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EXHIBIT 4.12
AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
EFFECTIVE AS OF DECEMBER 20, 2000
BY AND BETWEEN
LEAP WIRELESS INTERNATIONAL, INC.
AND
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions ..................................................................................................1
SECTION 1.1 Definitions.....................................................................................1
ARTICLE II PURCHASE AND SALE OF COMMON STOCK ...........................................................................4
SECTION 2.1 Purchase and Sale of Stock......................................................................4
SECTION 2.2 The Shares......................................................................................4
SECTION 2.3 Purchase and Closing............................................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES .............................................................................5
SECTION 3.1 Representations and Warranties of the Company...................................................5
SECTION 3.2 Representations, Warranties and Covenants of the Purchaser.....................................12
ARTICLE IV COVENANTS ..................................................................................................13
SECTION 4.1 Securities Compliance..........................................................................13
SECTION 4.2 Registration and Listing.......................................................................13
SECTION 4.3 Registration Statement.........................................................................14
SECTION 4.4 Compliance with Laws...........................................................................14
SECTION 4.5 Keeping of Records and Books of Account........................................................14
SECTION 4.6 Limitations on Holdings and Issuances..........................................................14
SECTION 4.7 Non-public Information.........................................................................15
SECTION 4.8 Effective Registration Statement...............................................................15
SECTION 4.9 No Stop Orders.................................................................................15
SECTION 4.10 Amendments to the Registration Statement.......................................................15
SECTION 4.11 Prospectus Delivery............................................................................15
SECTION 4.12 Other Financing................................................................................16
SECTION 4.13 Notices .......................................................................................17
ARTICLE V CONDITIONS TO CLOSING, DRAW DOWNS AND CALL OPTIONS...........................................................17
SECTION 5.1 Conditions Precedent to the Obligation of the Company to
Issue a Draw Down Notice or Grant a Call Option and Sell the Shares .........................17
SECTION 5.2 Conditions Precedent to the Obligation of the Purchaser to Close...............................18
SECTION 5.3 Conditions Precedent to the Obligation of the Purchaser to Accept a
Draw Down or Call Option Grant and Purchase the Shares ......................................19
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ARTICLE VI DRAW DOWN TERMS; CALL OPTION ...............................................................................20
SECTION 6.1 Draw Down Terms................................................................................20
SECTION 6.2 Purchaser's Call Option........................................................................23
SECTION 6.3 Aggregate Limit................................................................................24
ARTICLE VII TERMINATION ...............................................................................................24
SECTION 7.1 Termination by Mutual Consent..................................................................24
SECTION 7.2 Company Termination............................................................................24
SECTION 7.3 Other Termination..............................................................................24
SECTION 7.4 Effect of Termination..........................................................................25
ARTICLE VIII INDEMNIFICATION ..........................................................................................25
SECTION 8.1 General Indemnity..............................................................................25
SECTION 8.2 Indemnification Procedures.....................................................................26
ARTICLE IX MISCELLANEOUS ..............................................................................................27
SECTION 9.1 Fees and Expenses..............................................................................27
SECTION 9.2 Specific Enforcement, Consent to Jurisdiction..................................................28
SECTION 9.3 Entire Agreement; Amendment....................................................................28
SECTION 9.4 Notices .......................................................................................28
SECTION 9.5 Waivers .......................................................................................29
SECTION 9.6 Headings ......................................................................................29
SECTION 9.7 Successors and Assigns.........................................................................30
SECTION 9.8 Governing Law..................................................................................30
SECTION 9.9 Survival ......................................................................................30
SECTION 9.10 Counterparts...................................................................................30
SECTION 9.11 Publicity .....................................................................................30
SECTION 9.12 Severability...................................................................................30
SECTION 9.13 Further Assurances.............................................................................30
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AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED COMMON STOCK PURCHASE AGREEMENT (this
"Agreement"), effective as of December 20, 2000, is made by and between Leap
Wireless International, Inc., a Delaware corporation (the "Company"), and Acqua
Wellington North American Equities Fund, Ltd., a limited liability company
organized under the laws of the Commonwealth of The Bahamas (the "Purchaser").
