SPACEDEV, INC.
SECURITIES PURCHASE AGREEMENT
AUGUST 25, 2004
iii
TABLE OF CONTENTS
PAGE
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1. Agreement to Sell and Purchase. . . . . . . . . . . . . . . . . 1
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2. Fees and Warrant. . . . . . . . . . . . . . . . . . . . . . . . . 1
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3. Closing, Delivery and Payment. . . . . . . . . . . . . . . . . . 2
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3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 2
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3.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . 2
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4. Representations and Warranties of the Company. . . . . . . . . 2
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4.1 Organization, Good Standing and Qualification . . . . . 2
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4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 3
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4.3 Capitalization; Voting Rights . . . . . . . . . . . . . . 3
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4.4 Authorization; Binding Obligations . . . . . . . . . . . 4
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4.5 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 4
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4.6 Agreements; Action . . . . . . . . . . . . . . . . . . . . 5
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4.7 Obligations to Related Parties . . . . . . . . . . . . . 5
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4.8 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . 6
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4.9 Title to Properties and Assets; Liens, Etc . . . . . 7
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4.10 Intellectual Property . . . . . . . . . . . . . . . . . . 7
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4.11 Compliance with Other Instruments . . . . . . . . . . . 8
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4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 8
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4.13 Tax Returns and Payments . . . . . . . . . . . . . . . . 9
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4.14 Employees. . . . . . . . . . . . . . . . . . . . . . . . . 9
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4.15 Registration Rights and Voting Rights . . . . . . . . . 9
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4.16 Compliance with Laws; Permits . . . . . . . . . . . . . 10
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4.17 Environmental and Safety Laws . . . . . . . . . . . . . 10
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4.18 Valid Offering . . . . . . . . . . . . . . . . . . . . . . 10
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4.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 10
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4.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.21 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 11
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4.22 Listing. . . . . . . . . . . . . . . . . . . . . . . . . . 11
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4.23 No Integrated Offering . . . . . . . . . . . . . . . . . 11
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4.24 Stop Transfer . . . . . . . . . . . . . . . . . . . . . . 11
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4.25 Dilution . . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.26 Patriot Act . . . . . . . . . . . . . . . . . . . . . . . 12
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5. Representations and Warranties of the Purchaser. . . . . . . . 12
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5.1 No Shorting . . . . . . . . . . . . . . . . . . . . . . . 12
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5.2 Requisite Power and Authority . . . . . . . . . . . . . 13
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5.3 Investment Representations . . . . . . . . . . . . . . . . 13
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5.4 Purchaser Bears Economic Risk . . . . . . . . . . . . . 13
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5.5 Acquisition for Own Account . . . . . . . . . . . . . . 13
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5.6 Purchaser Can Protect Its Interest . . . . . . . . . . 13
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5.7 Accredited Investor . . . . . . . . . . . . . . . . . . . 14
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5.8 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . 14
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6. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 16
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6.1 Stop-Orders. . . . . . . . . . . . . . . . . . . . . . . . 16
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6.2 Listing. . . . . . . . . . . . . . . . . . . . . . . . . . 16
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6.3 Market Regulations . . . . . . . . . . . . . . . . . . . . 16
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6.4 Reporting Requirements . . . . . . . . . . . . . . . . . . 16
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6.5 Use of Funds . . . . . . . . . . . . . . . . . . . . . . 16
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6.6 Access to Facilities . . . . . . . . . . . . . . . . . . 16
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6.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.9 Intellectual Property . . . . . . . . . . . . . . . . . . 17
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6.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.11 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 18
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6.12 Required Approvals . . . . . . . . . . . . . . . . . . . . 18
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6.13 Reissuance of Securities . . . . . . . . . . . . . . . . 18
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6.14 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 18
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7. Covenants of the Purchaser. . . . . . . . . . . . . . . . . . . . 19
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7.1 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 19
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7.2 Non-Public Information . . . . . . . . . . . . . . . . . . 19
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8. Covenants of the Company and Purchaser Regarding Indemnification. . 20
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8.1 Company Indemnification . . . . . . . . . . . . . . . . . 20
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8.2 Purchaser's Indemnification . . . . . . . . . . . . . . . 20
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9. Conversion of Convertible Preferred Stock. . . . . . . . . . . . 20
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9.1 Mechanics of Conversion . . . . . . . . . . . . . . . . . 20
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10. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . 22
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10.1 Registration Rights Granted . . . . . . . . . . . . . . . 22
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10.2 Offering Restrictions . . . . . . . . . . . . . . . . . . 22
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11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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11.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . 22
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11.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 22
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11.3 Successors . . . . . . . . . . . . . . . . . . . . . . . . 23
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11.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 23
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11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . 23
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11.6 Amendment and Waiver. . . . . . . . . . . . . . . . . . . 23
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11.7 Delays or Omissions. . . . . . . . . . . . . . . . . . . 23
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11.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 23
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11.9 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . 24
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11.10 Titles and Subtitles. . . . . . . . . . . . . . . . . . . 25
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11.11 Facsimile Signatures; Counterparts. . . . . . . . . . . . 25
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11.12 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . 25
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11.13 Construction . . . . . . . . . . . . . . . . . . . . . . . 25
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PAGE
LIST OF EXHIBITS
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Form of Convertible Term Preferred Stock Exhibit A
Form of Warrant Exhibit B
Form of Opinion Exhibit C
Form of Escrow Agreement Exhibit D
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of August 25, 2004, by and between SPACEDEV, INC., a Colorado
corporation (the "Company"), and Laurus Master Fund, Ltd., a Cayman Islands
company (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale to the Purchaser of shares of
its Series C Convertible Preferred Stock with an aggregate stated value of Two
Million Five Hundred Thousand Dollars ($2,500,000) (the "Preferred Stock"),
which Preferred Stock is convertible into shares of the Company's common stock,
$0.0001 par value per share (the "Common Stock") at an initial fixed conversion
price of $1.54 per share of Common Stock ("Fixed Conversion Price");
WHEREAS, the Company wishes to issue a warrant to the Purchaser to purchase
up to 487,000 shares of the Company's Common Stock (subject to adjustment as set
forth therein) in connection with Purchaser's purchase of the Preferred Stock;
WHEREAS, Purchaser desires to purchase the Preferred Stock and the Warrant
(as defined in Section 2) on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Preferred Stock and
Warrant to Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Sell and Purchase . Pursuant to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company Preferred Stock with an aggregate stated value of
$2,500,000 convertible in accordance with the terms thereof into shares of the
Company's Common Stock in accordance with the terms of the Preferred Stock and
this Agreement. The Preferred Stock purchased on the Closing Date shall be known
as the "Offering." A form of the Preferred Stock is annexed hereto as Exhibit A.
Collectively, the Preferred Stock and Warrant and Common Stock issuable in
payment of the Preferred Stock, upon conversion of the Preferred Stock and upon
exercise of the Warrant are referred to as the "Securities."
2. Fees and Warrant. On the Closing Date:
(a) The Company will issue and deliver to the Purchaser a Warrant to
purchase up to 487,000 shares of Common Stock in connection with the
Offering (the "Warrant") pursuant to Section 1 hereof. The Warrant must be
PAGE
delivered on the Closing Date. A form of Warrant is annexed hereto as
Exhibit B. All the representations, covenants, warranties, undertakings,
and indemnification, and other rights made or granted to or for the benefit
of the Purchaser by the Company are hereby also made and granted in respect
of the Warrant and shares of the Company's Common Stock issuable upon
exercise of the Warrant (the "Warrant Shares").
(b) Subject to the terms of Section 2(d) below, the Company shall pay
to Laurus Capital Management, LLC, manager of Purchaser a closing payment
in an amount equal to three and one-half percent (3.50%) of the aggregate
stated value of the Preferred Stock. The foregoing fee is referred to
herein as the "Closing Payment."
(c) The Company shall reimburse the Purchaser for its reasonable
expenses (including documentation fees and expenses) incurred in connection
with the preparation and negotiation of this Agreement and the Related
Agreements (as hereinafter defined), and expenses incurred in connection
with the Purchaser's due diligence review of the Company and its
Subsidiaries and all related matters. Amounts required to be paid under
this Section 2(c) will be paid on the Closing Date and shall be $20,000 for
such expenses referred to in this Section 2(c).
(d) The Closing Payment and the expenses referred to in the preceding
clause (c) shall be paid at closing out of funds held pursuant to the
Escrow Agreement (as defined below) and a disbursement letter (the
"Disbursement Letter").
3. Closing, Delivery and Payment.
3.1 Closing. Subject to the terms and conditions herein, the closing of the
transactions contemplated hereby (the "Closing"), shall take place on the date
hereof, at such time or place as the Company and Purchaser may mutually agree
(such date is hereinafter referred to as the "Closing Date").
3.2 Delivery. Pursuant to the Escrow Agreement, at the Closing on the
Closing Date, the Company will deliver to the Purchaser, among other things,
Preferred Stock in the form attached as Exhibit A representing an aggregate
stated value of $2,500,000 and a Warrant in the form attached as Exhibit B in
the Purchaser's name representing 487,000 Warrant Shares and the Purchaser will
deliver to the Company, among other things, the amounts set forth in the
Disbursement Letter by certified funds or wire transfer.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows (which representations and
warranties are supplemented by, and subject to, the Company's filings under the
Securities Exchange Act of 1934 (collectively, the "Exchange Act Filings"),
copies of which have been provided to the Purchaser:
4.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. The Company has the corporate power and
authority to own and operate its properties and assets, to execute and deliver
this (i) this Agreement, (ii) the Preferred Stock Certificate of Designations
(defined below) (iii) a certificate issued to Purchaser for 250,0000 shares of
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Preferred Stock, (iv) the Warrant to be issued in connection with this
Agreement, (vi) the Registration Rights Agreement relating to the Securities
dated as of the date hereof between the Company and the Purchaser (as amended,
modified or supplemented from time to time, the "Registration Rights
Agreement"), (vii) the Escrow Agreement dated as of the date hereof among the
Company, the Purchaser and the escrow agent referred to therein, substantially
in the form of Exhibit D hereto (as amended, modified or supplemented from time
to time, the "Escrow Agreement") and (viii) all other agreements related to this
Agreement and the Preferred Stock and referred to herein (the preceding clauses
(ii) through (viii), collectively, the "Related Agreements"), to issue and sell
the Preferred Stock and the shares of Common Stock issuable upon conversion of
the Preferred Stock (the "Preferred Stock Shares"), to issue and sell the
Warrant and the Warrant Shares, and to carry out the provisions of this
Agreement and the Related Agreements and to carry on its business as presently
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions, except for those
jurisdictions in which the failure to do so has not had, or could not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the business, assets, liabilities, condition (financial or otherwise),
properties, operations or prospects of the Company (a "Material Adverse
Effect").
4.2 Subsidiaries. Each direct and indirect Subsidiary of the Company, the
direct owner of such Subsidiary and its percentage ownership thereof, is set
forth on Schedule 4.2. For the purpose of this Agreement, a "Subsidiary" of any
person or entity means (i) a corporation or other entity whose shares of stock
or other ownership interests having ordinary voting power (other than stock or
other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
persons or entities performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a corporation or
other entity in which such person or entity owns, directly or indirectly, more
than 50% of the equity interests at such time.
4.3 Capitalization; Voting Rights
(a) The authorized capital stock of the Company, as of the date
hereof, consists of 60,000,000 shares, of which 50,000,000 are shares of
Common Stock, par value $0.001 per share, 19,065,623 shares of which are
issued and outstanding, and 10,000,000 are shares of preferred stock, par
value $0.001 per share, of which no shares are issued and outstanding.
(b) Except as disclosed on Schedule 4.3, other than: (i) the shares
reserved for issuance under the Company's stock option plans; and (ii)
shares which may be issued pursuant to this Agreement and the Related
Agreements including the Company's revolving credit facility with Laurus,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder
agreements, or arrangements or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. Except as disclosed
on Schedule 4.3, neither the offer, issuance or sale of any of the
Preferred Stock or Warrant, or the issuance of any of the Preferred Stock
Shares or Warrant Shares, nor the consummation of any transaction
contemplated hereby will result in a change in the price or number of any
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securities of the Company outstanding, under anti-dilution or other similar
provisions contained in or affecting any such securities.
(c) All issued and outstanding shares of the Company's Common Stock:
(i) have been duly authorized and validly issued and are fully paid and
nonassessable; and (ii) were issued in compliance with all applicable state
and federal laws concerning the issuance of securities.
(d) The rights, preferences, privileges and restrictions of the shares
of the Common Stock are as stated in the Company's Certificate of
Incorporation (the "Charter"). The rights, preferences, privileges and
restrictions of the shares of the Preferred Stock are as stated in the
Company's Certificate of Designation as filed with the Secretary of State
of Colorado on August 25, 2004 (the "Certificate of Designation"). The
Preferred Stock Shares and Warrant Shares have been duly and validly
reserved for issuance. When issued in compliance with the provisions of
this Agreement and the Company's Charter, the Securities will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Securities may be subject to
restrictions on transfer under state and/or federal securities laws as set
forth herein or as otherwise required by such laws at the time a transfer
is proposed.
