EXHIBIT 10.38
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (713) 369-0550
AMENDMENT TO
STOCK PURCHASE AGREEMENT
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DATED AUGUST 10, 2004
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AMENDMENT TO
STOCK PURCHASE AGREEMENT
This AMENDMENT TO STOCK PURCHASE AGREEMENT (this "Agreement"), dated
August 10, 2004, is made by and among ▇▇▇▇▇-▇▇▇▇▇▇▇▇ Corporation, a Delaware
corporation (the "Company"), and the signatories hereto (the "Investors").
RECITALS
WHEREAS, the Company and certain investors (the "Investors") have
executed and delivered to each other a Stock Purchase Agreement (the "Stock
Purchase Agreement") dated August 10, 2004;
WHEREAS, certain Investors have requested that the Company enter into
certain additional covenants in connection with the transactions contemplated by
the Stock Purchase Agreement;
WHEREAS, the Company has agreed to make such additional covenants for
the benefit of all Investors; and
WHEREAS, the Company acknowledges that one or more Investors is
entering into the Stock Purchase Agreement in reliance upon the additional
covenants made by the Company herein;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. ADDITIONAL SHARES. In the event the Company sells Additional Shares
of Common Stock (as defined below) within six months after the date hereof for a
price per share of less than $3.00 per share, then, and in each such event, the
Company shall issue additional shares (the "Additional Shares") of the Common
Stock to each Investor so that the average price paid by each Investor for the
Initial Shares and all Additional Shares issued to such Investor shall be the
same as the lowest per share price paid by any other person for Additional
Shares of Common Stock. The Additional Shares shall be "Shares" for all purposes
hereunder. As used herein, "Additional Shares of Common Stock" shall (a) include
the issuance of Common Stock by the Company, (b) include the issuance by the
Company of securities ("Convertible Securities") convertible into or
exchangeable for Common Stock, in which event the price deemed to be paid for
the underlying Common Stock shall be equal to the minimum amount that may be
paid for such Common Stock taking into account the amount paid for the
Convertible Securities as well as any additional amount payable upon exercise or
conversion of such Convertible Securities, but without taking into account
customary anti-dilution rights, and (c) not include the issuance of options and
Common Stock pursuant to the agreements and other rights described in Schedule
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2.6 hereof, including upon exercise of options granted in the future pursuant to
the Company's 2003 Incentive Stock Plan. The closing of the issuance of any
Additional Shares shall be effected at the offices of the Company on or prior to
the tenth business day following the date of issuance of any Additional Shares
of Common Stock triggering the issuance of Additional Shares. At the Closing,
the Company shall cause the Depository Trust Company to enter a book entry on
behalf of each Investor representing the Additional Shares issued to such
Investor.
2. TRANSACTION RESTRICTIONS.
(a) The Shares may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of Shares other
than pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor or in connection with a pledge as contemplated in
Section 2(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Shares
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 and shall have the
rights of an Investor under this Agreement.
(b) The Company acknowledges and agrees that an Investor may from time
to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Shares to a
financial institution that is an "accredited investor" as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this
Agreement and, if required under the terms of such arrangement, such Investor
may transfer pledged or secured Shares to the pledgees or secured parties. Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith, provided that the pledgee certifies to the
Company that the requirements set forth in this Section 2(b) are met. Further,
no notice shall be required of such pledge. At the appropriate Investor's
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares, including, if the Shares are subject to
registration pursuant to this Agreement, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of Selling Stockholders thereunder.
(c) Certificates evidencing the Shares shall not contain any legend or
stop transfer order, including the legend set forth in Section 1 of the Stock
Purchase Agreement: (i) while a registration statement (including the
Registration Statement) covering the resale of such Shares is effective under
the Securities Act, or (ii) following any sale of such Shares pursuant to Rule
144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the SEC). The Company shall cause its counsel to issue a legal opinion to the
Company's transfer agent promptly after the Effective Date if required by the
Company's transfer agent to effect the removal of the legend hereunder. The
Company agrees that following the Effective Date or at such time as such legend
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is no longer required under this Section 2(c), it will, no later than five
business days following the delivery by an Investor to the Company or the
Company's transfer agent of a certificate representing Shares issued with a
restrictive legend (such date, the "Legend Removal Date"), deliver or cause to
be delivered to such Investor a certificate representing such Shares that is
free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section 2.