RECITALS
WHEREAS, the parties entered into that certain Common Stock Purchase
Agreement dated as of December 20, 2000 (the "Original Agreement"), and the
parties desire to amend and restate the Original Agreement to change the maximum
dollar amount of the Company's common stock, $.0001 par value ("Common Stock"),
that the Purchaser shall purchase under this Agreement.
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase up to a maximum of $125,000,000 of the
Company's Common Stock.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions.
(a) "Aggregate Limit" shall have the meaning assigned to such term in
Section 2.1 hereof.
(b) "Alternate Market" shall mean the Nasdaq Small Cap Market, the
American Stock Exchange, the New York Stock Exchange or the OTC Bulletin Board,
whichever is at the time the principal trading exchange or market for the Common
Stock.
(c) "Call Option" shall have the meaning assigned to such term in
Section 6.2(a) hereof.
(d) "Call Option Amount" means the actual amount of proceeds received by
the Company upon the exercise of a Call Option by the Purchaser.
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(e) "Commission" shall mean the Securities and Exchange Commission.
(f) "Commission Documents" shall mean all reports, schedules, forms,
statements and other documents filed by the Company with the Commission pursuant
to the reporting requirements of the Exchange Act, including material filed
pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been
previously filed by the Company and which shall be filed by the Company in the
future during the Investment Period, including, without limitation the Form 10-K
filed by the Company for the year ended August 31, 1999 (the "Form 10-K") and
the Transition Report on Form 10-K filed by the Company for the period from
September 1, 1999 to December 31, 1999 (the "Form 10-KT"), and shall include all
information contained in such filings and all filings incorporated by reference
therein.
(g) "Commission Filings" means the Registration Statement on Form S-3
No. 333-45388, as the same may be amended from time to time, and all other
filings made by the Company with the Commission prior to or after the Effective
Date pursuant to the Exchange Act.
(h) "Common Stock" shall have the meaning assigned to such term in the
Recitals.
(i) "Draw Down" means the exercise by the Company of its right to
request the purchase of shares of Common Stock by the Purchaser.
(j) "Draw Down Amount" means the actual amount of a Draw Down up to the
amount permitted by Section 6.1(a) hereof in any Draw Down Pricing Period or
such other amount mutually agreed upon by the Purchaser and the Company.
(k) "Draw Down Discount Percentage" means (i) 94.5% if the Market
Capitalization is equal to or greater than $400,000,000 but less than
$500,000,000; (ii) 95% if the Market Capitalization is equal to or greater than
$500,000,000 but less than $750,000,000; (iii) 95.5% if the Market
Capitalization is equal to or greater than $750,000,000 but less than
$1,000,000,000; and (iv) 96% if the Market Capitalization is equal to or greater
than $1,000,000,000.
(l) "Draw Down Exercise Date" shall mean the date of issuance of a Draw
Down Notice by the Company.
(m) "Draw Down Notice" shall have the meaning assigned to such term in
Section 6.1(i) hereof.
(n) "Draw Down Pricing Period" shall mean a period of eighteen (18)
consecutive Trading Days commencing on the first Trading Day designated as the
start date of such draw down pricing period in the Draw Down Notice, or such
other period mutually agreed upon by the Purchaser and the Company.
(o) "Effective Date" shall mean October 11, 2000, the date the
Registration Statement of the Company covering the Shares being subscribed for
hereby was declared effective.
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(p) "Investment Period" shall have the meaning assigned to such term in
Section 7.1 hereof.
(q) "Market Capitalization" shall be equal to the product of (i) the
closing bid price of the Common Stock and (ii) the number of outstanding shares
of Common Stock on such date, each as determined on the Draw Down Exercise Date
by Bloomberg Financial LP using the DES and HP Functions.
(r) "Material Adverse Effect" shall mean any effect on the business,
operations or financial condition of the Company that is material and adverse to
the Company and its subsidiaries, taken as a whole and/or any condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this Agreement in any material respect.
(s) "Material Change in Ownership" shall mean that, as of any particular
measurement date, the officers and significant owners of the Company shall
beneficially own in the aggregate less than 1% of the outstanding Common Stock
of the Company, except that for purposes of making any such calculation, Common
Stock issued to the Purchaser pursuant to this Agreement shall not be included
in such calculation.