4.4 Authorization; Binding Obligations. All corporate action on the part of
the Company, its officers and directors necessary for the authorization of this
Agreement and the Related Agreements, the performance of all obligations of the
Company hereunder and under the Related Agreements at the Closing and, the
authorization, sale, issuance and delivery of the Preferred Stock and Warrant
has been taken or will be taken prior to the Closing. This Agreement and the
Related Agreements, when executed and delivered and to the extent it is a party
thereto, will be valid and binding obligations of the Company enforceable in
accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable or legal remedies. The sale of the Preferred Stock and the
subsequent conversion of the Preferred Stock into Preferred Stock Shares
are not and will not be subject to any preemptive rights or rights of first
refusal (other than those already held by Laurus) that have not been
properly waived or complied with. The issuance of the Warrant and the
subsequent exercise of the Warrant for Warrant Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have
not been properly waived or complied with.
4.5 Liabilities. The Company does not have any contingent liabilities,
except current liabilities incurred in the ordinary course of business and
liabilities disclosed in any Exchange Act Filings.
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4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed
in any Exchange Act Filings:
(a) Other than those in existence on the date hereof between Purchaser
and the Company, there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to
which the Company is a party or to its knowledge by which it is bound which
may involve: (i) obligations (contingent or otherwise) of, or payments to,
the Company in excess of $50,000 (other than obligations of, or payments
to, the Company arising from purchase or sale agreements entered into in
the ordinary course of business); or (ii) the transfer or license of any
patent, copyright, trade secret or other proprietary right to or from the
Company (other than licenses arising from the purchase of "off the shelf"
or other standard products); or (iii) provisions restricting the
development, manufacture or distribution of the Company's products or
services; or (iv) indemnification by the Company with respect to
infringements of proprietary rights.
(b) Other than in connection with transactions between Purchaser and
the Company, since March 31, 2004, the Company has not: (i) declared or
paid any dividends, or authorized or made any distribution upon or with
respect to any class or series of its capital stock; (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than
ordinary course obligations) individually in excess of $50,000 or, in the
case of indebtedness and/or liabilities individually less than $50,000, in
excess of $100,000 in the aggregate; (iii) made any loans or advances to
any person not in excess, individually or in the aggregate, of $100,000,
other than ordinary advances for travel expenses; or (iv) sold, exchanged
or otherwise disposed of any of its assets or rights, other than the sale
of its inventory in the ordinary course of business.
(c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
4.7 Obligations to Related Parties. Except as set forth on Schedule 4.7, or
as disclosed related to obligations owing to Mr. Xxxxx Xxxxxx, the Company's
Chief Executive Officer of which the outstanding balance on the date hereof is
less than $200,000, there are no obligations of the Company to officers,
directors, stockholders or employees of the Company other than:
(a) for payment of salary for services rendered and for bonus payments
including deferred and accrued salaries on the Company's financial
statements;
(b) reimbursement for reasonable expenses incurred on behalf of the
Company;
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(c) for other standard employee benefits made generally available to
all employees (including stock option agreements outstanding under any
stock option plan approved by the Board of Directors of the Company); and
(d) obligations listed in the Company's financial statements or
disclosed in any of its Exchange Act Filings.
Except as described above or set forth on Schedule 4.7, none of the officers,
directors or, to the best of the Company's knowledge, key employees or
stockholders of the Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of $50,000
or have any direct or indirect ownership interest in any firm or corporation
with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, other
than passive investments in publicly traded companies (representing less than
one percent (1%) of such company) which may compete with the Company. Except as
described above, no officer, director or stockholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person, other
than Xx. Xxxxxx'x personal guarantee of the Company's building lease obligation.
Except as set forth on Schedule 4.7, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
4.8 Changes. Since March 31, 2004, except as disclosed in any Exchange Act
Filing or in any Schedule to this Agreement or to any of the Related Agreements,
there has not been:
(a) any change in the business, assets, liabilities, condition
(financial or otherwise), properties, operations or prospects of the
Company, which, individually or in the aggregate, has had or could
reasonably be expected to have, a Material Adverse Effect;
(b) any resignation or termination of any officer, key employee or
group of employees of the Company;
(c) any material change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) any damage, destruction or loss, whether or not covered by
insurance, which has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(e) any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) any direct or indirect material loans made by the Company to any
stockholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
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(g) any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) any declaration or payment of any dividend or other distribution
of the assets of the Company;
(i) any labor organization activity related to the Company;
(j) any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business other than in
connection with transactions between Purchaser and the Company;
(k) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) any change in any material agreement to which the Company is a
party or by which it is bound which, either individually or in the
aggregate, has had, or could reasonably be expected to have, a Material
Adverse Effect;
(m) any other event or condition of any character that, either
individually or in the aggregate, has had, or could reasonably be expected
to have, a Material Adverse Effect; or
(n) any arrangement or commitment by the Company to do any of the acts
described in subsection (a) through (m) above.
4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on
Schedule 4.9, the Company has good and marketable title to its properties and
assets, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than:
(a) those resulting from taxes which have not yet become delinquent;
(b) minor liens and encumbrances which do not materially detract from
the value of the property subject thereto or materially impair the
operations of the Company; and
(c) those that have otherwise arisen in the ordinary course of
business.
All facilities, machinery, equipment, fixtures, vehicles and other properties
owned, leased or used by the Company are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used. Except as set forth on Schedule 4.9, the Company is in compliance with
all material terms of each lease to which it is a party or is otherwise bound.
4.10 Intellectual Property.
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(a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary
for its business as now conducted and to the Company's knowledge as
presently proposed to be conducted (the "Intellectual Property"), without
any known infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
proprietary rights, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person
or entity other than such licenses or agreements arising from the purchase
of "off the shelf" or standard products.
(b) The Company has not received any communications alleging that the
Company has violated any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity, nor is the Company aware of any basis therefor.
(c) The Company does not believe it is or will be necessary to utilize
any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been
rightfully assigned to the Company.
4.11 Compliance with Other Instruments. The Company is not in violation or
default of (x) any term of its Charter, Bylaws or Certificate of Designation, or
(y) of any provision of any indebtedness, mortgage, indenture, contract,
agreement or instrument to which it is a party or by which it is bound or of any
judgment, decree, order or writ, which violation or default, in the case of this
clause (y), has had, or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. The execution,
delivery and performance of and compliance with this Agreement and the Related
Agreements to which it is a party, and the issuance and sale of the Preferred
Stock by the Company and the other Securities by the Company each pursuant
hereto and thereto, will not, with or without the passage of time or giving of
notice, result in any such material violation, or be in conflict with or
constitute a default under any such term or provision, or result in the creation
of any mortgage, pledge, lien, encumbrance or charge upon any of the properties
or assets of the Company or the suspension, revocation, impairment, forfeiture
or nonrenewal of any permit, license, authorization or approval applicable to
the Company, its business or operations or any of its assets or properties.
4.12 Litigation. Except as set forth on Schedule 4.12 hereto, there is no
action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against the Company that prevents the Company
from entering into this Agreement or the Related Agreements, or from
consummating the transactions contemplated hereby or thereby, or which has had,
or could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect or could result in any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis to assert any of the foregoing. 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 which the
Company intends to initiate.
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4.13 Tax Returns and Payments. The Company has timely filed (including all
filed extensions) all tax returns (federal, state and local) required to be
filed by it. All taxes shown to be due and payable on such returns, any
assessments imposed, and all other taxes due and payable by the Company on or
before the Closing, have been paid or will be paid prior to the time they become
delinquent. Except as set forth on Schedule 4.13, the Company has not been
advised:
(a) that any of its returns, federal, state or other, have been or are
being audited as of the date hereof; or
(b) of any deficiency in assessment or proposed judgment to its
federal, state or other taxes.
The Company has no knowledge of any liability of any tax to be imposed upon its
properties or assets as of the date of this Agreement that is not adequately
provided for.
4.14 Employees. Except as set forth on Schedule 4.14, the Company has no
collective bargaining agreements with any of its employees. There is no labor
union organizing activity pending or, to the Company's knowledge, threatened
with respect to the Company. Except as disclosed in the Exchange Act Filings or
on Schedule 4.14, the Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement, except the 2004 Equity Incentive Plan approved
by the Company's stockholders on August 5, 2004. To the Company's knowledge, no
employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company; and to the Company's
knowledge the continued employment by the Company of its present employees, and
the performance of the Company's contracts with its independent contractors,
will not result in any such violation. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company. The Company has not received any notice alleging
that any such violation has occurred. Except for employees who have a current
effective employment agreement with the Company, no employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. Except as set
forth on Schedule 4.14, the Company is not aware that any officer, key employee
or group of employees intends to terminate his, her or their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of employees.
4.15 Registration Rights and Voting Rights. Other than in connection with
transactions between Purchaser and the Company, and except as set forth on
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Schedule 4.15 and except as disclosed in Exchange Act Filings, the Company is
presently not under any obligation, and has not granted any rights, to register
any of the Company's presently outstanding securities or any of its securities
that may hereafter be issued. Except as set forth on Schedule 4.15 and except as
disclosed in Exchange Act Filings, to the Company's knowledge, no stockholder of
the Company has entered into any agreement with respect to the voting of equity
securities of the Company.
4.16 Compliance with Laws; Permits. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or
foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement or any Related Agreement and the issuance of any of
the Securities, except such as has been duly and validly obtained or filed, or
with respect to any filings that must be made after the Closing, as will be
filed in a timely manner. The Company has all material franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
4.17 Environmental and Safety Laws. The Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation. Except as set forth on Schedule 4.17, no Hazardous Materials (as
defined below) are used or have been used, stored, or disposed of by the Company
or, to the Company's knowledge, by any other person or entity on any property
owned, leased or used by the Company. For the purposes of the preceding
sentence, "Hazardous Materials" shall mean:
(a) materials which are listed or otherwise defined as "hazardous" or
"toxic" under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control
of hazardous wastes, or other activities involving hazardous substances,
including building materials; or
(b) any petroleum products or nuclear materials.
4.18 Valid Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
4.19 Full Disclosure. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision to
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purchase the Preferred Stock and Warrant, including all information the Company
believes is reasonably necessary to make such investment decision. Neither this
Agreement, the Related Agreements nor the exhibits and schedules hereto and
thereto nor any other document delivered by the Company to Purchaser or its
attorneys or agents in connection herewith or therewith or with the transactions
contemplated hereby or thereby, contain any untrue statement of a material fact
nor omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading. Any financial projections and other estimates provided to
the Purchaser by the Company were based on the Company's experience in the
industry and on assumptions of fact and opinion as to future events which the
Company, at the date of the issuance of such projections or estimates, believed
to be reasonable.
4.20 Insurance. The Company has general commercial, product liability, fire
and casualty insurance policies with coverages which the Company believes are
customary for companies similarly situated to the Company in the same or similar
business.
4.21 SEC Reports . Except as set forth on Schedule 4.21, the Company has
filed all proxy statements, reports and other documents required to be filed by
it under the Securities Xxxxxxxx Xxx 0000, as amended (the "Exchange Act"). The
Company has furnished the Purchaser with copies of: (i) its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2003 ; and (ii) its Quarterly
Reports on Form 10-QSB for the fiscal quarters ended March 31, 2004, and June
30, 2004, and the Form 8-K filings which it has made during the fiscal year
ending December 31, 2003 to date (collectively, the "SEC Reports"). Except as
set forth on Schedule 4.21, each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none of
the SEC Reports, nor the financial statements (and the Preferred Stocks thereto)
included in the SEC Reports, as of their respective filing dates, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.22 Listing. The Company's Common Stock is traded on the NASD Over the
Counter Bulletin Board ("OTCBB") and satisfies all requirements for the
continuation of such listing. The Company has not received any notice that its
Common Stock will be ineligible to be traded on the OTCBB or that its Common
Stock does not meet all requirements for such continued trading.
4.23 No Integrated Offering. 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 the offering of the
Securities pursuant to this Agreement or any Related Agreement to be integrated
with prior offerings by the Company for purposes of the Securities Act which
would prevent the Company from selling the Securities pursuant to Rule 506 under
the Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or subsidiaries take
any action or steps that would cause the offering of the Securities to be
integrated with other offerings.
4.24 Stop Transfer. The Securities are restricted securities as of the date
of this Agreement. The Company will not issue any stop transfer order or other
order impeding the sale and delivery of any of the Securities at such time
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PAGE
as the Securities are registered for public sale or an exemption from
registration is available, except as required by state and federal securities
laws.
4.25 Dilution. The Company specifically acknowledges that its obligation to
issue the shares of Common Stock upon conversion of the Preferred Stock and
exercise of the Warrant is binding upon the Company and enforceable regardless
of the dilution such issuance may have on the ownership interests of other
shareholders of the Company.
4.26 Patriot Act. The Company certifies that, to the best of Company's
knowledge, the Company has not been designated, and is not owned or controlled,
by a "suspected terrorist" as defined in Executive Order 13224. The Company
hereby acknowledges that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities. In furtherance of those
efforts, the Company hereby represents, warrants and agrees that: (i) none of
the cash or property that the Company will pay or will contribute to the
Purchaser has been or shall be derived from, or related to, any activity that is
deemed criminal under United States law; and (ii) no contribution or payment by
the Company to the Purchaser, to the extent that they are within the Company's
control shall cause the Purchaser 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 Company shall promptly notify the
Purchaser if any of these representations ceases to be true and accurate
regarding the Company. The Company agrees to provide the Purchaser any
additional information regarding the Company that the Purchaser deems necessary
or convenient to ensure compliance with all applicable laws concerning money
laundering and similar activities. The Company understands and agrees that if at
any time it is discovered that any of the foregoing representations are
incorrect, or if otherwise required by applicable law or regulation related to
money laundering similar activities, the Purchaser may undertake appropriate
actions to ensure compliance with applicable law or regulation, including but
not limited to segregation and/or redemption of the Purchaser's investment in
the Company. The Company further understands that the Purchaser may release
confidential information about the Company and, if applicable, any underlying
beneficial owners, to proper authorities if the Purchaser, in its sole
discretion, determines that it is in the best interests of the Purchaser in
light of relevant rules and regulations under the laws set forth in subsection
(ii) above.
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows (such representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement)
5.1 No Shorting. The Purchaser or any of its affiliates and investment
partners has not, will not and will not cause any person or entity, directly or
indirectly, to engage in "short sales," matched orders, pools, wash sales, runs,
corners, market stabilization, parking and warehousing, computerized program
trading, or marketing the close of the Company's Common Stock as long as the
Preferred Stock shall be outstanding.
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PAGE
5.2 Requisite Power and Authority. The Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
corporate action on Purchaser's part required for the lawful execution and
delivery of this Agreement and the Related Agreements have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Related Agreements will be valid and binding obligations of
Purchaser, enforceable in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
5.3 Investment Representations . Purchaser understands that the Securities
are being offered and sold pursuant to an exemption from registration contained
in the Securities Act based in part upon Purchaser's representations contained
in the Agreement, including, without limitation, that the Purchaser is an
"accredited investor" within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act"). The Purchaser confirms that it
has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect to
the Preferred Stock and the Warrant to be purchased by it under this Agreement
and the Preferred Stock Shares and the Warrant Shares acquired by it upon the
conversion of the Preferred Stock and the exercise of the Warrant, respectively.
The Purchaser further confirms that it has had an opportunity to ask questions
and receive answers from the Company regarding the Company's business,
management and financial affairs and the terms and conditions of the Offering,
the Preferred Stock, the Warrant and the Securities and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Purchaser or to which the Purchaser had access.
5.4 Purchaser Bears Economic Risk. The Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. The Purchaser must bear the economic risk of this investment
until the Securities are sold pursuant to: (i) an effective registration
statement under the Securities Act; or (ii) an exemption from registration is
available with respect to such sale.
5.5 Acquisition for Own Account. The Purchaser is acquiring the Preferred
Stock and Warrant and the Preferred Stock Shares and the Warrant Shares for the
Purchaser's own account for investment only, and not as a nominee or agent and
not with a view towards or for resale in connection with their distribution.
5.6 Purchaser Can Protect Its Interest. The Purchaser represents that by
reason of its, or of its management's, business and financial experience, the
Purchaser has the capacity to evaluate the merits and risks of its investment in
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PAGE
the Preferred Stock, the Warrant and the Securities and to protect its own
interests in connection with the transactions contemplated in this Agreement,
and the Related Agreements. Further, the Purchaser is aware of no publication of
any advertisement in connection with the transactions contemplated in the
Agreement or the Related Agreements.
5.7 Accredited Investor. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
5.8 Legends.
(a) The Preferred Stock shall bear substantially the following legend:
"THIS PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS
PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
PREFERRED STOCK MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THIS PREFERRED STOCK OR SUCH SHARES UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO SPACEDEV, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) The Preferred Stock Shares and the Warrant Shares, if not issued
by DWAC system (as hereinafter defined), shall bear a legend which shall be
in substantially the following form until such shares are covered by an
effective registration statement filed with the SEC:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO SPACEDEV, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
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PAGE
(c) The Warrant shall bear substantially the following legend:
"THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR THE UNDERLYING
SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SPACEDEV,
INC. THAT SUCH REGISTRATION IS NOT REQUIRED."
5.9 Patriot Act. The Purchaser certifies that, to the best of the
Purchaser's knowledge, neither the Purchaser nor any of its directors, officers,
managers, affiliates, agents or employees has been designated, and 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) none of the cash that the Purchaser or any of its affiliates or
agents will pay 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) no
payment by the Purchaser or any of its affiliates or agents to the Company, to
the extent that they are within the Purchaser's and/or its directors',
officers', managers', affiliates', agents', or employees' control shall cause
the Company to be in violation of the United States Bank Secrecy Act, the United
States International Money Laundering Abatement and Anti-Terrorist Financing Act
of 2001. The Purchaser shall promptly notify the Company if any of these
representations ceases to be true and accurate regarding the Purchaser and any
of its directors, officers, managers, affiliates, agents, or employees. The
Purchaser agrees to provide the Company any additional information regarding the
Purchaser or any of its directors, officers, managers, affiliates, agents, or
employees that the Company deems necessary or convenient to ensure compliance
with all applicable laws concerning money laundering and all similar activities.
The Purchaser understands and agrees that otherwise required by applicable law
or regulation related to money laundering similar activities, the Company may
undertake appropriate actions to ensure compliance with applicable law or
regulation. The Purchaser further understands that the Company may release
confidential information about the Purchaser and its directors, officers,
managers, affiliates, agents, or employees and, if applicable, any underlying
beneficial owners, to proper authorities if the Company, in its sole discretion,
determines that it is in the best interests of the Company in light of relevant
rules and regulations under the laws set forth in subsection (ii) above
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PAGE
6. Covenants of the Company. The Company covenants and agrees with the
Purchaser as follows:
6.1 Stop-Orders. The Company will advise the Purchaser, promptly after it
receives notice of issuance by the Securities and Exchange Commission (the
"SEC"), any state securities commission or any other regulatory authority of any
stop order or of any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the qualification of the
Common Stock of the Company for offering or sale in any jurisdiction, or the
initiation of any proceeding for any such purpose.
