permits and waivers necessary or appropriate for consummation
of the transactions contemplated by this Agreement. The Company shall have
obtained valid waivers of Right of First Refusal or other similar preemptive
rights with respect to the issuance of the Shares, the Warrants and the Warrant
Shares.
(c) Compliance Certificate. The Company shall have delivered to the
----------------------
Investors a certificate, executed by the Chairman of the Board and Chief
Executive Officer of the Company, dated the Closing Date, certifying to the
fulfillment of the conditions specified in subsection (a) of this Section 6.
(d) Opinion of Company's Counsel. Investors shall have received from
----------------------------
Xxxx Xxxx Xxxx & Freidenrich LLP, counsel to the Company, an opinion addressed
to the Investors, dated the Closing Date, which shall relate to the valid
issuance of the Shares and the Warrant Shares and to the due authorization,
execution and delivery of the Warrants, in the form attached hereto as Exhibit
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C.
-
7. Conditions to Obligations of the Company. The obligation of the
----------------------------------------
Company to sell and issue the Units to each Investor at the Closing is subject
to the fulfillment on or prior to the Closing Date of the following conditions,
any of which may be waived by the Company:
(a) Representations and Warranties. The representations and
------------------------------
warranties made by each Investor in Section 2 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
(b) Consents and Waivers. The conditions set forth in subsection (b)
--------------------
of Section 6 hereof shall have been fulfilled.
8. Miscellaneous.
-------------
(a) Governing Law. This Agreement will be governed by and construed
-------------
in accordance with the internal
laws of the State of California applicable to contracts made among residents of,
and wholly to be performed within, the State of California, without regard to
principles of conflict of laws or choice of laws.
(b) Further Instruments. From time to time, each party hereto will
-------------------
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
(c) Successors; No Other Beneficiaries. This Agreement will be
----------------------------------
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors and assigns of the parties hereto;
provided, however, that (i) rights of Investors hereunder may be transferred
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only in connection with (and to the transferee of) Common Stock of the Company
purchased by an Investor hereunder, but the Company may prohibit such transfer
of rights (but not the transfer of stock) if the transfer to a particular
transferee would not, in the good faith judgment of the Company's Board of
Directors, be in the Company's best interests, and (ii) any transferee of any
shares of stock of the Company affected by this Agreement to whom rights are so
transferred (a "Permitted Transferee") will be required, as a condition
precedent to acquiring such shares, to agree in writing to be bound by all the
terms and conditions of this Agreement applicable to such Permitted Transferee's
transferor, and (iii) upon and after such transfer the Permitted Transferee will
be deemed to be an Investor for purposes of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(d) Counterparts. This Agreement may be executed in two (2) or more
------------
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) Entire Agreement. This Agreement, including and incorporating the
----------------
Schedule of Exceptions and all other Exhibits attached hereto and referred to
herein, constitutes and contains the entire agreement and understanding of the
parties regarding the subject matter of this Agreement and supersedes in its
entirety any and all prior negotiations, correspondence, understandings and
agreements among the parties respecting the subject matter hereof.
(f) Notices. Any notice required to be given or delivered to the
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Company under the terms of this Agreement
shall be addressed to the Chief Financial Officer of the Company at its
principal corporate offices. Any notice required to be given or delivered to an
Investor shall be addressed to the Investor at the address set forth on the
signature page hereof or to such other address as such party may designate in
writing from time to time to the Company. Unless otherwise provided, notice
required or permitted to be given to a party pursuant to the provisions of this
Agreement will be in writing and will be effective and deemed given under this
Agreement on the earliest of (i) the date of personal delivery, or (ii) the date
of transmission by facsimile, or (iii) the business day after deposit with a
nationally-recognized courier or overnight service, including Federal Express or
Express Mail, for United States deliveries or three (3) business days after such
deposit for deliveries outside of the United States, or (iv) five (5) business
days after deposit in the United States mail by registered or certified mail,
postage prepaid, for United States deliveries. All notices for delivery outside
the United States will be sent by facsimile, or by nationally recognized courier
or overnight service, including Express Mail. Any notice given hereunder to more
than one person will be deemed to have been given, for purposes of counting time
periods hereunder, on the date given to the last party required to be given such
notice.
(g) Finders' Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each party agrees to indemnify and to hold the other parties
hereto harmless from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which such party or any of its officers,
partners, employees or representatives is responsible.
(h) Amendments and Waivers. Except as otherwise specifically provided
----------------------
in this Agreement, no term of this Agreement may be amended and the observance
of any term of the Agreement may not be waived (either generally or in a
particular instance and either retroactively or prospectively) except (i) if
prior to the Closing, with the written consent of the Company and each Investor
and (ii) if after the Closing, with the consent of the Company and Investors
holding at least seventy-five percent (75%) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 8(h) will be
binding upon the Company, each Investor, and their permitted transferees and
assigns.
(i) Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provisions will be excluded
from this Agreement to the extent unenforceable and the balance of such
provisions,
and of this Agreement, will be interpreted as if such provision or part and
hereof were so excluded and will be enforceable in accordance with its terms.
(j) Aggregation of Stock. All shares of Common Stock held or acquired
--------------------
by affiliated entities or persons will be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
(k) Expenses. The Company will pay all of the costs and expenses that
--------
it incurs, and will pay the reasonable fees and expenses, together, of Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx and Xxxxxxxxx, LLP, counsel to X.X. Xxxx Co.,
Inc., as agreed upon between the Company and Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxx and Xxxxxxxxx, LLP, with respect to the negotiation, execution,
delivery and performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
TO BE COMPLETED INVESTOR
BY INVESTOR
Units Subscribed: _______ ________________________________________________
(Print Name of Individual or
or Entity)
--
Dollar Amount Social Security or
Subscribed:______________ Tax I.D. Number:________________________________
By _____________________________________________
(Signature)
Name:
Title:
Address:________________________________________
________________________________________________
________________________________________________
________________________________________________
TO BE COMPLETED COMPANY
BY COMPANY
SILICON VALLEY RESEARCH, INC.
Units Issued: ____________
Unit Purchase Price: _____
Aggregate Purchase
Price: __________________ By______________________________________________
(Signature)
Name:
Title:
