Exhibit
10.36
EXECUTION
COPY
SECURITIES
PURCHASE AND REGISTRATION RIGHTS AGREEMENT
THIS SECURITIES PURCHASE AND REGISTRATION RIGHTS AGREEMENT
(this
Agreement
),
dated as of August 24,
2007, by and among Communication Intelligence Corporation, a
Delaware corporation with headquarters located at 275 Shoreline Drive, Suite
500, Redwood Shores, California 94065 (the
Company
),
and the investors listed on the Schedule of Investors attached hereto as
Exhibit A
(individually, an
Investor
and
collectively, the
Investors
).
BACKGROUND
A. The Company and each Investor are
executing and delivering this Agreement in reliance upon the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as
amended (the
Securities Act
),
and Rule 506 of Regulation D (
Regulation
D
) as promulgated by the United States Securities and Exchange
Commission (the
SEC
) under the
Securities Act.
B. Each Investor wishes to purchase,
and the Company wishes to sell, upon the terms and conditions stated in this Agreement,
the aggregate number of shares of the Common Stock, par value $0.01 per share,
of the Company (the
Common Stock
),
set forth opposite such Investors name in column two (2) on the Schedule of
Investors in
Exhibit A
(which aggregate amount for all Investors
together shall be 21,500,000 shares of Common Stock and shall collectively be
referred to herein as the
Common Shares
or the
Securities
) for a an aggregate
purchase price of $3,000,000.
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Investors agree as follows:
ARTICLE I
DEFINITIONS
1.1
Definitions
. In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated:
Advisory Fee
means the sum of $250,000 payable by the
Company to Phoenix out of the proceeds of the offering immediately following
Closing.
Affiliate
means any Person that, directly
or indirectly through one or more intermediaries, controls or is controlled by
or is under common control with a Person, as such terms are used in and
construed under Rule 144 under the Securities Act.
Agreement
has the meaning set forth in the
Preamble.
Best Efforts
means the reasonable efforts that a prudent
person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as practical;
provided, however
, that an obligation to use
Best Efforts under this Agreement does not require the Company to dispose of or
make any change to its business or expend any material funds.
Business Day
means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.
Closing
means the closing of the purchase
and sale of the Securities pursuant to
Section 2.1
.
Closing Date
means the date and time of
the Closing.
Closing Market Price
has the meaning set forth in
Section
6.1(e)
.
Closing Price
means, for any date, the
closing price per share of the Common Stock for such date (or the nearest
preceding date) on the primary Eligible Market or exchange or quotation system
on which the Common Stock is then listed or quoted.
Company
has the meaning set forth in the Preamble.
Company Counsel
means Davis Wright
Tremaine LLP, counsel to the Company.
Common Shares
means an aggregate of
21,500,000 shares of Common Stock.
Common Stock
means the common stock of the
Company, par value $0.01 per share.
Contingent Obligation
has the meaning set
forth in
Section 3.1(z)
.
Convertible Securities
means any stock or
securities (other than Options) convertible into or exercisable or exchangeable
for Common Stock.
Disclosure Materials
has the meaning set
forth in
Section 3.1(g)
.
Effective Date
means the date that the
Registration Statement is first declared effective by the SEC.
Effectiveness Period
has the meaning set
forth in
Section 6.1(c)
.
8-K Filing
has the meaning set forth in
Section
4.5
.
Eligible Market
means any of the New York
Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market,
the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board.
Environmental Laws
has the meaning set
forth in
Section 3.1(cc)
.
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Event
has the meaning set forth in
Section 6.1(e)
.
Event Payments
has the meaning set forth
in
Section 6.1(e)
.
Exchange Act
means the Securities Exchange
Act of 1934, as amended.
Excluded Events
has the meaning set forth
in
Section 6.1(e)(ii)
.
Excluded Investors
means Phoenix and its
Affiliates, including Phoenix Venture Fund LLC and Phoenix Enterprises LLC.
Executive
Management Position
means any of the following: Chairman of
the Board, Chief Executive Officer, Chief Financial Officer, Chief Legal
Officer, Chief Technology Officer, President, Secretary, and Vice President,
Product Development.
Filing Date
means 60 days after the
Closing Date.
GAAP
has the meaning set forth in
Section
3.1(g)
.
Hazardous Materials
has the meaning set
forth in
Section 3.1(cc)
.