6.2 Listing. The Company shall promptly secure the trading of the shares
of Common Stock issuable upon conversion of the Preferred Stock and upon the
exercise of the Warrant on the OTCBB (the "Principal Market") upon which shares
of Common Stock are listed (subject to official notice of issuance) and shall
maintain such listing so long as any other shares of Common Stock shall be so
listed. The Company will maintain the listing of its Common Stock on the
Principal Market, and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
National Association of Securities Dealers ("NASD") and such exchanges, as
applicable.
6.3 Market Regulations. The Company shall notify the SEC, NASD and
applicable state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to the
Purchaser and promptly provide copies thereof to the Purchaser.
6.4 Reporting Requirements. The Company will timely file with the SEC all
reports required to be filed pursuant to the Exchange Act and refrain from
terminating its status as an issuer required by the Exchange Act to file reports
thereunder even if the Exchange Act or the rules or regulations thereunder would
permit such termination.
6.5 Use of Funds. The Company agrees that it will use the proceeds of the
sale of the Preferred Stock and Warrant for general working capital purposes
only.
6.6 Access to Facilities. The Company will permit any representatives
designated by the Purchaser (or any successor of the Purchaser), upon reasonable
notice and during normal business hours, at such person's expense and
accompanied by a representative of the Company, to:
(a) visit and inspect any of the properties of the Company;
(b) examine the corporate and financial records of the Company (unless
such examination is not permitted by federal, state or local law or by
contract) and make copies thereof or extracts therefrom; and
(c) discuss the affairs, finances and accounts of the Company with the
directors, officers and independent accountants of the Company.
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Notwithstanding the foregoing, the Company will not provide any material,
non-public information to the Purchaser unless the Purchaser signs a
confidentiality agreement and otherwise complies with Regulation FD, under
the federal securities laws.
6.7 Taxes. The Company will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefore.
6.8 Insurance. The Company will keep its assets which are of an insurable
character insured by financially sound and reputable insurers against loss or
damage by fire, explosion and other risks customarily insured against by
companies in similar business similarly situated as the Company; and the Company
will maintain, with financially sound and reputable insurers, insurance against
other hazards and risks and liability to persons and property to the extent and
in the manner which the Company reasonably believes is customary for companies
in similar business similarly situated as the Company and to the extent
available on commercially reasonable terms. The Company shall (i) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to the Company's
including business interruption insurance; (ii) maintain a bond in such amounts
as is customary in the case of companies engaged in businesses similar to the
Company's insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of the
Company either directly or through governmental authority to draw upon such
funds or to direct generally the disposition of such assets; (iii) maintain
public and product liability insurance against claims for personal injury, death
or property damage suffered by others; and (iv) maintain all such worker's
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which the Company is engaged in business.
6.9 Intellectual Property. The Company shall maintain in full force and
effect its corporate existence, rights and franchises and all licenses and other
rights to use Intellectual Property owned or possessed by it and reasonably
deemed to be necessary to the conduct of its business.
6.10 Properties. The Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needful and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company will at all times comply with each
provision of all leases to which it is a party or under which it occupies
property if the breach of such provision could reasonably be expected to have a
Material Adverse Effect.
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PAGE
6.11 Confidentiality. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Purchaser, unless
expressly agreed to by the Purchaser or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement. The Company may disclose Purchaser's identity and the terms of this
Agreement to its current and prospective debt and equity financing sources.
6.12 Required Approvals. For so long as at least twenty-five percent (25%)
of the aggregate stated value of the Preferred Stock issued to Purchaser
hereunder is outstanding, the Company, without the prior written consent of the
Purchaser, shall not:
(a) (i) directly or indirectly declare or pay any dividends, other
than dividends paid to the Purchaser with respect to the Series C
Preferred, (ii) issue any preferred stock that is mandatorily redeemable or
(iii) redeem any of its other equity interests;
(b) liquidate, dissolve or effect a material reorganization (it being
understood that in no event shall the Company dissolve, liquidate or merge
with any other person or entity (unless the Company is the surviving
entity);
(c) become subject to (including, without limitation, by way of
amendment to or modification of) any agreement or instrument which by its
terms would (under any circumstances) restrict the Company's right to
perform the provisions of this Agreement or any of the agreements
contemplated thereby;
(d) materially alter or change the scope of the business of the
Company; and
(e) make investments in, make any loans or advances to, or transfer
assets to, any of its Subsidiaries, other than any immaterial investments,
loans, advances and/or asset transfers made in the ordinary course of
business.
6.13 Reissuance of Securities. The Company agrees to reissue certificates
representing the Securities without the legends set forth in Section 5.8 above
at such time as:
(a) the holder thereof is permitted to dispose of such Securities
pursuant to Rule 144(k) under the Securities Act; or
(b) upon resale subject to an effective registration statement after
such Securities are registered under the Securities Act. The Company agrees
to cooperate with the Purchaser in connection with all resales pursuant to
Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow
such resales provided the Company and its counsel receive reasonably
requested representations from the selling Purchaser and broker, if any.
6.14 Opinion. On the Closing Date, the Company will deliver to the
Purchaser an opinion acceptable to the Purchaser from the Company's legal
counsel. The Company will provide, at the Company's expense, such other legal
opinions in the future as are reasonably necessary for the conversion of the
Preferred Stock and exercise of the Warrant.
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PAGE
6.15 Margin Stock. The Company will not permit any of the proceeds of the
Preferred Stock or the Warrant to be used directly or indirectly to "purchase"
or "carry" "margin stock" or to repay indebtedness incurred to "purchase" or
"carry" "margin stock" within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect.
6.16 Financing Right of First Refusal.
(a) So long as any shares of Preferred Stock are outstanding, the
Company hereby grants to the Purchaser a right of first refusal to provide
any Additional Financing (as defined below) to be issued by the Company
and/or any of its Subsidiaries, subject to the following terms and
conditions. From and after the date hereof, prior to the incurrence of any
additional indebtedness and/or the sale or issuance of any equity interests
of the Company or any of its Subsidiaries other than to holders of the
Preferred Stock upon conversion, dividends paid to holders of the Preferred
Stock in shares of Common Stock, pursuant to options that may be issued
under any employee incentive stock plan or any qualified stock plan (an
"Additional Financing"), the Company and/or any Subsidiary of the Company,
as the case may be, shall notify the Purchaser of its intention to enter
into such Additional Financing. In connection therewith, the Company and/or
the applicable Subsidiary thereof shall submit a fully executed term sheet
(a "Proposed Term Sheet") to the Purchaser setting forth the terms,
conditions and pricing of any such Additional Financing (such financing to
be negotiated on "arm's length" terms and the terms thereof to be
negotiated in good faith) proposed to be entered into by the Company and/or
such Subsidiary. The Purchaser shall have the right, but not the
obligation, to deliver its own proposed term sheet (the "Purchaser Term
Sheet") setting forth the terms and conditions upon which Purchaser would
be willing to provide such Additional Financing to the Company and/or such
Subsidiary. The Purchaser Term Sheet shall contain terms no less favorable
to the Company and /or the Subsidiary than those outlined in Proposed Term
Sheet. The Purchaser shall deliver such Purchaser Term Sheet within ten
business days of receipt of each such Proposed Term Sheet. If the
provisions of the Purchaser Term Sheet are at least as favorable to the
Company and/or such Subsidiary, as the case may be, as the provisions of
the Proposed Term Sheet, the Company and/or such Subsidiary shall enter
into and consummate the Additional Financing transaction outlined in the
Purchaser Term Sheet.