(t) "Prospectus" shall mean the prospectus in the form included in the
Registration Statement, as supplemented by any Prospectus Supplement.
(u) "Prospectus Supplement" shall mean any prospectus supplement to the
Registration Statement filed with the Commission pursuant to Rule 424(b).
(v) "Registration Statement" shall mean the registration statement on
Form S-3, Commission File Number 333-45388 under the Securities Act, filed with
the Commission for the registration of the Shares, as such Registration
Statement may be amended from time to time.
(w) "Section 6.1(m) Notice" shall have the meaning assigned to such term
in Section 6.1(m) hereof.
(x) "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
(y) "Settlement Date" shall have the meaning assigned to such term in
Section 6.1(d) hereof.
(z) "Shares" shall mean collectively the shares of Common Stock of the
Company that may be purchased hereunder upon exercise of any Draw Down or Call
Option.
(aa) "Threshold Price" is the lowest price at which the Company may set
in the Draw Down Notice to sell Shares during a Draw Down Pricing Period (not
taking into account the Draw Down Discount Percentage during such Draw Down
Pricing Period).
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(bb) "Trading Day" shall mean a day on which the Common Stock is traded
on the Nasdaq National Market or an Alternate Market.
(cc) "Truncated Draw Down Allocation Amount" shall mean the portion of
the Draw Down Amount Requested that is allocated to the purchase of Shares in
accordance with Section 6.1 hereof for each Trading Day in a reduced Draw Down
Pricing Period (as provided in Section 6.1(m) hereof).
(dd) "VWAP" shall mean the daily volume weighted average price (based on
a Trading Day from 9:30 a.m. to 4:00 p.m., eastern time) of the Common Stock of
the Company on the Nasdaq National Market or an Alternate Market as reported by
Bloomberg Financial LP using the AQR function.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
SECTION 2.1 Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to a maximum of
$125,000,000 of the Company's Common Stock (the "Aggregate Limit") through (i)
an initial Draw Down, subject to Section 6.1 hereof, of up to $15,000,000 which
may be requested at any time on or after the Closing Date, and an initial Call
Option, subject to Section 6.2 hereof, of up to $40,000,000, to be granted with
the initial Draw Down, and (ii) subsequent Draw Downs, subject to Section 6.1
hereof, and Call Options, subject to Section 6.2 hereof, of up to the Draw Down
Amount for the applicable Draw Down Pricing Period that the Company may grant to
the Purchaser in the Company's sole discretion.
SECTION 2.2 The Shares. The Company has or will have authorized and has
or will have reserved and covenants to continue to reserve once reserved,
subject to Section 4.4(b) hereof, free of preemptive rights and other similar
contractual rights of stockholders, a sufficient number of its authorized but
unissued shares of its Common Stock to cover the Shares to be issued in
connection with all Draw Downs and Call Options, in any case prior to the
issuance to the Purchaser of such Shares under this Agreement.
SECTION 2.3 Purchase and Closing. Subject to the terms and conditions of
this Agreement, the Company agrees to issue and sell to the Purchaser and, in
consideration of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the Purchaser agrees to
purchase that number of the Shares to be issued in connection with each Draw
Down and each Call Option exercised by the Purchaser. The closing of the
execution and delivery of this Agreement shall occur upon delivery by facsimile
of executed signature pages of this Agreement and all other document,
instruments and writings required to be delivered pursuant to this Agreement to
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Closing") at 10:00 a.m., eastern time, on (i) December
20, 2000, or (ii) such other time and place or on such date as the Purchaser and
the Company may agree upon (the "Closing Date"). Each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing. Upon consummation of the
Closing, this Agreement shall
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be deemed to be effective as of December 20, 2000, and the Original Agreement
shall be null and void and of no further force and effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
As of the date hereof, the Company does not have any subsidiaries (as defined in
Section 3.1(g)) except as set forth in the Commission Documents or the
Commission Filings or on Schedule 3.1(g) attached hereto. The Company and each
such subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect.
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and, except as contemplated by Sections 2.2 or
4.4(b), no further consent or authorization of the Company or its Board of
Directors or stockholders is required. This Agreement has been duly executed and
delivered by the Company. This Agreement constitutes, or shall constitute when
executed and delivered, 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 applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of the date hereof are set forth on
Schedule 3.1(c) attached hereto. All of the outstanding shares of the Common
Stock have been duly and validly authorized, and are fully paid and
non-assessable. Except as set forth in this Agreement including Schedule 3.1(c)
attached hereto or as set forth in the Commission Documents or the Commission
Filings, as of the date hereof no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in this Agreement
including Schedule 3.1(c) attached hereto or as set forth in the Commission
Documents or the Commission Filings as of the date hereof there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue
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additional shares of the capital stock of the Company or options, securities or
rights convertible into shares of capital stock of the Company. Except for
customary transfer restrictions contained in agreements entered into by the
Company in order to sell restricted securities or as set forth in Schedule
3.1(c) attached hereto or as set forth in the Commission Documents or the
Commission Filings as of the date hereof, the Company is not a party to any
agreement granting registration rights to any person with respect to any of its
equity or debt securities. Except as set forth in Schedule 3(c) attached hereto,
the Company is not a party to, and it has no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of the
Company. Except as set forth in Schedule 3.1(c) attached hereto, the offer and
sale of all capital stock, convertible securities, rights, warrants, or options
of the Company issued prior to the Closing complied with all applicable federal
and state securities laws, and no stockholder has a right of rescission or
damages with respect thereto which would have a Material Adverse Effect. The
Company has furnished or made available to the Purchaser true and correct copies
of the Company's Certificate of Incorporation and in effect on the date hereof
(the "Charter"), and the Company's Bylaws as in effect on the date hereof (the
"Bylaws").
(d) Issuance of Shares. The Shares to be issued under this Agreement
have been or, prior to the issuance to Purchaser hereunder, will be duly
authorized by all necessary corporate action and, when paid for and issued in
accordance with the terms hereof, the Shares shall be validly issued and
outstanding, fully paid and non-assessable, and the Purchaser shall be entitled
to all rights accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company's Charter or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases (other than violations
pursuant to clauses (i) and (iv) (to the extent of federal securities law)), for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company is not required under federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares in accordance with the terms hereof (other than any
filings which may be required to be made by the Company with the Commission, or
the Nasdaq National Market subsequent to the Closing, and, any registration
statement which may be filed pursuant hereto); provided that, for purpose of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein.
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(f) Commission Documents, Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Company has
timely filed all Commission Documents. The Company has delivered or made
available to the Purchaser true and complete copies of the Commission Documents
filed with the Commission since December 31, 1999 and prior to the Closing Date.
The Company has not provided to the Purchaser any information which, according
to applicable law, rule or regulation, should have been disclosed publicly by
the Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement. As of its date, each of the Form
10-K and the Form 10-KT complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents, and each of the Form 10-K and the Form 10-KT, as
of its date, did not contain any untrue statement of a material fact or omit 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. The financial statements of the Company included in the
Commission Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission 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 not include 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
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(g) Subsidiaries. The Commission Documents, the Commission Filings or
Schedule 3.1(g) attached hereto set forth each subsidiary of the Company as of
the date hereof, showing the jurisdiction of its incorporation or organization
and showing the percentage of the Company's direct or indirect ownership of the
outstanding stock or other interests of such subsidiary. For the purposes of
this Agreement, "subsidiary" shall mean any corporation or other entity of which
at least a majority of the securities or other ownership interest having
ordinary voting power (absolutely or contingently) for the election of directors
or other persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. Except as set
forth in the Commission Documents or the Commission Filings, none of such
subsidiaries is a "significant subsidiary" as defined in Regulation S-X.
(h) No Material Adverse Effect. Since September 30, 2000, the Company
has not experienced or suffered any Material Adverse Effect except continued
losses from operations.
(i) No Undisclosed Liabilities. Except as set forth on Schedule 3.1(i)
attached hereto, the Company has no liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to be disclosed on a balance
sheet of the Company or any subsidiary (including the
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notes thereto) in conformity with GAAP not disclosed in the Commission
Documents, the Commission Filings or on Schedule 3.1(i) attached hereto, other
than those incurred in the ordinary course of the Company's or its subsidiaries
respective businesses since September 30, 2000 and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.