Indebtedness
has the meaning set forth in
Section
3.1(z)
.
Indemnified Party
has the meaning set
forth in
Section 6.4(b)
.
Indemnifying Party
has the meaning set
forth in
Section 6.4(b)
.
Insolvent
has the meaning set forth in
Section
3.1(h)
.
Intellectual Property Rights
has the
meaning set forth in
Section 3.1(s)
.
Investor
has the meaning set forth in the
Preamble.
Legal
Counsel
has the meaning set forth in
Section 6.1(c)
.
Lien
means any lien, charge, claim,
security interest, encumbrance, right of first refusal or other restriction.
Losses
means any and all losses, claims,
damages, liabilities, settlement costs and expenses, including, without
limitation, reasonable attorneys fees.
Major
Subsidiary
means any direct or indirect subsidiary of the Company through which the
Company conducts a material portion of its operations, which holds a material
portion of assets, or which is the obligor on any material amount of
Indebtedness.
Material Adverse Effect
means (i) a
material adverse effect on the results of operations, assets, business,
financial condition or prospects of the Company and the Subsidiaries, taken as
a
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whole on a consolidated
basis, or (ii) material and adverse impairment of the Companys ability to
perform its obligations under any of the Transaction Documents, provided, that
none of the following alone shall be deemed to constitute a Material Adverse
Effect: (i) changes in general business
or economic conditions, including such conditions related to the Companys
business, other than those conditions affecting the Company and its
Subsidiaries differently than or disproportionately compared with other
companies operating in the same or similar business, (ii) changes in law,
rules, regulations, orders, or other binding directives issued by any
governmental entity and not specifically directed at the Company or its
industry, or (iii) any existing fact with respect to which the Investor has
knowledge as of the date hereof.
Material Permits
has the meaning set forth
in
Section 3.1(u)
.
Options
means any outstanding rights,
warrants or options to subscribe for or purchase Common Stock or Convertible
Securities.
Person
means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, or joint
stock company.
Phoenix
means SG Phoenix Ventures LLC, the managing
member of Phoenix Venture Fund LLC.
Phoenix
Entity
has the
meaning set forth in
Section 6.2(o)
.
Phoenix
Underwriter Registration Statement
has the meaning set forth in
Section 6.2(o)
.
Phoenix
Venture
has the
meaning set forth in
Section 6.2(o)
.
Proceeding
means an action, claim, suit,
investigation or proceeding (including, without limitation, or a partial
proceeding, such as a deposition), whether commenced or threatened in writing.
Prospectus
means the prospectus included
in the Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Registrable Securities
means the Common
Shares issued or issuable pursuant to the Transaction Documents, together with
any securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing.
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Registration Statement
means each
registration statement required to be filed under Article VI, including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Regulation D
has the meaning set forth in
the recitals.
Required Effectiveness Date
means one
hundred eighty (180) days after the Closing Date.
Required
Holders
means the holders of at least a majority of the
outstanding Registrable Securities.
Rule 144
,
Rule 415
, and
Rule 424
means Rule 144, Rule 415 and Rule 424, respectively, promulgated
by the SEC pursuant to the Securities Act, as such Rules may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC
having substantially the same effect as such Rule.
SEC
has the meaning set forth in the recitals.
SEC Reports
has the meaning set forth in
Section 3.1(g)
.
Securities
has the meaning set forth in
the recitals.
Securities Act
has the meaning set forth
in the recitals.
Shares
means shares of the Companys
Common Stock.
Subsidiary
means any direct or indirect
subsidiary of the Company.
Trading Day
means (i) a day on which the
Common Stock is traded on a Trading Market (other than the OTC Bulletin Board),
or (ii) if the Common Stock is not listed on a Trading Market (other than the
OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the Pink Sheets
LLC (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
Trading Market
means whichever of the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select
Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board
on which the Common Stock is listed or quoted for trading on the date in
question.
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Transaction
Documents
means this Agreement, the schedules and exhibits
attached hereto and the Transfer Agent Instructions.
Transfer Agent
means American Stock Transfer
and Trust Company, or any successor transfer agent for the Company.
Transfer Agent Instructions
means, with
respect to the Company, the Irrevocable Transfer Agent Instructions, in the
form of
Exhibit E
, executed by the Company and delivered to and acknowledged
in writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
2.1
Closing
. Subject to the terms and conditions set forth
in this Agreement, the Company shall issue and sell to each Investor, and each
Investor shall purchase from the Company such number of Common Shares for the
aggregate price set forth opposite such Investors name on
Exhibit A
hereto under the headings Common Shares and Purchase Price,
respectively. The date and time of the
Closing and shall be 11:00 a.m., New York City Time, on the Closing Date, which
shall be a date determined by mutual agreement of the Company and Phoenix, but
in no event less than five (5) Business Days or more than twenty (20) Business
Days subsequent to the date of this Agreement.
The Closing shall take place at the offices of counsel to the Investors.
2.2
Closing
Deliveries
.
(a) At the Closing, the Company shall deliver or
cause to be delivered to each Investor the following:
(i) a
certificate executed by the Companys chief executive officer and chief
financial officer, confirming the continued truth and correctness in all
material respects (except as to those representations and warranties qualified
by materiality, as to which the confirmation shall be as to their continued
truth and correctness) as of the Closing Date of the Companys representations
and warranties made in Article III hereof;
(ii) a
certificate of the secretary of the Company, attaching a recent copy of the
certificate of incorporation, as amended, certified by the Secretary of State
of the State of Delaware and a good standing certificate dated August 17, 2007,
copies of the by-laws of the Company and resolutions of the board of directors,
which the secretary of the Company has certified as true and correct copies in
full force and effect as of the Closing;
(iii) one
or more stock certificates (or copies thereof provided by the Transfer Agent),
free and clear of all restrictive and other legends (except as expressly
provided in
Section 4.1(b)
hereof), evidencing such number of Common
Shares set forth opposite such Investors name on
Exhibit A
hereto
under the heading Common Shares, registered in the name of such Investor;
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(iv) a
legal opinion of Company Counsel, in the form of
Exhibit C
,
executed by such counsel and delivered to the Investors;
(v) duly
executed Transfer Agent Instructions acknowledged by the Companys transfer
agent;
(vi) approval
by each applicable Trading Market of an additional shares listing application
covering all of the Registrable Securities, if required by such Trading Market
(and, if applicable, evidence of conditional listing approval); and
(vii) any
consents or approvals of any Person listed on
Schedule 3.1(z)
or any
other third-party required to effect the terms and conditions of this
Agreement.
(b) At the Closing, each Investor shall deliver
or cause to be delivered to the Company the purchase price (less each Investors
proportionate share of the Investors fees and expenses described in
Section
7.2
, which shall be paid by deduction to the proceeds payable as directed
by each Investor) set forth opposite such Investors name on
Exhibit A
hereto under the heading Purchase Price in United States dollars and in
immediately available funds, by wire transfer to an account designated in
writing to such Investor by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1
Representations
and Warranties of the Company
. The
Company hereby represents and warrants to the Investors as follows (which
representations and warranties shall be deemed to apply, where appropriate, to
each Subsidiary of the Company), as of the date hereof and as of the Closing:
(a)
Major Subsidiaries
. The Company has no Major Subsidiaries other
than those listed in
Schedule 3.1(a
) hereto. Except as disclosed in
Schedule 3.1(a
)
hereto, the Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Major Subsidiary free and clear of any Lien
and all the issued and outstanding shares of capital stock or comparable equity
interest of each Major Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b)
Organization and Qualification
. Each of the Company and the Major
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite legal authority to own and use its properties
and assets and to carry on its business as currently conducted. Neither the Company nor any Major Subsidiary
is in violation of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the
Major Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be,
7
would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
(c)
Authorization; Enforcement
. The Company has the requisite corporate
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents to which
it is a party by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which it
is a party has been (or upon delivery will be) duly executed by the Company and
is, or when delivered in accordance with the terms hereof, will constitute, the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, and
(ii) the effect of rules of law governing the availability of specific
performance and other equitable remedies.
(d)
No Conflicts
. The execution, delivery and performance of
the Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not, and will not, (i) conflict with or violate any provision of the
Companys or any Major Subsidiarys certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Major Subsidiary debt or otherwise) or other
understanding to which the Company or any Major Subsidiary is a party or by which
any property or asset of the Company or any Major Subsidiary is bound, or
affected, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right would not reasonably be expected
to have a Material Adverse Effect, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or a Major Subsidiary
is subject (including, assuming the accuracy of the representations and
warranties of the Investors set forth in
Section 3.2
hereof, federal and
state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets), or by which any property or
asset of the Company or a Major Subsidiary is bound or affected, except to the
extent that such violation would not reasonably be expected to have a Material
Adverse Effect.
(e)
The Securities
. The Securities are duly authorized and, when
issued and paid for in accordance with the Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens
and will not be subject to preemptive or similar rights of stockholders (other
than those granted to the Investors under
Section 4.7
). The offer,
8
issuance and
sale of the Shares to the Investors pursuant to this Agreement are exempt from
the registration requirements of the Securities Act.
(f)
Capitalization
. The aggregate number of shares and type of
all authorized, issued and outstanding classes of capital stock, options and
other securities of the Company (whether or not presently convertible into or
exercisable or exchangeable for shares of capital stock of the Company) is set
forth in
Schedule 3.1(f)
hereto.
All outstanding shares of capital stock are duly authorized, validly
issued, fully paid and nonassessable and have been issued in compliance in all
material respects with all applicable securities laws. Except as disclosed in
Schedule 3.1(f)
hereto, the Company did not have outstanding at December 31, 2006 any other
Options, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or entered into any agreement giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth on
Schedule 3.1(f)
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) and the issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Investors) and will not
result in a right of any holder of securities to adjust the exercise,
conversion, exchange or reset price under such securities. To the knowledge of the Company, except as
disclosed in the SEC Reports and any Schedules 13D or 13G filed with the SEC
pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in
Schedule
3.1(f)
hereto, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to
acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common Stock.
(g)
SEC Reports; Financial Statements
. Except as set forth on
Schedule 3.1(g)
,
the Company has filed all reports required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12
months preceding the date hereof on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to
the expiration of any such extension and has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof. Such reports required to be filed by the
Company under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, together with any materials filed or furnished by the Company under
the Exchange Act, whether or not any such reports were required being
collectively referred to herein as the
SEC
Reports
and, together with this Agreement and the Schedules to this
Agreement, the
Disclosure Materials
. As of their respective dates, the SEC Reports
filed by the Company complied in all material respects with the requirements of
the Securities Act and the Exchange Act and the rules and regulations of the
SEC promulgated thereunder, and none of the SEC Reports, when filed by the
Company, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements
of the
9
Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (
GAAP
),
except as may be otherwise specified in such financial statements, the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP or may be condensed or summary statements, and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, year-end audit
adjustments. All material agreements to
which the Company or any Subsidiary is a party or to which the property or
assets of the Company or any Subsidiary are subject are included as part of or
identified in the SEC Reports, to the extent such agreements are required to be
included or identified pursuant to the rules and regulations of the SEC.
(h) Since the date of the latest audited
financial statements included within the SEC Reports, except as disclosed in
the SEC Reports or in
Schedule 3.1(h)
hereto, (i) there has been no
event, occurrence or development that, individually or in the aggregate, has
had or that would result in a Material Adverse Effect, (ii) the Company
has not incurred any material liabilities other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected in the
Companys financial statements pursuant to GAAP or required to be disclosed in
filings made with the SEC, (iii) the Company has not altered its method of
accounting or the changed its auditors, except as disclosed in its SEC Reports,
(iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders, in their capacities as such, or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock (except for repurchases by the Company of shares of capital
stock held by employees, officers, directors, or consultants pursuant to an
option of the Company to repurchase such shares upon the termination of
employment or services), and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock-based plans. The Company
has not taken any steps to seek protection pursuant to any bankruptcy law nor
does the Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge
of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
applicable Closing, will not be Insolvent (as defined below). For purposes of this
Section 3.1(h)
,
Insolvent
means (i) the present fair
saleable value of the Companys assets is less than the amount required to pay
the Companys total Indebtedness (as defined in
Section 3.1(z)
), (ii)
the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) the Company intends to incur or believes that it will incur
debts that would be beyond its ability to pay as such debts mature or (iv) the
Company has unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted.
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(i)
Absence of Litigation
. Except as disclosed in the SEC Reports, there
is no action, suit, claim, or Proceeding, or, to the Companys knowledge,
inquiry or investigation, before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries that could, individually or in the aggregate, have a Material
Adverse Effect.
(j)
Compliance
. Except as described in
Schedule 3.1(j)
,
neither the Company nor any Subsidiary, except in each case as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect, (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received written notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order
of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority.
(k)
Title to Assets
. The Company and the Subsidiaries own no real
property except as described in
Schedule 3.1(k)
. The Company and the Subsidiaries have good
and marketable title in all personal property owned by them that is material to
the business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for Liens that do not, individually or in the aggregate,
have or result in a Material Adverse Effect.
Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases of
which the Company and the Subsidiaries are in material compliance.
(l)
No General Solicitation; Fees
. Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agents fees, financial advisory fees, or brokers
commission (other than for persons engaged by any Investor or its investment
advisor) relating to or arising out of the issuance of the Securities pursuant
to this Agreement. The Company shall
pay, and hold each Investor harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys fees and out-of-pocket
expenses) arising in connection with any such claim for fees arising out of the
issuance of the Securities pursuant to this Agreement. The Company has not engaged any placement
agent or other agent in connection with the sale of the Securities.
(m)
Private
Placement
. Neither the Company nor
any of its Affiliates nor, any Person acting on the Companys behalf has,
directly or indirectly, at any time within the past six months, made any offer
or sale of any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption
from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Company of the Securities as
contemplated hereby or (ii) cause the offering of the Securities
11
pursuant to
the Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and regulations of
any Trading Market. The sale and
issuance of the Securities hereunder does not contravene the rules and
regulations of any Trading Market on which the Common Stock is listed or
quoted. The Company is not required to
be registered as, and is not an Affiliate of, an investment company within
the meaning of the Investment Company Act of 1940, as amended. The Company is not required to be registered
as, a United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.
(n)
Listing and Maintenance Requirements
. The Company has not, in the twelve months
preceding the date hereof, received notice (written or oral) from any Trading Market
on which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements
of such Trading Market. The Company is,
and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.
(o)
Registration Rights
. Except as described in
Schedule 3.1(o)
,
the Company has not granted or agreed to grant to any Person any rights
(including piggy-back registration rights) to have any securities of the
Company registered with the SEC or any other governmental authority that have
not been satisfied or waived.
(p)
Application of Takeover Protections
. Except as described in
Schedule 3.1(p)
,
there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Companys charter documents or the laws of
its state of incorporation that is or could become applicable to any of the
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including, without limitation, as a result of the Companys issuance of the Securities
and the Investors ownership of the Securities.
(q)
Disclosure
. The Company confirms that neither it nor any
officers, directors or Affiliates, has provided any of the Investors (other
than Excluded Investors) or their agents or counsel with any information that
constitutes or might constitute material, nonpublic information (other than the
existence and terms of the issuance of Securities, as contemplated by this
Agreement). The Company confirms that
neither it nor any officers, directors or Affiliates, has provided any of the
Investors (other than Excluded Investors) or their agents or counsel with any
information that constitutes or might constitute material, nonpublic
information (other than the existence and terms of the issuance of Securities,
as contemplated by this Agreement). The
Company understands and confirms that each of the Investors will rely on the
foregoing representations in effecting transactions in securities of the
Company (other than Excluded Investors).
All disclosure provided by the Company to the Investors regarding the
Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on the behalf of the Company are
true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
12
order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. To the
Companys knowledge, except for the transactions contemplated by this
Agreement, no event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, operations or financial condition, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no
Investor makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those set forth in the
Transaction Documents.
(r)
Acknowledgment Regarding Investors
Purchase of Securities
. Based upon
the assumption that the transactions contemplated by this Agreement are
consummated in all material respects in conformity with the Transaction
Documents, the Company acknowledges and agrees that each of the Investors is
acting solely in the capacity of an arms length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby. The Company further
acknowledges that no Investor is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Investor or any of
their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Investors purchase of the Securities. The Company further represents to each
Investor that the Companys decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(s)
Patents and Trademarks
. The Company and its Subsidiaries own, or
possess adequate rights or licenses to use, all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights (
Intellectual Property Rights
) necessary to
conduct their respective businesses now conducted. Except as set forth in
Schedule 3.1(s)
,
none of the Companys Intellectual Property Rights have expired or terminated,
or are expected to expire or terminate, within three years from the date of
this Agreement. The Company does not
have any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others.
Except as set forth in
Schedule 3.1(s)
, the Company does not have
any knowledge of any infringement by others of Intellectual Property Rights of
the Company or its Subsidiaries. Except
as disclosed in the SEC Reports, there is no claim, action or proceeding being
made or brought, or to the knowledge of the Company, being threatened, against
the Company or its Subsidiaries regarding its Intellectual Property Rights.
(t)
Insurance
. The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses and
locations in which the Company and the Subsidiaries are engaged.
13
(u)
Regulatory Permits
. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports (
Material Permits
), except where the failure to possess such
permits does not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect, and neither the Company nor
any Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any Material Permit.
(v)
Transactions With Affiliates and Employees
. Except as set forth or incorporated by
reference in the Companys SEC Reports, none of the officers, directors or
employees of the Company is presently a party to any transaction that would be
required to be reported on Form 10-K with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the Companys knowledge, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(w)
Internal Accounting Controls
. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with managements
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with managements
general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x)
Sarbanes-Oxley
Act
. The Company is in compliance in all material respects with applicable
requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and
regulations promulgated by the SEC thereunder, except where such noncompliance
would not have, individually or in the aggregate, a Material Adverse Effect.
(y)
Foreign Corrupt Practices
. Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent, employee or
other Person acting on behalf of the Company or any of its Subsidiaries has, in
the course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or employee.
14
(z)
Indebtedness
. Except as disclosed in
Schedule 3.1(z)
,
neither the Company nor any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) is in violation of any term of or in
default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iii) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Companys officers, has or is
expected to have a Material Adverse Effect.
Schedule 3.1(z)
provides a detailed description of the material
terms of any such outstanding Indebtedness.
For purposes of this Agreement:
(x)
Indebtedness
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase
price of property or services (other than trade payables entered into in the
ordinary course of business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments, (D)
all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above; (y) Contingent
Obligation means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto; and (z) Person means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
(aa)
Employee Relations
. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company believes
that its relations with its employees are as disclosed in the SEC Reports. Except as disclosed in the SEC Reports,
during the period covered by the SEC Reports, no executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the Securities
Act) has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such officers
employment with the Company or any such Subsidiary. To the knowledge of the Company or any such
15
Subsidiary, no
executive officer of the Company or any of its Subsidiaries is in violation of
any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any such
Subsidiary to any liability with respect to any of the foregoing matters.
(bb)
Labor
Matters
. The Company and its Subsidiaries are in
compliance in all material respects with all federal, state, local and foreign
laws and regulations respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(cc)
Environmental
Laws
. The Company and its Subsidiaries
(i) are in compliance in all material respects with any and all Environmental
Laws (as hereinafter defined), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance in all material
respects with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply would be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term Environmental
Laws means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively,
Hazardous Materials
) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(dd)
Subsidiary
Rights
. Except as set forth in
Schedule
3.1(dd)
, the Company or one of its Subsidiaries has the unrestricted right
to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as
owned by the Company or such Subsidiary.
(ee)
Tax
Status.
The Company and each of its
Subsidiaries (i) has made or filed all foreign, federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company know of
no basis for any such claim.
16
(ff)
Right of First Offer
. The Company has not granted to any Person any
rights of first offer or rights of first refusal with respect to the provision
or obtaining of any debt or equity financing, including, but not limited to,
any rights to provide additional financing currently available under the credit
facilities described on
Schedule 3.1(z)
hereto, except for such rights
of first offer or rights of first refusal that by their terms have expired or
terminated and are no longer effective as of the Closing Date.
3.2
Representations
and Warranties of the Investors
.
Each Investor hereby, as to itself only and for no other Investor,
represents and warrants to the Company as follows, as of the date hereof and as
of the Closing:
(a)
Organization; Authority
. Such Investor is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, partnership or other power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such
Investor of the Securities hereunder has been duly authorized by all necessary
corporate, partnership or other action on the part of such Investor. This Agreement has been duly executed and
delivered by such Investor and constitutes the valid and binding obligation of
such Investor, enforceable against it in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors rights generally, and (ii) the effect of rules of law governing
the availability of specific performance and other equitable remedies.