(b) The Company will not, and will not permit its Subsidiaries to,
agree, directly or indirectly, to any restriction with any person or entity
which limits the ability of the Purchaser to consummate an Additional
Financing with the Company or any of its Subsidiaries.
7. Covenants of the Purchaser. The Purchaser covenants and agrees with the
Company as follows:
7.1 Confidentiality . The Purchaser agrees that it will not disclose, and
will not include in any public announcement, the name of the Company, unless
expressly agreed to by the Company or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.
7.2 Non-Public Information. The Purchaser agrees not to effect any sales
in the shares of the Company's Common Stock while in possession of material,
non-public information regarding the Company if such sales would violate
applicable securities law.
19
PAGE
7.3 No Shorting. The Purchaser or any of its affiliates and investment
partners has not, will not and will not cause any person or entity, directly or
indirectly, to engage in "short sales," matched orders, pools, wash sales, runs,
corners, market stabilization, parking and warehousing, computerized program
trading, or marketing the close of the Company's Common Stock as long as the
Preferred Stock shall be outstanding.
8. Covenants of the Company and Purchaser Regarding Indemnification.
8.1 Company Indemnification. The Company agrees to indemnify, hold
harmless, reimburse and defend Purchaser, each of Purchaser's officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser which results, arises out of or is based upon: (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement, any Related Agreement or in any exhibits or schedules attached hereto
or thereto; or (ii) any breach or default in performance by Company of any
covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and Purchaser relating hereto.
8.2 Purchaser's Indemnification. Purchaser agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's officers,
directors, agents, affiliates, control persons and principal shareholders, at
all times against any claim, cost, expense, liability, obligation, loss or
damage (including reasonable legal fees) of any nature, incurred by or imposed
upon the Company which results, arises out of or is based upon: (i) any
misrepresentation by Purchaser or breach of any warranty by Purchaser in this
Agreement or in any exhibits or schedules attached hereto or any Related
Agreement; or (ii) any breach or default in performance by Purchaser of any
covenant or undertaking to be performed by Purchaser hereunder, or any other
agreement entered into by the Company and Purchaser relating hereto.
9. Conversion of Convertible Preferred Stock.
9.1 Mechanics of Conversion.
(a) Provided the Purchaser has notified the Company of the Purchaser's
intention to sell the Preferred Stock Shares and the Preferred Stock Shares
are included in an effective registration statement or are otherwise exempt
from registration when sold: (i) Upon the conversion of the Preferred Stock
or part thereof, the Company shall, at its own cost and expense, take all
necessary action (including the issuance of an opinion of counsel
reasonably acceptable to the Purchaser following a request by the
Purchaser) to assure that the Company's transfer agent shall issue shares
of the Company's Common Stock in the name of the Purchaser (or its nominee)
or such other persons as designated by the Purchaser in accordance with
Section 9.1(b) hereof and in such denominations to be specified
representing the number of Preferred Stock Shares issuable upon such
conversion; and (ii) The Company warrants that no instructions other than
these instructions have been or will be given to the transfer agent of the
20
PAGE
Company's Common Stock and that after the Effectiveness Date (as defined in
the Registration Rights Agreement) the Preferred Stock Shares issued will
be freely transferable subject to the prospectus delivery requirements of
the Securities Act and the provisions of this Agreement, and will not
contain a legend restricting the resale or transferability of the Preferred
Stock Shares.
(b) Purchaser will give notice of its decision to exercise its right
to convert the Preferred Stock or part thereof by telecopying or otherwise
delivering an executed and completed notice of the number of shares to be
converted to the Company (the "Notice of Conversion"). The Purchaser will
not be required to surrender the Preferred Stock until the Purchaser
receives a credit to the account of the Purchaser's prime broker through
the DWAC system (as defined below), representing the Preferred Stock Shares
or until the Preferred Stock has been fully satisfied; however, once
satisfied, Purchaser shall promptly surrender the Preferred Stock. Each
date on which a Notice of Conversion is telecopied or delivered to the
Company in accordance with the provisions hereof shall be deemed a
"Conversion Date." Pursuant to the terms of the Notice of Conversion, the
Company will issue instructions to the transfer agent accompanied by an
opinion of counsel within three (3) business days of the date of the
delivery to the Company of the Notice of Conversion and shall cause the
transfer agent to transmit the certificates representing the Conversion
Shares to the Holder by crediting the account of the Purchaser's prime
broker with the Depository Trust Company ("DTC") through its Deposit
Withdrawal Agent Commission ("DWAC") system within three (3) business days
after receipt by the Company of the Notice of Conversion (the "Delivery
Date").
(c) The Company understands that a delay in the delivery of the
Preferred Stock Shares in the form required pursuant to Section 9 hereof
beyond the Delivery Date could result in economic loss to the Purchaser. In
the event that the Company fails to direct its transfer agent to deliver
the Preferred Stock Shares to the Purchaser via the DWAC system within the
time frame set forth in Section 9.1(b) above and the Preferred Stock Shares
are not delivered to the Purchaser by the Delivery Date, as compensation to
the Purchaser for such loss, the Company agrees to pay late payments to the
Purchaser for late issuance of the Preferred Stock Shares in the form
required pursuant to Section 9 hereof upon conversion of the Preferred
Stock in the amount equal to $500 per business day after the Delivery Date.
Notwithstanding the foregoing, the Corporation shall not owe the Holder any
late fees set forth in this Section 9(c) if (i) the delay in the delivery
of the Series C Preferred Shares beyond the Delivery date is solely out of
the control of the Corporation (as determined in good faith by the Holder
and the Corporation) (ii) the Corporation is utilizing its best efforts to
actively attempt to cure the cause of the delay or (iii) the delay is the
result of the exhaustion of all registered shares of Common Stock issuable
upon conversion of the Preferred Stock or payment of dividends on the
Preferred Stock if the Corporation is in the process of registering
additional shares of Common Stock for such purpose. The Company shall pay
any payments incurred under this Section in immediately available funds
upon demand.
