EXHIBIT 1.1
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COMMON STOCK UNDERWRITING AGREEMENT
BETWEEN
RAMIUS SECURITIES, LLC
AND
ONYX SOFTWARE CORPORATION
JANUARY 4, 2001
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FUEL(TM) A PROVISIONAL PATENT APPLICATION HAS BEEN FILED
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TABLE OF CONTENTS
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I. DEFINITIONS............................................................................................................ 1
II. SALE OF COMMON STOCK.................................................................................................... 6
2.1 Underwriting and Greenshoe................................................................................... 6
2.2 Limitations on Investment Amount............................................................................. 6
2.3 Mechanics of Notification.................................................................................... 7
2.4 Closings and Settlements..................................................................................... 7
2.5 Termination, Suspension and Modification of Underwriting Obligation.......................................... 8
2.6 Purchase Option.............................................................................................. 9
III. CONDITIONS PRECEDENT.................................................................................................... 11
3.1 Conditions Precedent to the Obligation of the Underwriter to Sell Common Stock Pursuant to a Capital Demand
Notice....................................................................................................... 11
3.2 Due Diligence Review......................................................................................... 13
3.3 Occurrence of Material Event................................................................................. 13
IV. REPRESENTATIONS AND WARRANTIES OF UNDERWRITER........................................................................... 14
4.1 Authorization; Enforcement................................................................................... 14
4.2 Not an Affiliate............................................................................................. 14
4.3 Organization and Standing.................................................................................... 14
4.4 Absence of Conflicts......................................................................................... 14
4.5 Broker-Dealer................................................................................................ 14
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................................... 14
5.1 Corporate Organization....................................................................................... 14
5.2 Capitalization and Indebtedness.............................................................................. 15
5.3 Subsidiaries................................................................................................. 15
5.4 Authorization; Enforcement; Compliance with Other Instruments................................................ 16
5.5 No Conflicts................................................................................................. 16
5.6 Compliance with Applicable Law; Regulatory Permits........................................................... 17
5.7 Absence of Litigation........................................................................................ 17
5.8 SEC Documents, Financial Statements.......................................................................... 17
5.9 No Undisclosed or Contingent Liabilities..................................................................... 18
5.10 Employment Matters; ERISA Matters............................................................................ 18
5.11 Absence of Certain Changes................................................................................... 19
5.12 Environmental Matters........................................................................................ 20
5.13 Material Contracts........................................................................................... 21
5.14 Properties; Encumbrances..................................................................................... 21
5.15 Insurance.................................................................................................... 21
5.16 Material Disclosure.......................................................................................... 21
5.17 Intellectual Property........................................................................................ 22
5.18 [Intentionally Omitted]...................................................................................... 23
5.19 [Intentionally Omitted]...................................................................................... 23
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5.20 Brokers...................................................................................................... 23
5.21 Acknowledgment Regarding the Underwriter's Sale of the Common Stock.......................................... 23
5.22 Certain Transactions......................................................................................... 24
5.23 Securities Act............................................................................................... 24
5.24 Foreign Corrupt Practices.................................................................................... 24
5.25 Investment Company Status.................................................................................... 24
VI. COVENANTS................................................................................................................ 24
6.1 [Intentionally Omitted]...................................................................................... 24
6.2 Reservation of Common Stock.................................................................................. 24
6.3 Listing of Common Stock...................................................................................... 25
6.4 Exchange Act Registration.................................................................................... 25
6.5 Legends...................................................................................................... 25
6.6 Corporate Existence.......................................................................................... 25
6.7 Additional SEC Documents..................................................................................... 25
6.8 Registration Requirements.................................................................................... 25
6.9 Registration Procedure....................................................................................... 26
6.10 Information by Underwriter................................................................................... 27
6.11 No Other Similar Agreements.................................................................................. 27
6.12 No Short Selling............................................................................................. 27
VII. ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION..................................................................... 27
7.1 Successors and Assigns....................................................................................... 27
7.2 Entire Agreement; Amendment.................................................................................. 27
7.3 Publicity.................................................................................................... 27
7.4 Termination.................................................................................................. 28
VIII. NOTICES; COSTS AND EXPENSES.............................................................................................. 29
8.1 Notices...................................................................................................... 29
8.2 Costs and Expenses........................................................................................... 30
IX. INDEMNIFICATION AND CONTRIBUTION......................................................................................... 31
9.1 Indemnification.............................................................................................. 31
9.2 Contribution................................................................................................. 33
X. GOVERNING LAW; MISCELLANEOUS............................................................................................. 33
10.1 Governing Law................................................................................................ 33
10.2 Counterparts................................................................................................. 33
10.3 Headings..................................................................................................... 33
10.4 Severability................................................................................................. 33
10.5 Survival..................................................................................................... 34
10.6 No Third Party Beneficiaries................................................................................. 34
10.7 Further Assurances........................................................................................... 34
10.8 Construction................................................................................................. 34
10.9 Equitable Relief............................................................................................. 34
10.10 Consent to Jurisdiction...................................................................................... 34
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CROSS REFERENCES
Defined Term
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"Affiliate" Section 1
"Agreement" Preamble
"Articles of Incorporation" Section 5.2(a)
"Blue Sky laws" Section 6.8
"Block Trades" Section 1
"Blocking Event" Section 2.5(a)(i)
"Bylaws" Section 5.2(a)
"Business Intellectual Property" Section 1
"Business Trade Secrets" Section 5.18(j)
"Capital Demand Notice" Section 1
"Capital Stock" Section 1
"Claims" Section 9.1(a)
"Closing Date" Section 1
"Code" Section 5.11
"Commission" Section 2.4(d)
"Commitment Period" Section 1
"Common Stock" Recitals
"Company" Preamble
"Company Assets" Section 5.15
"Company Permits" Section 5.6
"Condition Precedent Date" Section 3.1
"Deemed Receipt" Section 3.3
"Designated Officer" Section 1
"DTC" Section 2.4(b)
"Due Diligence Materials" Section 1
"Due Diligence Period" Section 1
"Due Diligence Request List" Section 1
"DWAC" Section 2.4(b)
"Effective Date" Section 1
"Environmental Laws" Section 5.13
"ERISA" Section 5.11
"Exchange Act" Section 1
"GAAP" Section 5.8(a)
"Governmental Entity" Section 1
"Floor Price" Section 1
"Hazardous Substance" Section 5.13
"Indemnified Damages" Section 9.1(a)
"Indemnified Party" Section 9.1(b)
"Indemnified Person" Section 9.1(a)
"Intellectual Property" Section 1
"Intellectual Property Contracts" Section 1
"Intellectual Property Rights" Section 5.18
"Knowledge" Section 1
"Licensed Intellectual Property" Section 1
"Liens" Section 5.15
"Material Adverse Effect" Section 1
"Material Contracts" Section 5.14(a)
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"Maximum Draw Down Amount" Section 1
"Minimum Draw Down Amount" Section 1
"Minimum Share Amount" Section 1
"NASD" Section 3.1(f)
"Notice" Section 6.9(e)
"Notice of Blocking Period" Section 3.3
"Organic Change" Section 2.6(b)(iii)
"Owned Intellectual Property" Section 1
"Permitted Transferee" Section 7.1
"Person" Section 1
"Plans" Section 1
"Preferred Stock" Section 5.2(a)
"Principal Market" Section 1
"Prospectus" Section 1
"Purchase Option" Section 2.6(a)(i)
"Purchase Option Issuance Date" Section 1
"Purchase Option Exercise Price" Section 1
"Purchase Option Exercise Date" Section 1
"Purchase Option Notice" Section 2.6(a)(ii)
"Purchase Option Share Amount" Section 1
"Qualified Daily Trading Limit" Section 1
"Registered" Section 1
"Registrable Securities" Section 1
"Registration Statement" Section 1
"Releases" Section 5.13
"SEC" Section 1
"SEC Documents" Section 5.8
"SEC Filings" Section 1
"Securities Act" Recitals
"Selling Period" Section 1
"Selling Period Obligation" Section 1
"Settlement" Section 1
"Settlement Date" Section 1
"Subsidiary" Section 5.3
"Suit" Section 5.18(c)
"Tax Return" Section 1
"Taxes" Section 1
"Trading Day" Section 1
"Transfer Agent" Section 1
"Underwriter" Preamble
"Underwriter's Clearing Broker" Section 1
"Underwriting Price" Section 1
"Underwriter Sales Notice" Section 2.3(b)
"Violations" Section 9.1(a)
"VWAP" Section 1
"WARN" Section 5.11
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COMMON STOCK UNDERWRITING AGREEMENT
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COMMON STOCK UNDERWRITING AGREEMENT dated as of January 4, 2001 (the
"Agreement"), between Ramius Securities, LLC, a limited liability company
organized and existing under the laws of the State of Delaware (the
"Underwriter"), and Onyx Software Corporation, a corporation organized and
existing under the laws of the State of Washington (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company may elect from time to time to issue and sell through the
Underwriter up to $30 million of the Company's Common Stock, $.01 par value per
share (the "Common Stock");
NOW, THEREFORE, the parties hereto agree as follows:
I. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall mean, with respect to a specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such specified Person.
"Agreement" shall mean this Common Stock Underwriting Agreement dated
as of January 4, 2001 between the Underwriter and the Company.
"Block Trades" shall mean block trades greater than 50,000 shares.
"Blocking Event" shall mean an event described in Subsection
2.5(a)(i), (ii), (iii), (iv), (v) or (vi).
"Business Intellectual Property" shall mean the Owned Intellectual
Property and the Licensed Intellectual Property.
"Capital Demand Notice" shall mean the written notice, in the form
attached hereto as Exhibit 2.3(a), delivered by a Designated Officer of the
Company to the Underwriter on any Trading Day during the Commitment Period
pursuant to Section 2.3.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
any and all equivalent ownership interests in a Person (other than a
corporation).
"Closing Date" shall mean, with respect to each sale of Common Stock
subject to the conditions contained herein, each Trading Day that the
Underwriter delivers an Underwriter Sales Notice to the Company and the date on
which the Underwriter delivers a Purchase Option Notice to the Company.
"Commission" shall have the meaning set forth in Section 2.4(d).
"Commitment Period" shall mean the period commencing on the date
hereof and expiring on the earliest to occur of (a) the election by the Company
to terminate the Underwriter's obligation to
sell, as the Company's Underwriter, on a best efforts basis, Common Stock, (b)
the election by the Underwriter to terminate such obligation to sell pursuant to
Section 7.4 hereof, (c) the date occurring on the two year anniversary of the
date hereof or (d) the date that the Underwriter has sold an aggregate of $30
million of Common Stock pursuant to Capital Demand Notices (without regard to
the Purchase Option).
"Common Stock" shall mean the common stock of the Company, $.01 par
value per share.
"Company" shall mean Onyx Software Corporation, a corporation
organized and existing under the laws of the State of Washington.
"Deemed Receipt" shall have the meaning set forth in Section 3.3.
"Designated Officer" shall mean the Chief Executive Officer, the
President, the General Counsel or the Chief Financial Officer of the Company or
such other person as designated by any of them in writing.
"DTC" shall mean The Depository Trust Company.
"Due Diligence Materials" shall have the meaning set forth in Section
3.2.
"Due Diligence Period" shall mean (i) with respect to the first
Capital Demand Notice delivered by the Company hereunder, the period commencing
on the Trading Day that the Company delivers or makes available all of the Due
Diligence Materials and ending on the seventh (7th) Trading Day thereafter or
(ii) with respect to each subsequent Capital Demand Notice, the period
commencing on the Trading Day that the Company delivers or makes available the
Due Diligence Materials and ending on the later of (x) the second (2nd) Trading
Day thereafter or (y) if there have been more than forty-five (45) days since
the end of the immediately preceding Selling Period, the fifth (5th) Trading Day
after the beginning of such Due Diligence Period.
"Due Diligence Request List" shall mean (i) with respect to the
initial due diligence review conducted by the Underwriter, its advisors and
representatives, the form of initial due diligence request list previously
delivered to the Company by the Underwriter or (ii) with respect to subsequent
due diligence reviews conducted by the Underwriter, its advisors and
representatives, the form of subsequent due diligence request lists delivered to
the Company by the Underwriter pursuant to Section 3.2 hereof.
"DWAC" shall mean the Deposit and Withdrawal at Custodian system.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Floor Price" shall be set by the Company in its sole discretion in
each Capital Demand Notice and such Floor Price may be different in each Capital
Demand Notice; provided, however, that the Floor Price may not be less than the
minimum bid price required to maintain listing on the Nasdaq SmallCap Market.
"Governmental Entity" shall mean any federal, state, local or foreign
legislative body, court, government, department or instrumentality, or
governmental, administrative or regulatory authority or agency.
"Intellectual Property" shall mean all foreign and domestic (i)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade
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dress, assumed names, fictitious names, trade names, and other indicia of
origin, all applications and registration for the foregoing, and all goodwill
associated therewith and symbolized thereby, including all extensions,
modifications and renewals of same (collectively, "Trademarks"); (ii)
inventions, discoveries and ideas, whether patentable or not, and all patents,
registrations, and applications therefor, including divisions, continuations,
continuations-in-part and renewal applications, and including renewals,
extensions and reissues (collectively, "Patents"); (iii) confidential and
proprietary information, trade secrets and know-how, including processes,
schematics, formulae, drawings, prototypes, models, designs and customer lists
(collectively, "Trade Secrets"); (iv) published and unpublished works of
authorship, whether copyrightable or not (including without limitation databases
and other compilations of information), copyrights therein and thereto, and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof (collectively, "Copyrights"); and (v) all
other intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including rights to recover for past, present
and future violations thereof (collectively, "Other Proprietary Rights").
"Intellectual Property Contracts" shall mean all agreements concerning
the Business Intellectual Property, including without limitation agreements
granting the Company rights to use the Licensed Intellectual Property,
agreements granting rights to use Owned Intellectual Property, confidentiality
agreements, Trademark coexistence agreements, Trademark consent agreements and
nonassertion agreements.
"Knowledge" shall mean the actual or constructive awareness or
understanding of the executive officers of the Company or the Underwriter after
diligent inquiry.
"Licensed Intellectual Property" shall mean the Intellectual Property
rights that the Company is licensed or otherwise permitted by other Persons to
use.
"Material Adverse Effect" shall mean any material adverse effect on
(i) the business, operations, properties, conditions (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole, or
(ii) the ability of the Company to enter into and perform its obligations under
this Agreement and under the agreements or instruments to be entered into or
filed in connection herewith or therewith.
"Maximum Draw Down Amount" shall mean the maximum dollar amount the
Underwriter may sell, as the Company's Underwriter, on a best efforts basis, of
shares of Common Stock pursuant to a Capital Demand Notice, which number shall
be equal to 110% of the Minimum Draw Down Amount specified in such Capital
Demand Notice.
"Minimum Draw Down Amount" shall mean the minimum dollar amount the
Underwriter is obligated to sell in shares of Common Stock pursuant to a Capital
Demand Notice; provided, however, that the Minimum Draw Down Amount shall be
subject to the limitations in Sections 2.1 and 2.2.
"Minimum Share Amount" shall mean the quotient of the Minimum Draw
Down Amount divided by the Underwriting Price.
"Notice of Blocking Period" shall mean the notice delivered by the
Company to the Underwriter pursuant to Section 3.3, in the form attached hereto
as Exhibit 3.3.
"Owned Intellectual Property" shall mean Intellectual Property owned
by the Company.
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"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or subdivision thereof.
"Plans" means every employee benefit plan (whether or not subject to
ERISA), including, but not limited to, each retirement, pension, savings, bonus,
stock purchase, profit sharing, stock option, deferred compensation, severance
or termination pay, insurance, death, medical, hospital, dental, vision care,
drug, sick leave, disability, salary continuation, vacation, incentive or other
compensation plan or arrangement or other employee benefit for the benefit of
employees or former employees (or dependents or beneficiaries thereof) of the
Company (or as to which the Company may otherwise have any liability (whether
actual or contingent), whether funded, insured or self-funded or whether written
or oral, maintained, contributed to or required to be contributed to by the
Company or any of member of its controlled group (determined in accordance with
Section 4001(a)(14) of ERISA).
"Principal Market" shall mean the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market, whichever is at the time or becomes the principal trading exchange or
market for the Common Stock.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any Prospectus supplement, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.
"Purchase Option Issuance Date" shall mean the date hereof.
"Purchase Option Exercise Price" shall mean $12.4875 subject to
adjustment pursuant to Section 2.6(b).
"Purchase Option Expiration Date" shall mean the earliest to occur of
(i) the second anniversary of the Purchase Option Issuance Date and (ii) the
exercise in full of the Purchase Option.
"Purchase Option Share Amount" shall mean that number of shares
determined by dividing $300,000 by the Purchase Option Exercise Price, subject
to adjustment pursuant to Section 2.6(b).
"Qualified Daily Trading Limit" shall mean the lesser of (a) the
Minimum Draw Down Amount divided by the number of trading days in the Selling
Period, and (b) 10% of the dollar trading volume of Common Stock (excluding
Block Trades) traded on each Trading Day of any Selling Period that trade at or
above the Floor Price, as reported by Bloomberg Financial LP using the AQR
function; provided, that the Qualified Daily Trading Limit shall be zero for any
Trading Day that the VWAP is below the Floor Price.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing an appropriate registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registered" shall mean issued, registered, renewed or the subject of
a pending application.
"Registrable Securities" shall mean any shares of Common Stock issued
or issuable pursuant to this Agreement (including shares of Common Stock
issuable in connection with the exercise of the Purchase Option).
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"Registration Statement" shall mean a registration statement of the
Company relating to Common Stock issuable pursuant to this Agreement (including
shares of Common Stock issuable in connection with the exercise of the Purchase
Option), as amended or supplemented from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Filings" shall mean the Company's Form 10-K for the fiscal year
ended December 31, 1999, its Form 10-Q for the fiscal quarters ended March 31,
2000, June 30, 2000 and September 30, 2000, its Forms 8-K filed with the SEC on
November 11, 2000, October 23, 2000, July 17, 2000, and May 1, 2000, and all
other filings made by the Company after the date hereof pursuant to the Exchange
Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Selling Period" shall mean the period commencing at the opening of
the first (1st) Trading Day following the expiration of the Due Diligence Period
and ending at the closing of the tenth (10th) Trading Day thereafter.
"Selling Period Obligation" shall mean, during any Selling Period, the
lesser of (i) the Minimum Draw Down Amount and (ii) the sum of the Qualified
Daily Trading Limit for each Trading Day during such Selling Period; provided,
however, that the Selling Period Obligation may be deemed to be zero, at the
Underwriter's sole option, if the VWAP shall be below the Floor Price for five
consecutive Trading Days during such Selling Period; provided further, that the
Underwriter's obligation to sell shares of Common Stock pursuant to a Capital
Demand Notice shall be null and void if the Selling Period Obligation is less
than $100,000.
"Settlement" shall mean the delivery, on the Settlement Date, of the
shares of the Company's Common Stock into the Company's DTC account.
"Settlement Date" shall mean, with respect to each purchase and sale
of Common Stock, subject to the conditions contained herein, the Trading Day no
later than three days (or such lesser time period as is mandated under "regular
ways" settlement on the Principal Market) following each Closing Date.
"Significant Subsidiaries" means any subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Subsidiaries" means the subsidiaries of the Company, each of which is
listed on Schedule 5.3(a).
"Tax Return" shall mean any report, return, information statement or
other information required to be supplied to any federal, state, local or
foreign taxing authority, or any election permitted to be made, in connection
with Taxes.
"Taxes" shall mean all taxes, charges, fees, levies, duties or other
assessments, including without limitation all net income, gross income, gross
receipts, franchise, value added, sales, use, property, ad valorem, transfer,
withholding, profits, license, employee, payroll, social security, unemployment,
excise, estimated, severance and any other taxes, duties, withholdings, fees,
assessments or charges of any kind whatsoever, including any interest, penalties
or additional amounts attributable thereto, imposed by any federal, state, local
or foreign taxing authority.
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"Trading Day" shall mean any day (from 9:30 a.m. to 4:00 p.m., Eastern
time) during which the Principal Market shall be open for business and on which
trading of the Common Stock on the Principal Market shall not have been
suspended or limited.
"Transfer Agent" shall mean Mellon Investor Services, LLC.
"Underwriter" shall mean Ramius Securities, LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
"Underwriter's Clearing Broker" shall mean Bear ▇▇▇▇▇▇▇ Securities
Corp.
"Underwriter Sales Notice" shall mean the notice delivered by the
Underwriter to the Company and to the Transfer Agent pursuant to Section 2.3(b)
in the form attached hereto as Exhibit 2.3(b).
"Underwriting Price" shall mean 96.5% of the VWAP during each Trading
Day during the Selling Period, provided, that if the VWAP for any Trading Day
during the Selling Period is at or below the Floor Price, the VWAP for such day
shall be deemed to be the Floor Price.
"VWAP" shall mean the daily volume weighted average price per share
(based on a trading day from 9:30 a.m. to 4:00 p.m., Eastern time) of the Common
Stock on the Principal Market (or any successor thereto) as reported by
Bloomberg Financial LP using the AQR function and eliminating any Block Trades;
provided, that if a Blocking Event occurs between the hours of 9:30 a.m. and
4:00 p.m. Eastern time on a Trading Day during a Selling Period, then the VWAP
for such Trading Day shall be adjusted such that the volume weighted average
price per share shall only take into consideration trades that occurred between
9:30 a.m. and the time of such Blocking Event.
II. SALE OF COMMON STOCK.
2.1 Underwriting and Greenshoe.
(a) Underwritings. Subject to the terms and conditions set
forth herein, during the Commitment Period the Company may elect to deliver a
Capital Demand Notice. Upon the Company's delivery of such Capital Demand
Notice, the Underwriter, subject to the limitations of Section 2.2(a), agrees,
during the Selling Period corresponding to such Capital Demand Notice, to sell,
on behalf of the Company and on a best efforts basis, the number of shares of
the Company's Common Stock equal to the Minimum Share Amount; provided, however,
that the Underwriter may not sell more than 15% of the Maximum Draw Down Amount
on any given Trading Day during a Selling Period. The Minimum Draw Down Amount
specified in any Capital Demand Notice shall not be less than $2,000,000 nor
more than $15,000,000.
(b) Maximum Draw Down Amount. The Underwriter shall be
entitled, but not obligated, to sell, as the Company's Underwriter, on a best
efforts basis, the number of shares of Common Stock whose proceeds to the
Company equal the difference between the Maximum Draw Down Amount and the
Minimum Draw Down Amount.
2.2 Limitations on Investment Amount.
(a) Selling Period Obligations. The Underwriter shall be
obligated during any Selling Period only to satisfy the Selling Period
Obligation. If during any Selling Period the Company shall issue any shares of
Common Stock (other than shares of Common Stock issued under this Agreement, and
other than the exercise of stock options granted pursuant to the Company's
approved
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stock option plans, the exercise of warrants outstanding as of the date hereof)
or the issuance of shares of Common Stock pursuant to the Company's employee
stock purchase plan, the Underwriter may in its sole discretion elect to
eliminate any obligation of the Underwriter during the remainder of such Selling
Period. The Underwriter shall notify the Company of such election, if any, on
the Trading Day immediately preceding the Closing Date relating to the last
Trading Day of the Selling Period.
2.3 Mechanics of Notification.
(a) Capital Demand Notice. On any Trading Day during the
Commitment Period, the Designated Officer may deliver a written notice, in the
form attached hereto as Exhibit 2.3(a), by facsimile, to the Underwriter (a
"Capital Demand Notice"). The Capital Demand Notice must specify each of the
Minimum Draw Down Amount, the Maximum Draw Down Amount and the Floor Price. A
Capital Demand Notice shall be irrevocable. The Company may issue as many
Capital Demand Notices as it may elect during the Commitment Period but may not
deliver a new Capital Demand Notice during an existing Selling Period.
(b) Underwriter Sales Notice. Prior to 8:00 p.m. Eastern time
on the Trading Day following each Trading Day during the Selling Period when the
Underwriter has sold shares of Common Stock, the Underwriter shall deliver a
notice to the Company and to the Transfer Agent in the form of Exhibit 2.3(b)
attached hereto (an "Underwriter Sales Notice") setting forth the number of
shares of Common Stock that the Underwriter has sold and the Underwriting Price
on such Trading Day.
(c) Date of Delivery of Notices. Except as otherwise provided
herein, any notices delivered by the Company to the Underwriter or by the
Underwriter to the Company hereunder shall be in accordance with the terms set
forth in Section 8.1.
2.4 Closings and Settlements.
(a) Brokerage Account. The Company must have a brokerage
account with the Underwriter prior to the date on which the Company delivers a
Capital Demand Notice, into which account the proceeds of any sale of Common
Stock, net of any amounts payable under Section 2.4(d), shall be deposited.
(b) Deliveries. The Company shall credit the number of shares
of Common Stock set forth in the Underwriter Sales Notice by the Settlement Date
to the Company's or its designee's balance account with the DTC through its DWAC
system or delivery by such other means as may be mutually agreed upon by the
parties. In addition, prior to each Closing Date, each of the Company and the
Underwriter shall deliver all documents, instruments and writings required to be
delivered or reasonably requested by either of them pursuant to this Agreement
in order to implement and effect the transactions contemplated herein.
(c) Company's Failure to Deliver Shares. If the Company shall
fail to deliver the shares of Common Stock to the Underwriter by the Settlement
Date, the Underwriter shall notify the Company advising the Company that such
shares have not been received. If, after such notice, the Company shall fail to
issue the shares of Common Stock by the fifth (5th) Trading Day after the
Settlement Date for such shares, the Company shall pay damages to the
Underwriter equal to any actual damages incurred by the Underwriter because of
the Company's failure to deliver such required shares, including damages
resulting from the Underwriter's need, as determined by the Underwriter in its
sole discretion, to "unwind" any and all sales of the Company's Common Stock
made during the Selling Period and to reimburse any and all purchasers for their
completed purchases of the Company's Common Stock. Moreover, if the shares have
not been delivered by such date, the Underwriter will not be obligated to pay
the Company (unless the Company has already paid the Underwriter's actual
damages, if
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any, incurred during such Selling Period) for any shares sold by the Underwriter
or that the Underwriter agreed to sell or was obligated to sell during the
Selling Period nor will the Underwriter be obligated to engage in any further
efforts to sell the Company's Common Stock during the remainder of the Selling
Period. In addition, if the shares have not been delivered by the Company by the
fifth Business Day after the Settlement Date, at the Underwriter's sole option,
it may terminate this Agreement.
(d) Underwriter's Commission. During the Selling Period, the
Company will pay the Underwriter, at the end of each Trading Day, a commission
(the "Commission") equal to the difference, if any, between (i) the daily gross
proceeds from sales of shares on such Trading Day minus (ii) the aggregate
number of shares sold during such Trading Day multiplied by the Underwriting
Price. Such Commission will be deducted from the Company's account at the end of
each Trading Day during a Selling Period. In the event that the Commission on
any Trading Day during a Selling Period shall equal a negative amount, such
Commission shall not be paid by the Underwriter to the Company at the end of
such Trading Day, but rather shall be accumulated and credited against the next
Commission(s) payable by the Company to the Underwriter. Immediately following
the Selling Period, the Underwriter shall pay to the Company any accumulated
amounts which have not been paid.
2.5 Termination, Suspension and Modification of Underwriting
Obligation.
(a) Blocking Events. The Underwriter shall not be obligated to
sell any shares of Common Stock from the Company pursuant to any Capital Demand
Notice, nor shall a Capital Demand Notice be delivered at any time during the
Commitment Period, when there shall exist any one or more of the following:
(i) the withdrawal or suspension of the effectiveness of a
registration statement for the registration of not less than the number of
shares of Common Stock equal to, for any Capital Demand Notice, the Maximum Draw
Down Amount divided by the Floor Price, plus the maximum number of shares of
Common Stock issuable pursuant to the Purchase Option, which Registration
Statement shall have been declared effective by the SEC;
(ii) the failure of the Common Stock issuable hereunder to
be validly listed on the Principal Market;
(iii) the Company's failure to satisfy the requirements of
Section 3.1 or 3.2;
(iv) any failure in the compliance by the Company with any
of the covenants provided in Article VI;
(v) any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity; or
(vi) receipt or Deemed Receipt (as provided in Section 3.3)
by the Underwriter of a Notice of Blocking Period (each of (i), (ii), (iii),
(iv), (v) or (vi) a "Blocking Event").
The Company shall be obligated to notify the Underwriter in writing using the
form attached hereto as Exhibit 3.3 immediately upon the occurrence of a
Blocking Event.
(b) Reduction or Elimination of Underwriter Obligation to Sell
During Any Selling Period or Extension of Selling Period. In the event that a
Blocking Event occurs during a Selling Period, at the option of the Underwriter,
(a) the Selling Period, and therefore the Underwriter's
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obligations, shall be extended by the number of Trading Days that such Blocking
Event exists or (b) unless such Blocking Event is waived in writing by the
Underwriter, the obligation of the Underwriter to sell shares of Common Stock
during such Selling Period shall be canceled for such Selling Period and the
Underwriter shall be entitled to rescind any sales made during such Selling
Period, whether or not the Settlement of such sales has occurred prior to such
Blocking Event, and the Company shall be liable for all actual damages incurred
by the Underwriter caused by the occurrence of the Blocking Event.
If the Underwriter has sold shares of Common Stock during the Selling
Period and the Settlement of such sales has not occurred prior to the occurrence
of a Blocking Event, the Company shall, subject to the proviso in the last
sentence of Section 6.8 hereof, use its reasonable best efforts to take all
actions necessary to cure such Blocking Event, if curable, within 24 hours;
provided, however, that the Company shall not be required to disclose any
material information relating to a proposed transaction or event that
constitutes a Blocking Event prior to such time as the Company would generally,
based on advice from its counsel, disclose such transaction or event.
2.6 Purchase Option.
(a) Purchase Option.
(i) The Company hereby grants to the Underwriter the right
to purchase, on the terms and conditions set forth in this Section 2.6, that
number of shares of Common Stock equal to the Purchase Option Share Amount (the
"Purchase Option").
(ii) The Purchase Option may be exercised at any time and
from time to time by the Underwriter on or after the Purchase Option Issuance
Date but prior to the Purchase Option Expiration Date by written notice to the
Company of its desire to so exercise (a "Purchase Option Notice"), accompanied
by payment therefor in the amount of the Purchase Option Exercise Price
multiplied by the number of shares of Common Stock for which the Purchase Option
is then being exercised. Payment of the Purchase Option Exercise Price may be
made as follows (or by an combination of the following): (i) in United States
currency by cash or delivery of a certified or official bank check payable to
the order of the Company or by wire transfer to its account, (ii) only after the
one year anniversary of the date hereof and to the extent a Registration
Statement is not then effective for use by the Underwriter to sell the shares
issuable to the Underwriter upon exercise of the Purchase Option, by
cancellation of such number of shares of Common Stock otherwise issuable to the
Underwriter upon such exercise as shall be specified by the Underwriter, such
that the excess of the aggregate closing market price on the Trading Day
immediately prior to date of exercise of such specified number of shares over
the aggregate Purchase Option Exercise Price attributable to such shares shall
equal the Purchase Option Exercise Price attributable to the shares of Common
Stock to be issued upon such exercise, in which case such amount shall be deemed
to have been paid to the Company and the number of shares issuable upon such
exercise shall be reduced by such specified number, or (iii) only after the one
year anniversary of the date hereof and to the extent a Registration Statement
is not then effective for use by the Underwriter to sell the shares issuable to
the Underwriter upon exercise of the Purchase Option, by surrender to the
Company for cancellation by delivery through DWAC of shares of Common Stock of
the Company owned by the Underwriter (or delivery of certificates representing
the shares of Common Stock of the Company properly endorsed for transfer in
blank) having an aggregate closing price on the Trading Day immediately prior to
the date of exercise equal to the Purchase Option Exercise Price. In the event
that the Purchase Option is exercised in part, the Purchase Option Share Amount
shall be reduced by that number of shares of Common Stock that the Underwriter
has exercised and the Purchase Option relating to the remainder of the Purchase
Option Share Amount shall remain in full force and effect.
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(b) Adjustment to Purchase Option Exercise Price, Dilution and
Other Events. In order to prevent dilution of the rights granted under the
Purchase Option, the Purchase Option Share Amount and the Purchase Option
Exercise Price will be subject to adjustment from time to time as provided in
this Section 2.6(b). Any such adjustments will be applicable to the Purchase
Option if not yet exercised.
(i) Dividends and Distributions. If the Company shall
declare or pay to the holders of the Common Stock a dividend or other
distribution payable in shares of Common Stock or any other security convertible
into or exchangeable for shares of Common Stock, the Purchase Option Share
Amount and the Purchase Option Exercise Price in effect immediately prior
thereto shall be adjusted so that the Underwriter shall receive the number of
shares of Common Stock at the exercise price which the Underwriter would have
been entitled after the happening of such dividend or distribution if the
Underwriter had exercised the Purchase Option held by the Underwriter
immediately prior to the happening of each such dividend or distribution on the
day upon which such dividend or distribution, as the case may be, becomes
effective.
(ii) Stock Splits and Combinations. If the Company shall
subdivide (by means of any stock split, stock dividend, recapitalization or
otherwise) the outstanding shares of Common Stock into a greater number of
shares of Common Stock, or combine (by means of any combination, reverse stock
split or otherwise) the outstanding shares of Common Stock into a lesser number
of shares, or issue by reclassification of shares of Common Stock any shares of
the Company, the Purchase Option Share Amount and the Purchase Option Exercise
Price in effect immediately prior thereto shall be adjusted so that the
Underwriter shall receive the number of shares of Common Stock at the exercise
price which the Underwriter would have been entitled after the happening of any
and each of the events described above if the Underwriter had exercised the
Purchase Option held by the Underwriter immediately prior to the happening of
each such event on the day upon which such subdivision or combination, as the
case may be, becomes effective.