(b)
No Public Sale or Distribution
. Such Investor is acquiring the Common Shares
in the ordinary course of business for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under the Securities Act or under
an exemption from such registration and in compliance with applicable federal
and state securities laws, and such Investor does not have a present arrangement
to effect any distribution of the Securities to or through any person or
entity;
provided
,
however
, that by making the representations
herein, such Investor does not agree to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
(c)
Investor Status
. At the time such Investor was offered the
Securities, it was, and at the date hereof it is, an accredited investor as
defined in Rule 501(a) under the Securities Act or a qualified institutional
buyer as defined in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker
dealer registered under Section 15(a) of the Exchange Act, or a member of the
NASD, Inc. or an entity engaged in the business of being a broker dealer. Except as otherwise disclosed in writing to
the Company on Exhibit B-2 (attached hereto) on or prior to the date of this
Agreement, such Investor is not affiliated with any broker dealer registered
under Section 15(a) of the Exchange Act, or a member of the NASD, Inc. or an
entity engaged in the business of being a broker dealer.
17
(d)
Experience of Such Investor
. Such Investor, either alone or together with
its representatives has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.
Such Investor understands that it must bear the economic risk of this
investment in the Securities indefinitely, and is able to bear such risk and is
able to afford a complete loss of such investment.
(e)
Access to Information
. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded: (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information (other than material non-public
information) about the Company and the Major Subsidiaries and their respective
financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor
any other investigation conducted by or on behalf of such Investor or its representatives
or counsel shall modify, amend or affect such Investors right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Companys
representations and warranties contained in the Transaction Documents. Such Investor acknowledges receipt of copies
of the SEC Reports.
(f)
No Governmental Review
. Such Investor understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(g)
No
Conflicts
. The execution, delivery
and performance by such Investor of this Agreement and the consummation by such
Investor of the transactions contemplated hereby will not (i) result in a
violation of the organizational documents of such Investor or
(ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Investor is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such
Investor, except in the case of clauses (ii) and (iii) above, for such that are
not material and do not otherwise affect the ability of such Investor to
consummate the transactions contemplated hereby.
(h)
Restricted Securities
. The Investors understand that the Securities
are characterized as restricted securities under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act
only in certain limited circumstances.
18
(i)
Legends
. It is understood that, except as provided in
Section
4.1(b)
of this Agreement, certificates evidencing such Securities may bear
the legend set forth in
Section 4.1(b)
.
(j)
No Legal, Tax or Investment Advice
. Such Investor understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company
to the Investor in connection with the purchase of the Securities constitutes
legal, tax or investment advice. Such
Investor has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions
.
(a) The Investors covenant that the Securities
will only be disposed of pursuant to an effective registration statement under,
and in compliance with the requirements of, the Securities Act or pursuant to
an available exemption from the registration requirements of the Securities
Act, and in compliance with any applicable state securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or to the Company,
or pursuant to Rule 144(k), the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the Company
hereby consents to and agrees to register on the books of the Company and with
its Transfer Agent, without any such legal opinion, except to the extent that
the transfer agent requests such legal opinion, any transfer of Securities by
an Investor to an Affiliate of such Investor, provided that the transferee
certifies to the Company that it is an accredited investor as defined in Rule
501(a) under the Securities Act and provided that such Affiliate does not
request any removal of any existing legends on any certificate evidencing the
Securities.
(b) The Investors agree to the imprinting, so
long as is required by this
Section 4.1(b
), of the following legend
on any certificate evidencing any of the Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE
SECURITIES ACT
), OR ANY
APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
19
Certificates
evidencing Securities shall not be required to contain such legend or any other
legend (i) while a registration statement (including the Registration
Statement) covering the resale of the Securities is effective under the
Securities Act, (ii) following any sale of such Securities pursuant to Rule 144
if the holder provides the Company with a legal
opinion (and the documents upon which the legal opinion is based) reasonably
acceptable to the Company to the effect that the Securities can be sold under
Rule 144, (iii) if the holder provides the Company with a legal opinion (and
the documents upon which the legal opinion is based) reasonably acceptable to the Company to the
effect that the Securities are eligible for sale under Rule 144(k), or (iv) if
the holder provides the Company with a legal opinion (and the documents upon
which the legal opinion is based) reasonably acceptable to the Company to the
effect that the legend is not required under applicable requirements of the
Securities Act (including controlling judicial interpretations and
pronouncements issued by the Staff of the SEC).