(j) No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.
(k) Indebtedness. The Commission Documents, the Commission Filings or
Schedule 3.1(k) attached hereto sets forth as of September 30, 2000 all
outstanding secured and unsecured Indebtedness of the Company, or for which the
Company or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $1,000,000 (other than trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $1,000,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company
or any subsidiary is in default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and its subsidiaries has good
and marketable title to all of their real and personal property reflected in the
Commission Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated in the Commission
Documents or the Commission Filings or on Schedule 3.1(l) attached hereto or
those that would not cause a Material Adverse Effect. All said leases of the
Company and each of its subsidiaries are valid and subsisting and in full force
and effect in all material respects.
(m) Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto. Except
as set forth in the Commission Documents, the Commission Filings or on Schedule
3.1(m) attached hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against or
involving the Company or any subsidiary, or any of their respective properties
or assets which, if adversely determined, would result in a Material Adverse
Effect.
(n) Compliance with Law. The business of the Company has been and is
presently being conducted in accordance with all applicable federal, state and
local governmental laws, rules, regulations and ordinances, except as such that
do not cause a Material Adverse Effect. Each of the Company and its subsidiaries
has all franchises, permits, licenses, consents
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and other governmental or regulatory authorizations and approvals necessary for
the conduct of its business as now being conducted unless the failure to possess
such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, would
not have a Material Adverse Effect.
(o) Certain Fees. Except as set forth on Schedule 3.1(o) attached
hereto, no brokers, finders or financial advisory fees or commissions will be
payable by the Company with respect to the transactions contemplated by this
Agreement.
(p) Disclosure. To the Company's knowledge, neither this Agreement or
the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchaser by or on behalf of the Company in connection with the
transactions contemplated by this Agreement contain any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading.
(q) Operation of Business. The Company or one or more of its
subsidiaries owns or has a valid right to use all patents, trademarks, service
marks, trade names, copyrights, licenses and authorizations as set forth in the
Commission Documents or the Commission Filings and all rights with respect to
the foregoing, which are necessary for the conduct of its business as now
conducted without, to the Company's knowledge, any conflict with the rights of
others, except to the extent set forth in the Commission Documents or the
Commission Filings and except to the extent that a Material Adverse Effect would
not result from such conflict.
(r) Environmental Compliance. Except as disclosed in the Commission
Filings, the Company has obtained all 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 emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, 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, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not individually or in the
aggregate have a Material Adverse Effect, 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
that violate or would to violate any Environmental Law after the Closing or that
would 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 the emission,
discharge, release or threatened release of any hazardous substance.
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(s) Material Agreements. Except as set forth in the Commission
Documents, the Commission Filings or on Schedule 3.1(s) attached hereto, the
Company is not a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to a registration statement on
Form S-3 or applicable form (collectively, "Material Agreements") if the Company
was registering securities under the Securities Act. The Company has in all
material respects performed all the obligations required to be performed by it
to date under the foregoing Material Agreements, has received no notice of
default and, to the best of the Company's knowledge is not in default under any
Material Agreement now in effect, the result of which could reasonably be
expected to cause a Material Adverse Effect.
(t) Transactions with Affiliates. Except as set forth in the Commission
Documents, the Commission Filings or on Schedule 3.1(t) attached hereto, there
are no loans, leases, agreements, contracts, royalty agreements, management
contracts or arrangements or other continuing transactions exceeding $1,000,000
between (a) the Company or any subsidiary on the one hand, and (b) on the other
hand, any officer, employee, consultant or director of the Company, or any
person who would be covered by Item 404(a) of Regulation S-K or any corporation
or other entity controlled by such officer, employee, director or person.
(u) Securities Act of 1933. 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 hereunder.
(i) 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 when so filed in all
material respects with the provisions of the Securities Act. The Commission has
not issued any order preventing or suspending the use of any Prospectus.
(ii) The Company meets the requirements for the use of Form S-3
under the Securities Act. The Registration Statement in the form in which it
became effective and also in such form as it may be when any post-effective
amendment thereto became effective and the Prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 424(b) under the
Securities Act, complied in all material respects with the provisions of the
Securities Act and did not at any such times 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 made) not misleading, except 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 Purchaser furnished to the Company
in writing by or on behalf of the Purchaser expressly for use therein.
(iii) The Company has not distributed and, prior to the completion
of the sale of the Shares to the Purchaser, will not distribute any offering
material in connection with the offering and sale of the Shares other than the
Registration Statement, the Prospectus or other materials, if any, permitted by
the Securities Act.
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(v) Employees. Except as set forth in the Commission Documents, the
Commission Filings or on Schedule 3.1(v) attached hereto, as of the date hereof,
the Company has no collective bargaining arrangements or agreements covering any
of its employees. Except as set forth on Schedule 3.1(v) attached hereto, as of
the date hereof the Company has no employment contract or any other similar
contract or restrictive covenant, relating to the right of any officer, key
employee or consultant to be employed or engaged by the Company whose
termination individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect. As of the date hereof, since September 30, 2000,
no officer, consultant or key employee of the Company whose termination, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company.
(w) Use of Proceeds. The proceeds from the sale of the Shares will be
used by the Company and its subsidiaries as set forth in the Registration
Statement.
(x) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan (as defined below) by the Company which
is or would have a Material Adverse Effect. The execution and delivery of this
Agreement and the issue and sale of the Shares will not involve any transaction
which is subject to the prohibitions of Section 406 of ERISA or in connection
with which a tax could be imposed pursuant to Section 4975 of the Internal
Revenue Code of 1986, as amended, provided that, if any of the Purchaser, or any
person or entity that owns a beneficial interest in any of the Purchaser, is an
"employee pension benefit plan" (within the meaning of Section 3(2) of ERISA)
with respect to which the Company is a "party in interest" (within the meaning
of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of
ERISA, if applicable, are met. As used in this Section 3.1(y), the term "Plan"
shall mean an "employee pension benefit plan" (as defined in Section 3 of ERISA)
which is or has been established or maintained, or to which contributions are or
have been made, by the Company or by any trade or business, whether or not
incorporated, which, together with the Company, is under common control, as
described in Section 414(b) or (c) of the Code.
(z) Acknowledgment Regarding Purchaser's Purchase of Shares. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
arm's length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the Purchaser 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
hereunder and any advice given by the Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Purchaser's purchase of the Shares.
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SECTION 3.2 Representations, Warranties and Covenants of the Purchaser.
The Purchaser hereby makes the following representations, warranties and
covenants to the Company:
(a) Organization and Standing of the Purchaser. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the Commonwealth of the Bahamas.
(b) Authorization and Power. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Purchaser, its
Board of Directors or stockholders is required. This Agreement constitutes, or
shall constitute when executed and delivered, a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of, creditor's rights and remedies or by other equitable principles
of general application.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser's charter documents or bylaws or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose a lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is or
by which any of its properties or assets are bound or (iv) result in a violation
of any law, rule, or regulation, or any order, judgment or decree of any court
or governmental agency applicable to the Purchaser or its properties, except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the Purchaser to
enter into and perform its obligations under this Agreement in any material
respect. The Purchaser is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or to purchase the Shares in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
the Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
(d) Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares.
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Purchaser understands that it (and not the Company) shall be responsible for its
own tax liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement.
(e) Selling Restriction. The Purchaser has the right to sell that number
of Shares equal in number to the number of Shares to be purchased pursuant to
this Agreement during the Investment Period. The Purchaser covenants, however,
that prior to and during the Investment Period and for a period of three (3)
months after any termination of this Agreement in accordance with Article VII
hereof, neither the Purchaser nor any of its affiliates nor any entity managed
by the Purchaser will ever be in a short position with respect to shares of
Common Stock of the Company in any account directly or indirectly managed by the
Purchaser, or any affiliates of the Purchaser, or any entity managed by the
Purchaser. In addition, prior to and during the Investment Period and for a
period of three (3) months after any termination of this Agreement in accordance
with Article VII hereof, neither the Purchaser nor any of its affiliates nor any
entity managed by the Purchaser will sell any shares of Common Stock, except
that during the Investment Period the Purchaser shall have the right to sell
those Shares that the Purchaser has purchased or has accumulated for purchase
during each Trading Day of a Draw Down Pricing Period pursuant to the terms and
conditions described in this Agreement. Neither the Purchaser nor any of its
affiliates nor any entity managed by the Purchaser will grant any option to
purchase or acquire any right to dispose or otherwise dispose for value, any
shares of Common Stock or any securities convertible into, or exchangeable for,
or warrants to purchase any shares of Common Stock or any swap, short sale,
hedge or other agreement that transfers, in whole or in part, the economic risk
of ownership of the Common Stock. In addition, on a daily Trading Day basis, the
Purchaser agrees to restrict the volume of sales of Shares by the Purchaser, its
affiliates and any entity managed by the Purchaser to no more than thirty
percent (30%) of the total trading volume of the Common Stock, as reported on
Bloomberg Financial LP using the HP function, for such Trading Day.