(iii) Organic Changes. Any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets (in one or a series of related
transactions) to another person or entity or other transaction which is effected
in such a way that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock is referred to herein as an "Organic
Change". In case the Company shall effect an Organic Change, then the Company
will make appropriate provision (in form and substance reasonably satisfactory
to the Underwriter) to insure that the provisions of this Section 2.6(b)(iii)
will thereafter be applicable to the Purchase Option. The Company will not
effect any such Organic Change unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such Organic Change
assumes, by written instrument (in form and substance satisfactory to the
Underwriter), the obligation to deliver to the Underwriter such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
Underwriter may be entitled to acquire or receive. The provisions of this
subparagraph (iii) shall similarly apply to successive Organic Changes.
(iv) No Dilution or Impairment. The Company shall not, by
amendment of its articles of incorporation or through any Organic Change or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Section 2.6(b). Without limiting the generality of the
foregoing, the Company (A) shall not take any action which results in any
adjustment of the Purchase Option Exercise Price or the Purchase Option Share
Amount if the total number of shares of Common Stock issuable after the action
upon the exercise of the Purchase Option would exceed the total number of shares
of Common Stock then authorized by the Company's articles of incorporation and
available for the purpose of issue upon such exercise and (B) shall not permit
the par
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value of any shares of stock receivable upon the exercise of the Purchase Option
to exceed the amount payable therefor upon such exercise.
III. CONDITIONS PRECEDENT.
3.1 Conditions Precedent to the Obligation of the Underwriter to Sell
Common Stock Pursuant to a Capital Demand Notice. The obligation of the
Underwriter to sell Common Stock, as the Company's Underwriter, on a best
efforts basis, pursuant to a Capital Demand Notice is subject to the
satisfaction, on the date of delivery of a Capital Demand Notice, and on each
applicable Closing Date (each a "Condition Precedent Date") of each of the
following conditions, which conditions cannot be waived without the prior
written consent of the Underwriter:
(a) Effective Registration Statement. The Registration
Statement shall be in effect and shall remain effective on each Condition
Precedent Date and (i) neither the Company nor the Underwriter shall have
received notice that the SEC has issued or intends to issue a stop order with
respect to the Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened to do so, and (ii) no other suspension
of the use of the Registration Statement or related Prospectus shall exist.
(b) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company, as set forth in this
Agreement, without taking into account any materiality qualifications therein,
shall be true and correct in all material respects as of each Condition
Precedent Date as though made at each such time (except for representations and
warranties made as of a specific date).
(c) Performance by the Company. The Company shall have
performed, satisfied and complied with in all material respects all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to each Condition Precedent Date.
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(e) Adverse Changes. Except as disclosed pursuant to public
filings under the Exchange Act, since the date through which the most recent
quarterly report of the Company on Form 10-Q (or annual report on Form 10-K if
more recent) has been prepared and filed with the SEC, no event which had or is
reasonably expected to have a Material Adverse Effect shall have occurred.
(f) No Suspension of Trading In or Delisting of Common Stock.
The trading of the Common Stock shall not have been suspended by the SEC, the
Principal Market or the National Association of Securities Dealers, Inc.
("NASD"), and the Common Stock to be issued hereunder (including the Common
Stock issuable upon exercise of the Purchase Option) shall have been approved
for listing or quotation on and shall not have been delisted from the Principal
Market. The issuance of shares of Common Stock on the applicable Closing Date
(including the Common Stock issuable upon exercise of the Purchase Option, if
any) shall not violate the shareholder approval requirements of the Principal
Market.
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(g) Legal Opinions. The Company shall have caused to be
delivered to the Underwriter, on the Trading Day immediately prior to the first
Trading Day of the first Selling Period, a legal opinion of the Company's one or
more outside counsel, containing the opinions set forth in Exhibit 3.1(g)(i)
hereto; and on the Trading Day immediately prior to the first Trading Day of
each subsequent Selling Period, a bring-down legal opinion of its outside legal
counsel containing the opinions set forth in Exhibit 3.1(g)(ii) hereto.
(h) Accountant's Letter. On the Trading Day immediately prior
to the first Trading Day of the first Selling Period and on the Trading Day
immediately prior to the first Trading Day of the first Selling Period following
the filing of any SEC filing to be incorporated by reference into the
Registration Statement or any amendment thereto, the Company shall have
furnished to the Underwriter a comfort letter of its independent auditors in
customary form, including a statement to the effect that they have performed the
procedures in accordance with the provisions of Statement on Auditing Standards
No. 71, as amended, as agreed to by the parties hereto, and reports thereon as
shall have been reasonably requested by the Underwriter with respect to certain
financial information contained in the Registration Statement; and on the
Trading Day immediately prior to the first Trading Day of each other Selling
Period, a bring-down comfort letter of its independent auditor in customary
form.
(i) Officer's Certificate. The Company shall have delivered to
the Underwriter, on the Trading Day immediately prior to the first Trading Day
of each Selling Period, a certificate in the form attached hereto as Exhibit
3.1(i) executed by an executive officer of the Company and to the effect that
all the conditions to such Closing shall have been satisfied as at the date of
each such certificate.
(j) Due Diligence. The Underwriter shall have been reasonably
satisfied with the Due Diligence Materials pursuant to Section 3.2 and to the
adequacy of the disclosure contained in the Registration Statement.
(k) [Intentionally Omitted].
(l) Clearing Broker Instructions. The Company shall have issued
instructions to the Underwriter's Clearing Broker (in the form attached hereto
as Exhibit 3.1(l)) to release the Commission at the Underwriter's request. The
Company shall also cooperate with the Underwriter to provide the Underwriter's
Clearing Broker with any additional documentation requested thereby in
connection with payment of Commissions to the Underwriter.
(m) Transfer Agent Instructions. The Company shall have issued
instructions to its Transfer Agent (in the form attached hereto as Exhibit
3.1(m)) to issue certificates for the shares of Common Stock issuable under this
Agreement pursuant to such Capital Demand Notice, or at the Underwriter's
request, to electronically issue such shares (e.g., through DWAC or DTC) (such
electronic issuance to be made only if such shares have been registered),
registered in the name of the Company or its nominee(s).
(n) Account. The Company must have an account open with the
Underwriter.
(o) Board Resolutions. To the extent that the Board of
Directors (or a committee thereof) authorizes the issuance of shares of Common
Stock pursuant to any Capital Demand Notice, the Company shall have delivered to
the Underwriter proof of such authorization in the form of resolutions of the
board of directors, resolutions of a committee of the board of directors or
similar corporate governance documentation.
(p) Good Standing. Each of the Company and its Subsidiaries
shall be validly existing and in good standing (with respect to jurisdictions
that recognize such concept) under the laws of
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the jurisdiction in which it is incorporated, and shall have the requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries shall be duly qualified as a foreign corporation to do business and
be in good standing in every jurisdiction in which the property owned, leased,
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have, individually or in the
aggregate, a Material Adverse Effect.
3.2 Due Diligence Review.
(a) Upon delivery of a Capital Demand Notice, the Company shall
also deliver or make available, during normal business hours, for inspection and
review by the Underwriter, advisors to and representatives of the Underwriter
(who may or may not be affiliated with the Underwriter), all such information
reasonably requested in the applicable Due Diligence Request List (the "Due
Diligence Materials") (including, without limitation, responses to all questions
and other inquiries reasonably made or submitted therein), for the sole purpose
of enabling the Underwriter and such representatives, advisors and underwriters
and their respective accountants and attorneys to conduct initial and ongoing
due diligence with respect to the Company and the accuracy of the Registration
Statement.
(b) Prior to disclosure of material non-public information to
the Underwriter, advisors to or representatives of the Underwriter, the Company
shall identify such information as being material nonpublic information and
provide the Underwriter, such advisors and representatives with the opportunity
to accept or refuse to accept such nonpublic information for review. If the
Company discloses material nonpublic information to the Underwriter, advisors to
or representatives of the Underwriter prior to disclosure of such information in
a registration statement, prospectus or amendment thereto, such event shall
constitute a Blocking Event pursuant to Section 2.5(a)(i).
3.3 Occurrence of Material Event. If the Company's management
determines in its good faith judgment (i) that it is required or advisable to do
so or (ii) that any fact exists or any event has occurred that makes any
statement of a material fact made in the Registration Statement, the prospectus,
any amendment or supplement thereto, or any document incorporated by reference
therein untrue in any material respect, or that requires the making of any
additions to or changes in the Registration Statement or the prospectus, in
order to make the statements therein not misleading in any material respect, the
Company shall notify the Underwriter using the form attached hereto as Exhibit
3.3 (a "Notice of Blocking Period") that the Underwriter may not sell the
Registrable Securities pursuant to any Registration Statement or prospectus;
provided, that if the Underwriter reasonably believes, after advice from its
attorneys and notice to and consultation with the Company, that a fact exists or
an event has occurred that makes any statement of a material fact made in the
Registration Statement, the prospectus, any amendment or supplement thereto, or
any document incorporated by reference therein untrue in any material respect,
or that requires the making of any additions to or changes in the Registration
Statement or the prospectus, in order to make the statements therein not
misleading in any material respect, then the Company shall have been deemed to
have delivered a Notice of Blocking Period to the Underwriter ("Deemed
Receipt"). The Underwriter agrees that, upon receipt of a Notice of Blocking
Period from the Company of the existence of any fact of the kind described in
the immediately preceding sentence, the Underwriter shall not dispose of, sell
or offer for sale the Registrable Securities pursuant to the Registration
Statement until such Underwriter receives (i) copies of the supplemented or
amended prospectus, unless counsel for the Company shall have determined that
such disclosure is not required due to subsequent events, (ii) notice in writing
from the Company that the use of the prospectus may be resumed and (iii) copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus. If so directed by the Company in connection with any such
notice, each Underwriter will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in
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such Underwriter's possession, of the prospectus
covering such Registrable Securities that was current immediately prior to the
time of receipt of such notice.
IV. REPRESENTATIONS AND WARRANTIES OF UNDERWRITER.
The Underwriter represents and warrants to the Company as follows:
4.1 Authorization; Enforcement. The Underwriter has full power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Underwriter.
No other proceedings on the part of Underwriter are necessary to approve and
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby in accordance with the terms hereof. This
Agreement has been validly executed and delivered by the Underwriter and is a
valid and binding agreement of the Underwriter enforceable against it in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and similar laws relating to, or affecting generally the enforcement
of, applicable creditors' rights and remedies.
4.2 Not an Affiliate. The Underwriter is not an officer, director or
Affiliate of the Company.
4.3 Organization and Standing. The Underwriter is duly organized,
validly existing, and in good standing under the laws of Delaware, and has all
requisite power and authority to carry on its business as now being conducted,
and is duly qualified to do business and in good standing in each jurisdiction
in which the nature of the business conducted by it makes such qualifications
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect.
4.4 Absence of Conflicts. The execution and delivery of this
Agreement and any other document or instrument executed in connection herewith,
and the consummation of the transactions contemplated hereby and thereby, and
compliance with the requirements hereof and thereof, will not violate the
provision of any indenture, instrument or agreement to which the Underwriter is
a party or is subject, or by which the Underwriter or any of its assets is
bound, or conflict with or constitute a material default thereunder, or result
in the creation or imposition of any lien pursuant to the terms of any such
indenture, instrument or agreement, or constitute a breach of any fiduciary duty
owed by the Underwriter to any third party.
4.5 Broker-Dealer. The Underwriter is a registered broker-dealer
under the Exchange Act and is a member in good standing of the NASD.
V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in the Schedules delivered by the Company to the
Underwriter on the date hereof, the Company represents and warrants to the
Underwriter as follows:
5.1 Corporate Organization. Each of the Company and its Subsidiaries
is a corporation duly organized, validly existing and in good standing (with
respect to jurisdictions that recognize such concept) under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
and authority to own or lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the property owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except to the extent
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that the failure to be so qualified or be in good standing would not have,
individually or in the aggregate, a Material Adverse Effect.
5.2 Capitalization and Indebtedness.
(a) As of the date hereof (and as of any Condition Precedent
Date, as applicable), the authorized capital stock of the Company consists of
80,000,000 shares of Common Stock, of which as of December 29, 2000 (and as of a
date not more than 5 Business Days from any Condition Precedent Date, as
applicable), 37,480,264 shares were issued and outstanding, and 20,000,000
shares of preferred stock (the "Preferred Stock") of the Company, of which as of
the date hereof (and as of a date not more than 5 Business Days from any
Condition Precedent Date, as applicable), no shares are issued or outstanding.
All of the outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights or any liens suffered or permitted
by the Company. As of the date hereof, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
Capital Stock of the Company, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of Capital Stock of the Company, other than rights created pursuant to
this Agreement or pursuant to the Company's stock option plan and employee stock
purchase plan, (ii) there are no outstanding debt securities, notes, credit
agreements, or other agreements, documents or instruments evidencing
indebtedness of the Company or any of its Subsidiaries or by which the Company
or any of its Subsidiaries is or may become bound and (iii) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the Securities
Act (except as provided in this Agreement). There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Common Stock pursuant to this Agreement.
The Company has furnished to the Underwriter true and correct copies of the
Company's articles of incorporation, as amended and as in effect on the date
hereof (the "Articles of Incorporation"), and the Company's bylaws, as in effect
on the date hereof (the "Bylaws"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the holders
thereof in respect thereto.
(b) Upon issuance of the Common Stock issuable upon exercise of
the Purchase Option, and payment of the Purchase Option Exercise Price therefor,
pursuant to a purchase and sale in accordance with the terms of this Agreement,
the Company will transfer to the Underwriter good and valid title to the Common
Stock, free and clear of any liens, other than liens created by the Underwriter,
and such Common Stock will be duly authorized, fully paid and nonassessable.
5.3 Subsidiaries.
(a) A complete list of the Subsidiaries is set forth in Schedule
5.3(a).
(b) No Subsidiary owns material assets or is subject to material
liabilities, other than those listed on Schedule 5.3(b). Each Subsidiary is,
directly or indirectly, wholly owned by the Company. No Subsidiary is a
Significant Subsidiary.
(c) (i) All the outstanding stock or other equity or ownership
interests of each Subsidiary is owned free and clear of all material liens and
is validly issued and (ii) there are no options, warrants or other rights,
agreements, arrangements or commitments of any character to which any Subsidiary
is a party or otherwise obligating any Subsidiary to issue or sell, or entitling
any Person to acquire from any Subsidiary, and no Subsidiary is a party to any
agreement, arrangement or commitment obligating it to repurchase, redeem or
otherwise acquire, any shares of the Capital Stock or any securities convertible
into or exchangeable for the Capital Stock of any such Subsidiary.
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5.4 Authorization; Enforcement; Compliance with Other Instruments.
(a) The Company has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement and to issue,
sell and perform its obligations with respect to the Common Stock in accordance
with the terms hereof (including the Common Stock issuable upon exercise of the
Purchase Option).
(b) The execution and delivery of this Agreement by the Company
and the consummation by it of the transactions contemplated hereby, including,
without limitation, the reservation for issuance and the issuance of the Common
Stock (including the Common Stock issuable upon exercise of the Purchase
Option), have been duly authorized by the Company's Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its shareholders; provided, that the Company's Board of Directors
(or a committee thereof), or an authorized officer of the Company shall
authorize each Capital Demand Notice and the issuance of Common Stock thereby
prior to the issuance of such Capital Demand Notice. To the Knowledge of the
Company, no other corporate proceedings on the part of the Company are necessary
to approve and authorize the execution and delivery of this Agreement and the
issuance of the Common Stock issuable upon each Closing, and the consummation of
the transactions contemplated hereby in accordance with the terms hereof.
(c) The Common Stock issuable in accordance with the terms of
this Agreement (including the Common Stock issuable upon exercise of the
Purchase Option), upon due authorization by the Board of Directors of such
issuance (in the case of Common Stock issuable pursuant to a Capital Demand
Notice), the issuance of such Common Stock and payment of the Underwriting Price
or Purchase Option Exercise Price therefor, as applicable, in accordance with
the terms hereof, will be duly and validly issued, fully paid and nonassessable.
(d) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
5.5 No Conflicts.
(a) The execution, delivery and performance of this Agreement by
the Company, and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation or Bylaws of the Company or the organizational charter and/or
bylaws of any of its Subsidiaries, or (ii) violate or conflict with, or result
in a breach of any provision of, 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, or result
in the creation of any lien on or against any of the properties of the Company
or any of its Subsidiaries, any note, bond, mortgage, agreement, license
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any statute, law, rule, regulation, writ,
injunction, order, judgment or decree (including U.S. federal and state
securities laws and regulations and the rules and regulations of the Principal
Market on which the Common Stock is traded or listed) applicable to the Company
or any of its Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected, except where such violation,
conflict, breach or other consequence would not have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in
violation of any term of or in default under its Articles of Incorporation, or
Bylaws or its organizational charter or bylaws, respectively, or in violation of
any material term of or in default under any material contract, agreement,
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mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its Subsidiaries.
(c) Except as specifically contemplated by this Agreement and as
required under the Securities Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental or regulatory or self-regulatory agency in order for it to
execute, deliver or perform any of its obligations under or contemplated by this
Agreement in accordance with the terms hereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof.
(d) The Company is not in violation of the listing requirements
of the Principal Market and, to its Knowledge, is not aware of any facts that
would cause it to be delisted by the Principal Market.
5.6 Compliance with Applicable Law; Regulatory Permits. The
businesses of the Company are not being conducted in violation of any law,
ordinance, rule, regulation, judgment, decree or order of any Governmental
Entity, except for violations which, individually or in the aggregate, would not
have a Material Adverse Effect. The Company and each of its Subsidiaries
possesses all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders necessary to own, lease and operate
its properties and to conduct its businesses as currently being conducted
(collectively, the "Company Permits"), except where failure to possess any of
such Company Permits would not have a Material Adverse Effect. There is no
action pending or, to the Knowledge of the Company, threatened regarding the
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect.
5.7 Absence of Litigation. There are no actions, suits, proceedings,
inquiries or investigations before or by any Governmental Entity or arbitrator
pending, or, to the Knowledge of the Company and to the extent an unfavorable
decision, ruling or finding would have a Material Adverse Effect, threatened
against or, to the Company's Knowledge, affecting the Company or any of its
Subsidiaries. There is no judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries that has had, or would reasonably be expected in the future to
have, a Material Adverse Effect or which reasonably could be expected to
materially adversely affect the transactions contemplated by this Agreement.
5.8 SEC Documents, Financial Statements.
(a) The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act (all of the foregoing, and all
other documents and registration statements, whether heretofore or hereafter
filed by the Company with the SEC, and the Registration Statement, when declared
effective, and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents"). The Common Stock is currently
listed or quoted on the Principal Market which is, as of the date hereof, the
Nasdaq National Market. The Company (i) has delivered or made available to the
Underwriter or its advisor or representative (including via the SEC's ▇▇▇▇▇
system) true and complete copies of the SEC Documents as have been filed as of
the date hereof and as the Underwriter or its advisor or representative has
requested from the Company and (ii) agrees to deliver or make available to the
Underwriter or its advisor or representative true and complete copies of any SEC
Documents filed after the date hereof, upon request.
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(b) As of their respective dates, the SEC Documents (except for
the Registration Statement and the Prospectus, which are discussed below)
complied as to form in all material respects with the requirements of the
Securities Act and the Exchange Act applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC (except for those
SEC Documents that were subsequently amended prior to the date hereof) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) The Registration Statement, in the form in which it became
effective, and each Prospectus included as part of the Registration Statement as
originally filed or as part of any amendment or supplement thereto, or filed
pursuant to Rule 424 under the Securities Act, complied, as to form, when so
filed in all material respects with the provisions of the Securities Act and did
not at any such times (and does not, as of the date hereof) contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading; provided, that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to the
Underwriter furnished to the Company in writing by or on behalf of the
Underwriter expressly for use therein. The Registration Statement and the
Prospectus contained in the Registration Statement, in such form as it may be as
of the date of delivery of such Prospectus by the Underwriter in connection with
sales of Common Stock by the Underwriter, will comply, as to form, in all
material respects with the requirements of the Securities Act and other federal,
state and local laws, rules and regulations applicable to such Prospectus.
(d) As of their respective dates, the financial statements of
the Company included (or incorporated by reference) in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(e) During the three (3) years preceding the date hereof, the
SEC has not issued an order preventing or suspending the use of any prospectus
relating to the offering of any shares of Common Stock or instituted proceedings
for that purpose.
5.9 No Undisclosed or Contingent Liabilities. Neither the Company
nor any of its Subsidiaries has any claims, liabilities or obligations of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that would be required to be reflected or reserved
against on a consolidated balance sheet of the Company and its consolidated
Subsidiaries under GAAP, except for claims, liabilities or obligations (i)
disclosed in the Company's most recent Form 10-K or any SEC Document filed
subsequent to such Form 10-K or (ii) incurred by the Company or any of its
Subsidiaries since the date of filing the most recent SEC Document, which are in
the ordinary course of business and which are consistent with past practice and
that, individually or in the aggregate, would not have a Material Adverse
Effect.
5.10 Employment Matters; ERISA Matters. The Company and its
Subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations respecting employment and
-18-
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have, individually or in the
aggregate, a Material Adverse Effect. To the Knowledge of the Company, there are
no pending investigations involving, or any unfair labor practice charges or
complaints against, the Company or any of its Subsidiaries by or before any
Governmental Entity responsible for the enforcement of such federal, state,
local or foreign laws and regulations. Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement and no labor
organization or group of employees of the Company or any of its Subsidiaries has
made a pending demand for recognition or certification. There is no unfair labor
practice charge or complaint against the Company or any of its Subsidiaries
pending before the National Labor Relations Board or any other authority or
arbitrator or any strike, picketing, boycott, dispute, slowdown, lockout or
stoppage pending or threatened against or involving the Company or any of its
Subsidiaries. Neither the Company or any of its Subsidiaries has any liability
pursuant to the Worker Adjustment and Retraining Notification Act ("WARN").
Except for such failures that would not have, individually or in the aggregate,
a Material Adverse Effect, each of the Plans has been maintained and
administered in accordance with its terms and applicable laws, including,
without limitation, the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") and the Internal Revenue Code of 1986, as amended (the
"Code"). None of the Plans is subject to Title IV of ERISA and no Plan is a
multiemployer plan (within the meaning of Section 3(37) of ERISA). There is no
pending or, to the Knowledge of the Company or any of its Subsidiaries,
threatened legal action, suit or claim relating to the Plans or the
administration of the investment of the assets of any such Plan (other than
routine claims for benefits). All contributions and other payments required to
be made by the Company or any of its Subsidiaries to any Plan as of the Closing
Date, or with respect to any period ending prior to the Closing Date, have been
made or will be made on or prior to the Closing Date or have been properly
reflected on the Company's financial statements included in the SEC Filings.
Neither the Company nor any member of its controlled group maintains or is
required to contribute to any plan, fund (including, without limitation, any
superannuation fund) or other similar program established or maintained outside
the United States of America primarily for the benefit of employees of the
Company residing outside the United States of America, which fund or similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
Neither the Company nor any of its Subsidiaries has any obligation to
provide post-retirement health or life benefits, except as required by law.
The Company has heretofore delivered or made available to the
Underwriter correct and complete copies of each of the written Plans listed in
Schedule 5.11 and summaries of any unwritten Plans. Each Plan intended to
qualify under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the Internal Revenue Service regarding its
qualification under such section and, to the Knowledge of the Company, no event
has occurred which would cause any such Plan to lose its qualification.
5.11 Absence of Certain Changes.
(a) Since September 30, 2000 or the end of the most recent
fiscal quarter before the delivery of each Capital Demand Notice, as the case
may be, the business of the Company and its Subsidiaries has been conducted in
the ordinary course consistent with past practices and except in the ordinary
course of business consistent with past practice there has not been:
(i) any event, occurrence, development or state of
circumstances or facts which, individually or in the aggregate, has had or would
have a Material Adverse Effect;
-19-
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of Capital Stock of
the Company or any repurchase, redemption or other acquisition by the Company or
any Subsidiary of any outstanding shares of Capital Stock or other securities
of, or other ownership interests in, the Company or any Subsidiary;
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money, other than (i) working
lines of credit or borrowings under existing lines of credit or floor plan
financing arrangements, (ii) any license fees and royalties and (iii) pursuant
to any lease;
(v) any creation or assumption by the Company or any
Subsidiary of any lien on any material asset other than in the ordinary course
of business consistent with past practice;
(vi) any making of any loan, advance or capital
contributions to or investment in any Person in excess of $500,000 other than
loans, advances or capital contributions to or investments in wholly-owned
Subsidiaries made in the ordinary course of business consistent with past
practice;
(vii) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets of the
Company or any Subsidiary which, individually or in the aggregate, has had or
would have a Material Adverse Effect;
(viii) any transaction or commitment made, or any contract
or agreement entered into, by the Company or any Subsidiary relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by the Company or any Subsidiary of any contract or other
right, in any such case, material to the Company and the Subsidiaries, taken as
a whole, other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
or
(ix) any material change in any method of accounting or
accounting practice by the Company or any Subsidiary.
(b) None of the Company or its Subsidiaries have taken any
steps, and do not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any
Knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
5.12 Environmental Matters. The Company and each of its Subsidiaries
have obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws. "Environmental Laws" shall mean all applicable laws relating to the
protection of the environment including, without limitation, all requirements
pertaining to reporting, licensing, permitting, controlling, investigating or
remediating Releases of Hazardous Substances into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances. "Hazardous Substance" shall include any element, compound or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic or hazardous substance, hazardous waste, medical waste, special
waste or solid waste under Environmental Laws, including, but not limited to
petroleum, PCBs or asbestos containing materials. "Releases" shall mean any
escaping, leaking, spilling, leaking, pumping, emitting,
-20-
emptying, discharging, injecting, dumping or disposing of Hazardous Substances
into the environment. To the best of the Company's Knowledge, there are no past
or present events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting the Company or its Subsidiaries that violate
or could reasonably be expected to violate any Environmental Law or that could
reasonably be expected to give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling
or Release of any Hazardous Substance.
5.13 Material Contracts.
(a) Other than as filed in any SEC filings, neither the Company
nor any Subsidiary is a party to or bound by any agreement or arrangement
material to the Company and its Subsidiaries taken as a whole ("Material
Contracts").
(b) Each Material Contract is in full force and effect and
constitutes a legal, valid and binding obligation of the Company or the
Subsidiary party thereto and, to the Knowledge of the Company, each other party
thereto, and is enforceable against the Company or its Subsidiaries and, to the
Knowledge of the Company, each other party thereto in accordance with its terms,
except to the extent that such enforceability is limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity, and neither the Company nor any of its
Subsidiaries, nor, to the Knowledge of the Company, any other party thereto is
in conflict therewith or in violation or breach thereof or default thereunder,
except for such conflicts, violations, breaches and defaults which, individually
or in the aggregate, would not have a Material Adverse Effect.
5.14 Properties; Encumbrances. The Company owns no real property.
Except as disclosed in the SEC Filings, each of the Company and its Subsidiaries
has good and valid title to all material properties and assets which it purports
to own (personal, tangible and intangible, including all forms of goodwill,
rights, intellectual property and intellectual property rights) (collectively,
the "Company Assets"). Except as disclosed in the SEC Filings, all Company
Assets are free and clear of all liens, mortgages, claims, interests, charges,
security interests or other encumbrances or adverse interests of any nature
whatsoever and other title or interest retention arrangements ("liens").
5.15 Insurance. The Company and each of its Subsidiaries maintains
reasonably adequate insurance, based on customary insurance coverage for
similarly situated companies in the industry.
5.16 Material Disclosure. There is no fact, transaction or
development which the Company has not disclosed to the Underwriter in writing
(including pursuant to the SEC Documents filed prior to the date hereof) which
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. This Agreement (including any Exhibit or Schedule
hereto) and any written statements, documents or certificates furnished to the
Underwriter by the Company or its Subsidiaries prior to the date hereof in
connection with the transactions contemplated hereby, taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated herein or therein or necessary to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading. Except with respect to 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 conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company prior to
the date hereof (or any Closing Date), but which has not been so publicly
announced or disclosed (assuming for
-21-
this purpose that the Company's reports filed under the Exchange Act are being
incorporated into an effective registration statement filed by the Company under
the Securities Act).
5.17 Intellectual Property
(a) Schedule 5.17(a) discloses all (i) Registered or material
Owned Intellectual Property (each identified as a Patent, Trademark, Trade
Secret, Copyright or Other Proprietary Right, as the case may be) and (ii)
material Intellectual Property Contracts.
(b) Except as set forth in the SEC Filings or as would not have
a Material Adverse Effect:
(i) To the Company's Knowledge, all Business Intellectual
Property is valid, subsisting and enforceable. The Company owns all Owned
Intellectual Property exclusively.
(ii) To the Company's Knowledge, no Owned Intellectual
Property has been canceled or adjudicated invalid (excepting any expirations in
the ordinary course), or is subject to any outstanding order, judgment or decree
restricting its use or adversely affecting or reflecting the Company's or the
Subsidiaries' rights thereto. No Licensed Intellectual Property has been
canceled or adjudicated invalid (excepting any expirations in the ordinary
course), or is subject to any outstanding order, judgment or decree restricting
its use or adversely affecting or reflecting the Company's or the Subsidiaries'
rights thereto. The material Owned Intellectual Property has been used with all
patent, trademark, copyright, confidential, proprietary, and other Intellectual
Property notices and legends prescribed by law or otherwise permitted.
(iii) To the Company's Knowledge, no suit, action, reissue,
reexamination, public protest, interference, opposition, cancellation or other
proceeding (collectively, "Suit") is pending against the Company or the
Subsidiaries concerning any claim or position that the Company or the
Subsidiaries have violated any Intellectual Property rights of a third party. No
claim has been asserted or threatened against the Company or its Subsidiaries or
any of their indemnitees for violation of any Intellectual Property rights. The
Company and the Subsidiaries are not violating and have not violated any
Intellectual Property rights, except that this statement is only to the
Company's Knowledge as concerns U.S. patent rights.
(c) To the Company's Knowledge, no Suit is pending against the
Company or its Subsidiaries concerning any claim or position that the Company or
another Person has breached any Intellectual Property Contract. No claim has
been threatened or asserted that the Company or another Person has breached any
Intellectual Property Contract. There exists no event, condition or occurrence
which, with the giving of notice or lapse of time, or both, would constitute a
breach or default by the Company or another Person under any Intellectual
Property Contract. Neither the Company nor any other party to a material
Intellectual Property Contract is in breach or default of that Intellectual
Property Contract. No party to any material Intellectual Property Contract has
given the Company notice of its intention to cancel, terminate or fail to renew
any such Intellectual Property Contract.
(d) To the Company's Knowledge, no Suit is pending against the
Company or its Subsidiaries concerning the Owned Intellectual Property,
including any Suit concerning a claim or position that the Owned Intellectual
Property has been violated or is invalid, unenforceable, unpatentable,
unregisterable, cancelable, not owned or not owned exclusively by the Company.
No such claim has been threatened or asserted and no valid basis for any such
Suits or claims exists.
(e) To the Company's Knowledge, no Suit is pending concerning
the Licensed Intellectual Property, including any concerning a claim or position
that the Licensed Intellectual Property
-22-
has been violated or is invalid, unenforceable, unpatentable, unregisterable,
cancelable, not held or not held exclusively by the Company or the Subsidiaries.
No such claim has been threatened or asserted and no valid basis for any such
Suits or claims exists.
(f) To the Company's Knowledge, no Person is violating any
Business Intellectual Property.
(g) To the Company's Knowledge, the Company owns or
otherwise holds valid rights to use all material Intellectual Property currently
used in the Business of the Company or the Subsidiaries.
(h) The Company has timely made all filings and payments
with the appropriate foreign and domestic agencies required to maintain in
subsistence all Registered Owned Intellectual Property and the Company intends
to make any payments and filings that fall due within ninety (90) days of the
Closing Date. To the Company's Knowledge, the Company and the Subsidiaries are
in compliance with all applicable rules and regulations of such agencies with
respect to material Business Intellectual Property. All documentation necessary
to confirm and effect the Company's ownership of material Owned Intellectual
Property, if acquired from other Persons, has been recorded in the United States
Patent and Trademark Office, the United States Copyright Office and all other
appropriate offices.
(i) The Company has taken all reasonable measures to
protect the secrecy, confidentiality and value of all material Trade Secrets
used in the business (collectively, "Business Trade Secrets"). To the Company's
Knowledge, the material Business Trade Secrets have not been disclosed to any
Persons other than Company or Subsidiary employees and contractors who had a
need to know and use such Business Trade Secrets in the ordinary course of
employment or contract performance and who executed appropriate confidentiality
agreements.
(j) To the Company's knowledge, no current or former
Company or Subsidiary employee or contractor is or was a party to any
confidentiality agreement and/or agreement not to compete that restricts or
forbids, or restricted or forbade at any time during such employee's employment
or contractor's engagement such employee's or contractor's performance of the
Company's or the Subsidiaries' business, or any other activity that such
employee or contractor performed on behalf of the Company or Subsidiaries or in
connection with such employment or engagement by the Company or Subsidiaries.
5.18 [Intentionally Omitted].
5.19 [Intentionally Omitted].
5.20 Brokers. Except for its engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners
LLC, the Company has taken no action which would give rise to any claim by any
Person for brokerage commissions, finder's fees or similar payments by the
Underwriter relating to this Agreement for the transactions contemplated hereby.
5.21 Acknowledgment Regarding the Underwriter's Sale of the Common
Stock. The Company acknowledges and agrees that the Underwriter is acting
solely as the Company's Underwriter with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Underwriter is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by the Underwriter or any of its
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Underwriter's sale
of the Common Stock hereunder. The Company further represents to the Underwriter
that the Company's
-23-
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
5.22 Certain Transactions. Except as disclosed in the SEC Filings
and except for arm's length transactions pursuant to which the Company makes
payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from third parties, none of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
5.23 Securities Act. The Company has complied in all material
respects with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the shares of Common Stock hereunder.
The SEC has not issued any order preventing or suspending the
effectiveness of the Registration Statement. The Company is currently (i)
eligible to register securities, including a primary offering of, and the resale
of, the Common Stock purchased pursuant to this Agreement on a Registration
Statement on Form S-3 under the Securities Act and (ii) in compliance with Rule
415(a)(1)(x) and Rule 415(a)(4). The Company has not distributed and, prior to
the completion of the sale of the shares of Common Stock by the Underwriter,
will not distribute any offering material in connection with the offer and sale
of the Common Stock other than the Registration Statement, the Prospectus or
other materials, if any, permitted by the Securities Act.
5.24 Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
5.25 Investment Company Status. The Company is not, and upon
consummation of the sale of the Common Stock will not be, an "investment
company," a company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended.
VI. COVENANTS.
6.1 [Intentionally Omitted].
6.2 Reservation of Common Stock. The Company shall reserve, prior to
the commencement of any Selling Period, such number of shares of Common Stock,
free of preemptive rights, equal to the number of shares of Common Stock equal
to (i) the quotient of the Maximum Draw Down Amount divided by the Floor Price
plus (ii) the maximum number of shares issuable upon full exercise of the
Purchase Option. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the
number of shares actually delivered hereunder and the number of shares so
reserved shall be increased to reflect (a) potential increases in the
-24-
Common Stock which the Company may be obligated to issue by reason of
adjustments to the Purchase Option and (b) stock splits and stock dividends and
distributions.
6.3 Listing of Common Stock. During the term of this Agreement, the
Company hereby agrees to maintain the listing of the Common Stock, including the
shares to be issued hereunder, on a Principal Market, and as soon as reasonably
practicable, but in any event prior to the commencement of the initial Selling
Period, to list any additional shares of Common Stock issuable under this
Agreement. The Company further agrees that, if the Company applies to have the
Common Stock traded on any other Principal Market, it will include in such
application the Common Stock issuable under this Agreement, and will take such
other action as is necessary or desirable to cause the Common Stock issued or
issuable hereunder to be listed on such other Principal Market as promptly as
possible.
6.4 Exchange Act Registration. During the term of this Agreement,
the Company will cause its Common Stock to continue to be registered under
Section 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Exchange Act or the
rules thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act. If
required, the Company will take all action to continue the listing and trading
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 NASD and the Principal Market.
6.5 Legends. The certificates evidencing the Common Stock to be
issued at each Closing and upon exercise of the Purchase Option shall be free of
legends or stop transfer or other restrictions; provided, that if a Registration
Statement registering shares of Common Stock issued pursuant to the Purchase
Option is not effective at the time of issuance of such shares and there is no
exemption to the registration of such shares (such as pursuant to Rule 144), the
certificates evidencing such shares shall contain customary legends and stop
transfer restrictions.
6.6 Corporate Existence. During the term of this Agreement, the
Company will take all steps necessary to preserve and continue the corporate
existence of the Company; provided, however, that nothing herein shall be
construed to limit the ability of the Company to partake in any merger, asset
sale or acquisition transaction involving the Company, subject to the Company
complying with the terms of this Agreement.
6.7 Additional SEC Documents. During the term of this Agreement, the
Company will notify the Underwriter within a reasonable time after each time
that an SEC Document is submitted by the Company to the SEC for filing.
6.8 Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable United States state
securities and takeover laws ("Blue Sky laws") or other state laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as would permit or facilitate the sale or distribution of all the
Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Underwriter for purposes of maximizing the
proceeds realizable by the Underwriter from such sale or distribution; provided,
however, that the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 6.8, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction. The Company shall cooperate with the Underwriter and take all such
other reasonable actions in connection therewith in order to expedite or
facilitate the disposition of the Registrable Securities. Prior to the thirtieth
day from the date hereof, the Company shall register the maximum number of
shares of Common Stock issuable upon full exercise of the Purchase Option by
filing with the
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SEC a post-effective amendment to the Registration Statement pursuant to the
Securities Act. The Company shall keep such Registration Statement effective
until the Purchase Option Expiration Date with regard to at least the maximum
number of shares of Common Stock issuable pursuant to the Purchase Option,
except to the extent a Blocking Event occurs pursuant to Section 3.3. If a
Blocking Event occurs pursuant to Section 3.3, the Company shall use its
reasonable best efforts to remove such Blocking Event as soon as possible,
including the filing with the SEC of a Prospectus supplement or post-effective
amendment to the Registration Statement or related Prospectus, as applicable;
provided, however, that the Company shall not be required to disclose any
material information relating to a proposed transaction or event that
constitutes a Blocking Event prior to such time as the Company would generally,
based on advice of counsel, disclose such transaction or event.
6.9 Registration Procedure. The Company will keep the Underwriter
advised in writing as to the filing of any registration statement, in addition
to the Registration Statement, registering shares of Common Stock pursuant to
this Agreement, any prospectus supplement or post effective amendment to the
Registration Statement and as to the effectiveness thereof. At its expense, the
Company will use its reasonable best efforts to:
(a) Permit the Underwriter and a single firm of counsel,
initially ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP or such other counsel as thereafter
designated as Underwriter's counsel by the Underwriter, to review and comment
upon any registration statement registering shares of Common Stock pursuant to
this Agreement and all amendments and supplements thereto, and any prospectus
supplement or post-effective amendment to the Registration Statement that
relates to the transactions contemplated by this Agreement at least five (5)
days prior to their filing with the SEC, and not file any document in a form to
which such counsel reasonably objects. The Company shall not submit a request
for acceleration of the effectiveness of a registration statement or any
amendment thereto or to the Registration Statement or file any prospectus or
supplement that relates to the transactions contemplated by this Agreement
without the prior approval of such counsel, which approval shall not be
unreasonably withheld;
(b) The Company shall provide a CUSIP number, a transfer agent
and registrar for all such Registrable Securities;
(c) If requested by the Underwriter, the Company shall
incorporate as soon as practicable in a prospectus supplement or post-effective
amendment such information as the Underwriter requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being issued, the Underwriting Price being paid therefor and any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering; make all required filings of such prospectus supplement
or post-effective amendment as soon as practicable after notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and in connection therewith supplement or make amendments to any
Registration Statement if requested by the Underwriter;
(d) Furnish such number of Prospectuses and amendments and
supplements thereto, and other documents incident thereto, as the Underwriter
from time to time may reasonably request; and
(e) Notify the Underwriter and its counsel (as designated in
writing by the Underwriter) promptly, and confirm such notice (a "Notice") in
writing (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, and (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or related Prospectus or for additional information.
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6.10 Information by Underwriter. The Underwriter shall promptly
furnish to the Company such information regarding the Underwriter and the
distribution proposed by such Underwriter as the Company may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in Sections 6.8 and 6.9.
All information provided to the Company by the Underwriter shall be accurate and
complete in all material respects and the Underwriter shall promptly notify the
Company if any such information becomes incorrect or incomplete.
6.11 No Other Similar Agreements. The Company shall refrain from
entering into any other similar agreements, arrangements or understandings
granting to the Company the right to issue shares of its securities to one or
more underwriters through an equity line or similar transaction; provided,
however, that the Company may enter into private placements or standard
underwriting arrangements that are not "at the market" offerings.
6.12 No Short Selling. During the term of this Agreement, the
Underwriter and its Affiliates shall not engage in any short selling activities
with respect to the Company's Common Stock.
VII. ASSIGNMENT, ENTIRE AGREEMENT, AMENDMENT, TERMINATION.
7.1 Successors and Assigns. Neither this Agreement nor any rights of
the Underwriter or the Company hereunder may be assigned by either party to any
other Person. Notwithstanding the foregoing, the Underwriter's rights and
obligations under this Agreement may be assigned at any time, in whole, with the
prior written consent of the Company (which consent shall not be unreasonably
withheld) to any Affiliate of the Underwriter (a "Permitted Transferee"). The
rights and obligations of the Underwriter under this Agreement shall inure to
the benefit of, and be enforceable by and against, any such Permitted
Transferee.
7.2 Entire Agreement; Amendment. This Agreement 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
thereof, and supercedes all other prior oral or written agreements between the
parties, their Affiliates, or persons acting on their behalf. No party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth in this Agreement
or therein. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
7.3 Publicity. Each of the Company and the Underwriter agrees that
they will not make any disclosure to any Person, issue any press release or make
any other public announcement with respect to the terms hereof and the
transactions contemplated hereby without the prior consent of the other party,
unless such disclosure is required by law, applicable regulation or the listing
requirements of the Principal Market, and then only to the extent of such
requirement; provided, however, neither party may make any disclosure pursuant
to the listing requirements of the Principal Market without prior consultation
with the other party about its contents. Except as may be required by law or
applicable regulation, each of the Company and the Underwriter shall consult
with the other before issuing any press release or otherwise making any public
statements with respect to this Agreement and, except as required by law,
applicable regulation or the listing requirements of the Principal Market, shall
not issue any such press release or make any such public statement without the
prior written consent of the other party (which consent shall not be
unreasonably withheld).
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7.4 Termination.
(a) The Company may, in its sole discretion, terminate the
Agreement or the Underwriter's obligation to sell, as the Company's Underwriter,
on a best efforts basis, any Common Stock for the remainder of the Commitment
Period; provided, however, that such termination shall not effect the survival
of (i) representations and warranties pursuant to Articles IV and V, and
indemnification and contribution rights pursuant to Article IX, each as set
forth in Section 10.5, (ii) the Purchase Option pursuant to Section 2.6 and
obligations relating to the Purchase Option, to the extent that any portion of
the Purchase Option is held by the Underwriter, (iii) obligations relating to
costs and expenses pursuant to Section 8.2, (iv) obligations pursuant to Article
II, to the extent such termination shall occur at any time from the beginning of
a Selling Period to the last Settlement Date of such Selling Period, (v)
covenants pursuant to Article VI (other than Section 6.11), to the extent any
portion of the Purchase Option is held by the Underwriter, (vi) the provisions
of Articles VII and X, or (vii) any other provisions of this Agreement that may
be reasonably construed to survive the termination of this Agreement.