Nothing contained herein or in any document referred to herein or delivered
in connection herewith shall be deemed to establish or require the payment of a
rate of interest or other charges in excess of the maximum permitted by
21
PAGE
applicable law. In the event that the rate of interest or dividends required to
be paid or other charges hereunder exceed the maximum amount permitted by such
law, any payments in excess of such maximum shall be credited against amounts
owed by the Company to a Purchaser and thus refunded to the Company.
10. Registration Rights.
10.1 Registration Rights Granted. The Company hereby grants registration
rights to the Purchaser pursuant to a Registration Rights Agreement dated as of
even date herewith between the Company and the Purchaser.
10.2 Offering Restrictions. Except as previously disclosed in the SEC
Reports or in the Exchange Act Filings, or stock or stock options granted to
employees or directors of the Company (these exceptions hereinafter referred to
as the "Excepted Issuances"), the Company will not issue any securities with a
continuously variable/floating conversion feature which are or could be (by
conversion or registration) free-trading securities (i.e. common stock subject
to a registration statement) prior to the full repayment or conversion of the
Preferred Stock (together with all accrued and unpaid interest and fees related
thereto.
11. Miscellaneous.
11.1 Governing Law. THIS AGREEMENT AND EACH RELATED AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER
PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND EACH RELATED AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS
OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK. BOTH
PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND THE RELATED AGREEMENTS
ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND
WAIVE TRIAL BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY
RELATED AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE
UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED
INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED
MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH PROVISION WHICH
MAY PROVE INVALID OR UNENFORCEABLE UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY
OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT OR ANY RELATED
AGREEMENT.
11.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby to the extent provided therein.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
22
PAGE
11.3 Successors. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who shall be a holder
of the Securities from time to time, other than the holders of Common Stock
which has been sold by the Purchaser pursuant to Rule 144 or an effective
registration statement. Purchaser may not assign its rights hereunder to a
competitor of the Company.
11.4 Entire Agreement. This Agreement, the Related Agreements, the
exhibits and schedules hereto and thereto and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
11.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the Purchaser
under this Agreement may be waived only with the written consent of the
Purchaser.
(c) The obligations of the Purchaser and the rights of the Company
under this Agreement may be waived only with the written consent of the
Company.
11.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, or the Related
Agreements, by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given:
(a) upon personal delivery to the party to be notified;
(b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day;
(c) three (3) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or
23
PAGE
(d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt.
All communications shall be sent as follows:
If to the Company, to: SpaceDev, Inc.
00000 Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X Xxxxxxx, Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxx
00000 Xxxx Xxxxx Xxxxx,
Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
If to the Purchaser, to: Laurus Master Fund, Ltd.
c/o Ironshore Corporate Services ltd.
X.X. Xxx 0000 G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Facsimile: 000-000-0000
with a copy to:
Xxxx X. Xxxxxx , Esq.
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
or at such other address as the Company or the Purchaser may designate by
written notice to the other parties hereto given in accordance herewith.
11.9 Attorneys' Fees. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
24
PAGE
11.10 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
11.11 Facsimile Signatures; Counterparts. This Agreement may be executed
by facsimile signatures and in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.
11.12 Broker's Fees. Except as set forth on Schedule 11.12 hereof, each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker's or finder's fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 11.12 being untrue.
11.13 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and the Related Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Agreement to favor any party against the other.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
25
PAGE
IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
SpaceDev, Inc. Laurus Master Fund, Ltd.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx Grin
-------------------------------- ---------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx Grin
-------------------------------- ---------------------------
Title: Chief Executive Officer Title: Director
-------------------------------- ---------------------------
26
PAGE
EXHIBIT A
FORM OF SERIES C CONVERTIBLE PREFERRED STOCK
A-1
PAGE
EXHIBIT B
FORM OF WARRANT
B-1
PAGE
EXHIBIT C
FORM OF OPINION
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Colorado and has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted.
2. The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under the Agreement and the Related
Agreements. All corporate action on the part of the Company and its officers,
directors and stockholders necessary has been taken for: (i) the authorization
of the Agreement and the Related Agreements and the performance of all
obligations of the Company thereunder at the Closing; and (ii) the
authorization, sale, issuance and delivery of the Securities pursuant to the
Agreement and the Related Agreements. The Preferred Stock Shares and the Warrant
Shares, when issued pursuant to and in accordance with the terms of the
Agreement and the Related Agreements and upon delivery shall be validly issued
and outstanding, fully paid and non assessable.
3. The execution, delivery and performance of the Agreement, the Preferred
Stock or the Related Agreements by the Company and the consummation of the
transactions on its part contemplated by any thereof, to the best of such
counsel's knowledge, will not, with or without the giving of notice or the
passage of time or both:
(a) Violate the provisions of the Charter or bylaws of the Company;
(b) Violate any judgment, decree, order or award of any court binding
upon the Company; or
(c) Violate any [Insert jurisdictions in which counsel is qualified]
or federal law.
4. The Agreement and the Related Agreements will constitute, valid and
legally binding obligations of the Company, and are enforceable against the
Company in accordance with their respective terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable or legal remedies.
5. To such counsel's knowledge, the sale of the Preferred Stock and the
subsequent conversion of the Preferred Stock into Preferred Stock Shares are not
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with. To such counsel's knowledge, the sale of the
Warrant and the subsequent exercise of the Warrant for Warrant Shares are not
subject to any preemptive rights or, to such counsel's knowledge, rights of
first refusal that have not been properly waived or complied with.
C-1
PAGE
6. Assuming the accuracy of the representations and warranties of the
Purchaser contained in the Agreement, the offer, sale and issuance of the
Securities on the Closing Date will be exempt from the registration requirements
of the Securities Act. To such counsel's knowledge, 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 and security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act which would prevent the Company
from selling the Securities pursuant to Rule 506 under the Securities Act, or
any applicable exchange-related stockholder approval provisions.
7. There is no action, suit, proceeding or investigation pending or, to
such counsel's knowledge, currently threatened against the Company that prevents
the right of the Company to enter into this Agreement or any of the Related
Agreements, or to consummate the transactions contemplated thereby. 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; nor, to
such counsel's knowledge, is there any action, suit, proceeding or investigation
by the Company currently pending or which the Company intends to initiate.
C-2
PAGE
EXHIBIT D
FORM OF ESCROW AGREEMENT
D-1
PAGE