The Company shall cause its counsel to issue the legal opinion included
in the Transfer Agent Instructions to the Transfer Agent on the Effective
Date. Following the Effective Date or at
such earlier time as a legend is no longer required for certain Securities, the
Company will no later than three Trading Days following the delivery by an
Investor to the Company or the Transfer Agent of (i) a legended certificate
representing such Securities, and (ii) an opinion of counsel to the extent
required by
Section 4.1(a)
, deliver or cause to be delivered to such
Investor a certificate representing such Securities that is free from all
restrictive and other legends. The
Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section
4.1(b)
.
If within three Trading Days after the
Companys receipt of a legended certificate and the other documents as
specified in Clauses (i) and (ii) of the paragraph immediately above, the
Company shall fail to issue and deliver to such Investor a certificate
representing such Securities that is free from all restrictive and other legends,
and if on or after such Trading Day the Investor purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Investor of shares of Common Stock that the Investor anticipated
receiving from the Company without any restrictive legend (the
Covering Shares
), then the Company shall,
within three Trading Days after the Investors request, pay cash to the
Investor in an amount equal to the excess (if any) of the Investors total
purchase price (including brokerage commissions, if any) for the Covering
Shares, over the product of (A) the number of Covering Shares, times (B) the
closing bid price on the date of delivery of such certificate and the other
documents as specified in Clauses (i) and (ii) of the paragraph immediately
above.
(c)
The Company will not object to
and shall permit (except as prohibited by law) an Investor to pledge or grant a
security interest in some or all of the Securities in connection with a bona
fide margin agreement or other loan or financing arrangement secured by the
Securities, and if required under the terms of such agreement, loan or
arrangement, the Company will not object to and shall permit (except as
prohibited by law) such Investor to transfer pledged or secured Securities to
the pledgees or secured parties. Except
as required by law, such a pledge or transfer shall not be subject to approval
of the Company, no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith, and no notice shall be required of such
pledge. Each Investor acknowledges that
the Company shall not be responsible for any pledges relating to, or the grant
of any security interest in, any of the Securities or for any agreement,
understanding or arrangement between any Investor and its pledgee or secured
party. At the appropriate Investors
expense, the
20
Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Provided that
the Company is in compliance with the terms of this
Section 4.1(c)
, the
Companys indemnification obligations pursuant to
Section 6.4
shall not
extend to any Proceeding or Losses arising out of or related to this
Section
4.1(c)
.
4.2
Furnishing
of Information
. Until the date that
any Investor owning Common Shares may sell all of them under Rule 144(k) of the
Securities Act (or any successor provision), the Company covenants to use its
Best Efforts to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. The Company further covenants that it will
take such further action as any holder of Securities may reasonably request to
satisfy the provisions of this
Section 4.2
.
4.3
Integration
. The Company shall not, and shall use its Best
Efforts to ensure that no Affiliate thereof shall sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Investors or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of any Trading Market.
4.4
Reservation
of Securities
. The Company shall
maintain a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may be required to
fulfill its obligations to issue such Shares under the Transaction
Documents. In the event that at any time
the then authorized shares of Common Stock are insufficient for the Company to
satisfy its obligations to issue such Shares under the Transaction Documents,
the Company shall promptly take such actions as may be required to increase the
number of authorized shares.
4.5
Securities
Laws Disclosure; Publicity
. The
Company shall, at or before 5:30 p.m., New York time, on the Signing Date, or
at or before 5:30 p.m., New York time, on the next Business Day following the
Signing Date, issue a press release reasonably acceptable to the Investors
disclosing all material terms of the transactions contemplated hereby. The Company shall, at or before 5:30 p.m.,
New York time, on the Signing Date, or at or before 5:30 p.m., New York time,
on the next Business Day following the Signing Date, file a Current Report on
Form 8-K with the SEC (the
8-K Filing
)
describing the terms of the transactions contemplated by the Transaction
Documents, in the form required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices required by the SEC or applicable law with respect to the
transactions contemplated hereby and provide copies thereof to the Investors
promptly after filing. Except as herein
provided, the Company shall not publicly disclose the name of any Investor, or
include the name of any Investor in any press release without the prior written
consent of such Investor, unless otherwise required by law. The Company shall not, and shall cause each
of its Subsidiaries and its and each of their respective officers, directors,
employees and agents not to, provide any Investor with any material
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