3. SHELF REGISTRATION. The Company makes the following additional
covenants relating to the Registration Statement described in Section 6 of the
Stock Purchase Agreement:
(a) The Company shall prepare and file the Registration Statement or
cause the Registration Statement to be prepared and filed with the SEC, as soon
as practicable but in any event no later than thirty (30) days after the date
hereof, on Form S-3 or such other form as the Company is then eligible to use
for an offering to be made on a delayed or continuous basis pursuant to Rule 415
of the Securities Act. The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act no
later than three (3) business days after receipt of notice of "no review" by the
SEC or one hundred twenty (120) days from the date hereof in the event of SEC
review. The Registration Statement may also register the sale of shares of
Common Stock of the Company by other Stockholders of the Company.
(b) The Company shall not suspend sales of Shares pursuant to the
Registration Statement for a period of more than thirty (30) days during any
twelve (12) month period pursuant to Section 6.2(e) of the Stock Purchase
Agreement.
(c) The Company shall pay to Investors, as liquidated damages and as
the sole remedy for the Company's failure to timely comply with such
obligations, a penalty of one percent (1.0%) of the amount paid for the Shares
by each Investor for the first thirty (30) day period of non-compliance, and a
penalty of two percent (2%) of the amount paid for the Shares by each Investor
for each subsequent thirty (30) days of non-compliance (if any period of
non-compliance exceeds thirty (30) days) with its obligation to timely file the
Registration Statement, to cause the Registration Statement to become effective
within the time periods set forth above, and to maintain the effectiveness of
the Registration Statement as set forth above.
4. APPROVAL. This Amendment has been approved by Investors purchasing
at least 66-2/3% of the Shares to be purchased pursuant to the Stock Purchase
Agreement, as required by Section 9.9 of the Stock Purchase Agreement.
5. INTERPRETATION. Except as modified hereby the Stock Purchase
Agreement remains in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective representatives hereunto duly authorized as of
the date first above written.
By:
▇▇▇▇▇-▇▇▇▇▇▇▇▇ Corporation, MICRO CAP PARTNERS, L.P.
a Delaware corporation
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/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ Signature
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇,
Chief Executive Officer
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Name
General Partner
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Title:
Address:
Palo Alto Investors
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UBTI FREE, L.P.
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Signature
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Name
General Partner
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Title
Address:
Palo Alto Investors
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PALO ALTO GLOBAL ENERGY FUND
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Signature
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Name
General Partner
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Title
Address:
Palo Alto Investors
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Signature
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Name
Sole beneficiary, self-directed ▇▇▇
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Title
Address:
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Signature
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Name
Sole beneficiary, self-directed ▇▇▇
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Title
Address:
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▇▇▇▇▇▇▇ PARTNERS
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Signature
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Name
Trading Authority
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Title
Address:
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▇▇▇▇▇▇ PARTNERS, LP
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Signature
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Name
Managing Principal
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Title
Address:
▇▇▇▇▇▇ Partners, LP
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▇▇▇▇▇▇ GEPT PARTNERS, LP
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Signature
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Name
Managing Principal
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Title
Address:
▇▇▇▇▇▇ GEPT Partners, LP
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MK EMPLOYEE EARLY STAGE FUND, L.P.
/S/ MINOR PERKINS
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Signature
MINOR PERKINS
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Name
Managing Director
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Title
Address:
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/S/ MINOR PERKINS
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Signature
MINOR PERKINS
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Name
Managing Director
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Title
Address:
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RRCM ONSHORE I, L.P.
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Signature
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Name
Executive Director
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Title
Address:
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RELIABLE CREDIT ASSOCIATION INC.
PROFIT SHARING PLAN & TRUST
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Signature
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Name
Chairman
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Title
Address:
May Management, Inc.
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RELIABLE CREDIT ASSOCIATION INC.
PENSION & TRUST
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Signature
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Name
Chairman
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Title
Address:
May Management, Inc.
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▇▇▇▇▇▇▇ FOUNDATION
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Signature
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Name
Chairman
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Title
Address:
May Management, Inc.
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Signature
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Name
Chairman
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Title
Address:
May Management, Inc.
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Signature
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Name
Investor
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Title
Address:
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24180 Petes ▇▇. ▇▇▇▇
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MAY MANAGEMENT, INC.
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Signature
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Name
Chairman
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Title
Address:
May Management, Inc.
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GSSF MASTER FUND, LP
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Signature
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Name
Authorized Agent
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Title
Address:
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Suite 490
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