(b) The Underwriter may (in its sole and absolute discretion)
terminate this Agreement and its obligation to sell, as the Company's
Underwriter, on a best efforts basis, any shares of Common Stock pursuant to a
Capital Demand Notice as a result of (i) a material breach by the Company of any
representation, warranty, covenant or other obligation in connection with this
Agreement (without taking into account materiality qualifications herein), (ii)
failure by the Company to comply with the requirements of Section 6.2, 6.3, 6.4,
6.5 or 6.6, (iii) the Company, at any date after the date hereof, effecting any
merger or consolidation of the Company with or into, or transferring all or
substantially all of the assets of the Company to, another entity, or (iv) the
Underwriter reasonably determining, at any time that the adoption of, or change
in, or any change in the interpretation or application of, any law, regulation,
rule, guideline or treaty (including, but not limited to, laws, regulations,
rules or guidelines with respect to changes of capital adequacy) makes it
illegal or materially impracticable for the Underwriter to fulfill its
commitment pursuant to this Agreement, but in the case of (i) or (iv) above, the
Underwriter may terminate this Agreement only after a 30-day period beginning
when the Underwriter gives the Company notice of its intentions to terminate
this Agreement (but the Underwriter's right to terminate its obligation to
purchase any shares of Common Stock pursuant to a Capital Demand Notice shall
not be subject to any delay or contingency) in which, in the case of (i), the
Company has not cured such breach as provided above, or, in the case of (iv),
the parties negotiate in good faith a reasonable alternative manner not illegal
or impracticable for the Underwriter to fulfill its commitment pursuant to this
Agreement; provided, however, that such termination shall not effect the
survival of (i) representations and warranties pursuant to Articles IV and V,
and indemnification and contribution rights pursuant to Article IX, each as set
forth in Section 10.5, (ii) the Purchase Option pursuant to Section 2.6 and
obligations relating to the Purchase Option, to the extent that any portion of
the Purchase Option is held by the Underwriter, (iii) obligations relating to
costs and expenses pursuant to Section 8.2, (iv) obligations pursuant to Article
II, to the extent such termination shall occur at any time from the beginning of
a Selling Period to the last Settlement Date of such Selling Period, (v)
covenants pursuant to Article VI (other than Section 6.11), to the extent any
portion of the Purchase Option is held by the Underwriter, (vi) the provisions
of Articles VII and X, or (vii) any other provisions of this Agreement that may
be reasonably construed to survive the termination of this Agreement. If the
Company shall fail to materially comply with the requirements under Section 6.2,
6.3, 6.4, 6.5 or 6.6 pursuant to clause (ii) above (without taking into account
materiality qualifications herein), the Company shall notify the Underwriter
within two (2) days of the time it becomes aware of its failure to materially
comply with any such covenants. If the Underwriter elects to terminate this
Agreement pursuant to clause (ii) above, it must first give the Company notice
of such election and then may terminate this Agreement only after a 10-day
period in which the Company has not cured its failure to comply with such
covenants; provided, however, that such termination shall not effect the
survival of (i) representations and warranties pursuant to Articles IV and V,
and indemnification and contribution rights pursuant to Article IX, each as set
forth in Section 10.5, (ii) the Purchase Option pursuant to Section 2.6 and
obligations relating to the Purchase
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Option, to the extent that any portion of the Purchase Option is held by the
Underwriter, (iii) obligations relating to costs and expenses pursuant to
Section 8.2, (iv) obligations pursuant to Article II, to the extent such
termination shall occur at any time from the beginning of a Selling Period to
the last Settlement Date of such Selling Period, (v) covenants pursuant to
Article VI (other than Section 6.11), to the extent any portion of the Purchase
Option is held by the Underwriter, (vi) the provisions of Articles VII and X, or
(vii) any other provisions of this Agreement that may be reasonably construed to
survive the termination of this Agreement. If a Capital Demand Notice has been
delivered by the Company to the Underwriter prior to the date that the
Underwriter terminates this Agreement pursuant to clause (iii) above, regardless
of the number of days that have elapsed from the date hereof, no reduction to
the Purchase Option Share Amount shall take place and the Purchase Option shall
remain in full force and effect. The Underwriter may also, in its sole and
absolute discretion, terminate this Agreement if the Company shall fail to
maintain the listing of the Common Stock on a Principal Market, or if trading of
the Common Stock on a Principal Market shall have been suspended for a period of
ten (10) consecutive Trading Days; provided, however, that such termination
shall not effect the survival of (i) representations and warranties pursuant to
Articles IV and V, and indemnification and contribution rights pursuant to
Article IX, each as set forth in Section 10.5, (ii) the Purchase Option pursuant
to Section 2.6 and obligations relating to the Purchase Option, to the extent
that any portion of the Purchase Option is held by the Underwriter, (iii)
obligations relating to costs and expenses pursuant to Section 8.2, (iv)
obligations pursuant to Article II, to the extent such termination shall occur
at any time from the beginning of a Selling Period to the last Settlement Date
of such Selling Period, (v) covenants pursuant to Article VI (other than Section
6.11), to the extent any portion of the Purchase Option is held by the
Underwriter, (vi) the provisions of Articles VII and X, or (vii) any other
provisions of this Agreement that may be reasonably construed to survive the
termination of this Agreement. The Underwriter may waive, in its sole and
absolute discretion, in whole or in part, any of the termination events
contained in this Section 7.4.
VIII. NOTICES; COSTS AND EXPENSES.
8.1 Notices. All notices, demands, requests, consents, approvals or
other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, (iv) transmitted by hand delivery or (v)
transmitted by facsimile, addressed as set forth below, or to such other address
as such party shall have specified most recently by written notice:
If to the Company, to:
Onyx Software Corporation
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Underwriter, to
Ramius Securities, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice (including, without limitation, a Capital Demand Notice,
but excluding any Underwriter Sales Notice, which Underwriter Sales Notice shall
be deemed to be delivered on the Trading Day it is delivered, if delivered via
facsimile prior to 8:00 p.m.) sent by one party to another with confirmation of
acceptance or otherwise received in writing via courier, hand delivery or first-
class mail (return receipt requested) by the Company, or, if received on any day
which is not a Trading Day or after 12:00 noon on a Trading Day, shall be deemed
to be delivered on the immediately succeeding Trading Day. Notice shall be
deemed given on the date of service or transmission if personally served or
transmitted by facsimile during normal business hours of the recipient;
provided, that such transmission by facsimile shall have been confirmed
received. Notice otherwise sent as provided herein shall be deemed given on the
third (3rd) business day following the date mailed or on the second business day
following the date of deposit for delivery of such notice with a reputable air
courier service.
8.2 Costs and Expenses. The Company shall be responsible for the
Underwriter's reasonable legal fees and related expenses incurred in entering
into this Agreement up to a maximum amount of $40,000. All such fees, costs and
expenses, that have been incurred prior to the date hereof, shall be payable
upon execution and delivery of this Agreement. The Company shall be responsible
for out-of-pocket costs and expenses incurred by the Underwriter while
conducting due diligence prior to such Selling Period up to a maximum amount of
$8,000 per calendar quarter. Notwithstanding anything contained in this Section
8.2 to the contrary, the Company shall not be responsible for any costs and
expenses pursuant to this Section 8.2 in any calendar quarter in which there
were no Capital Demand Notices delivered. The Company agrees to pay the
Underwriter the amounts due under this Section 8.2 (including expenses for due
diligence) that have not yet been paid within thirty (30) days following the
Underwriter's request therefor. In the event payment is not received within such
thirty (30) day period, Underwriter shall have the right to deduct any such
amounts owed by the Company to the Underwriter from any amounts owed by the
Underwriter to the Company pursuant hereto.
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IX. INDEMNIFICATION AND CONTRIBUTION.
9.1 Indemnification.
(a) To the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend the Underwriter, the
directors, officers, partners, employees and agents of the Underwriter and each
Person, if any, who controls any Underwriter within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, attorneys' fees, amounts paid in settlement or expenses, joint or several
(collectively, "Claims"), incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC or NASD, whether pending or threatened,
whether or not such Indemnified Person is or may be a party thereto
("Indemnified Damages"), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or any post-
effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other Blue Sky laws of any
jurisdiction in which Registrable Securities are offered, or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements therein were made, not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement, or (iv) any breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any document delivered in connection with this Agreement (the matters in the
foregoing clauses (i) through (iv) being, collectively, "Violations"). The
Company shall reimburse the Underwriters and each such controlling person,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 9.1(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company; (ii) with respect to any preliminary prospectus, shall
not inure to the benefit of any such person from whom the person asserting any
such Claim purchased the Registrable Securities that are the subject thereof (or
to the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a Violation and such Indemnified Person, notwithstanding such advice,
used it; and (iii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Underwriter.
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(b) In connection with any Registration Statement or any
amendment or supplement thereto in which the Underwriter is participating, the
Underwriter agrees to indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 9.1(a), the Company, each of
its directors, each of its officers who signs the Registration Statement, each
Person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claim or
Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon (i) any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter expressly for use in connection with any
Registration Statement covering Registrable Securities or (ii) the sale of
Common Stock by the Underwriter to any Person pursuant to a Registration
Statement despite the fact that the Underwriter has received a Notice of
Blocking Period from the Company and has not received notice from the Company
signaling the end of such Blocking Period; and, subject to Section 9.1(c), such
Underwriter will reimburse such Indemnified Parties promptly as such expenses
are incurred and are due and payable for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 9.1(b)
and the agreement with respect to contribution contained in Section 9.2 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Underwriter, which consent
shall not be unreasonably withheld; provided, further, however, that the
Underwriter shall be liable under this Section 9.1(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the Commission to such
Underwriter as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Underwriter.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 9.1(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
(c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 9.1 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
9.1, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right (at its expense) to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall diligently pursue such defense and
that an Indemnified Person or Indemnified Party shall have the right to retain
its own counsel with the fees and expenses to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, as the case may be, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay reasonable fees for
only one separate legal counsel for all Indemnified Persons or Indemnified
Parties (as applicable). The Indemnified Party or Indemnified Person shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent, provided, however, that the
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indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 9.1,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
(d) The indemnification required by this Section 9.1 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.
(e) The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
9.2 Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 9.1 to the fullest extent permitted by
law; provided, however, that: (i) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 9.1; (ii) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 10(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
X. GOVERNING LAW; MISCELLANEOUS
10.1 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.
10.2 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional original executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
10.3 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
10.4 Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction;
provided that such severability shall be ineffective if it materially changes
the economic benefit of this Agreement to any party.
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10.5 Survival. The representations, warranties and agreements of the
parties hereto shall survive each Closing hereunder and the termination of this
Agreement or the Commitment Period. The indemnity and contribution agreements
contained in Sections 9.1 and 9.2 hereof shall survive and remain operative and
in full force and effect regardless of (i) any termination of this Agreement or
of the Commitment Period, (ii) any investigation made by or on behalf of any
indemnified party or by or on behalf of the Company and (iii) the consummation
of the sale or successive resales of the Common Stock.
10.6 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person, except as provided in Article IX.
10.7 Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
10.8 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. Unless
the context of this Agreement otherwise clearly requires, references to the
plural include the singular, the singular the plural and the part the whole and
"or" has the inclusive meaning represented by the phrase "and/or". Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
10.9 Equitable Relief. The Company recognizes that in the event that
it fails to perform, observe, or discharge any or all of its obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the
Underwriter. The Company therefore agrees that the Underwriter shall be entitled
to seek temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
10.10 Consent to Jurisdiction. The parties hereto expressly submit
themselves to the exclusive jurisdiction of the state and federal courts of New
York, New York in any action or proceeding relating to this Agreement or any of
the other documents contemplated hereby or any of the transactions contemplated
hereby or thereby. Each party hereby irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any such action, suit or proceeding brought in such a court and any
claim that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum. The parties hereto hereby irrevocably waive
any and all right to a trial by jury with respect to any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. The parties hereto irrevocably and unconditionally consent to the
service of process of any of the aforementioned courts in any such action, suit
or proceeding by the mailing of copies thereof by registered or certified mail,
return receipt requested, postage prepaid, at their respective addresses set
forth or provided for herein, such service to become effective ten (10) days
after such mailing. Nothing herein shall affect the right of any party to serve
process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against the other parties in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
RAMIUS SECURITIES, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Principal
ONYX SOFTWARE CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Interim CFO
EXECUTION COPY COMMON STOCK
UNDERWRITING AGREEMENT