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows, which covenants are for
the benefit of the Purchaser and its permitted assignees, that during the term
of this Agreement:
SECTION 4.1 Securities Compliance. The Company shall notify the
Commission and the Nasdaq National Market or an Alternate Market, if applicable,
in accordance with their rules and regulations, of the transactions contemplated
by this Agreement, and shall take all other necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation, for the
legal and valid issuance of the Shares to the Purchaser or subsequent holders.
SECTION 4.2 Registration and Listing. The Company will take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 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 Securities Act or
the rules promulgated thereunder) to terminate or suspend such registration
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or to terminate or suspend its reporting and filing obligations under the
Exchange Act or Securities Act, except as permitted herein. The Company will
take all action necessary to continue the listing or trading of its Common Stock
and the listing of the Shares purchased by Purchaser hereunder on the Nasdaq
National Market or an Alternate Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Nasdaq National Market or an Alternate Market.
SECTION 4.3 Registration Statement. Before the Company shall issue a
Draw Down Notice, the Company shall have caused a sufficient number of shares of
Common Stock to be authorized and registered to cover the Shares to be issued in
connection with this Agreement.
SECTION 4.4 Compliance with Laws.
(a) The Company shall comply with all applicable laws, rules,
regulations and orders, noncompliance with which could reasonably be expected to
have a Material Adverse Effect.
(b) The Company will not be obligated to issue and the Purchaser will
not be obligated to purchase any shares of the Common Stock which would result
in the issuance under this Agreement of more than nineteen and nine-tenths
percent (19.9%) of the issued and outstanding shares of the Common Stock, unless
such issuance has been duly approved by the shareholders of the Company.
(c) The Purchaser shall comply with all applicable laws, rules,
regulations and orders, noncompliance with which could reasonably be expected to
have a Material Adverse Effect. Without limiting the foregoing, the Purchaser
shall comply with Rule 415(a)(4) under the Securities Act and Regulation M under
the Exchange Act.
SECTION 4.5 Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company and its subsidiaries, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
SECTION 4.6 Limitations on Holdings and Issuances. At no time during the
term of this Agreement shall the Purchaser directly or indirectly own more than
nine and nine-tenths percent (9.9%) of the issued and outstanding shares of
Common Stock unless the Company and Purchaser have complied with applicable
waiting period requirements under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act. The Company will not be obligated to issue and the Purchaser will not be
obligated to purchase any shares of the Common Stock which would result in the
issuance under this Agreement to Purchaser at any time of more than nine and
nine-tenths percent (9.9%) of the issued and outstanding shares of the Common
Stock unless the Company and Purchaser have complied with applicable waiting
period requirements under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act.
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SECTION 4.7 Non-public Information. Neither the Company nor any of its
officers or agents shall disclose any material non-public information about the
Company to the Purchaser and neither the Purchaser nor any of its affiliates,
officers or agents will solicit any material non-public information from the
Company.
SECTION 4.8 Effective Registration Statement. If it is necessary for a
post-effective amendment to the Registration Statement to be filed and declared
effective before the offering of any Shares may commence, the Company will
endeavor to cause such post-effective amendment to be filed and declared
effective as soon as reasonably practicable and will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such advice in
writing, when it receives notice that the Registration Statement or such
post-effective amendment has become effective.
SECTION 4.9 No Stop Orders. The Company will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such advice in
writing: (i) of its receipt of notice of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prospectus or
for additional information; (ii) of its receipt of notice of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction or the initiation of any proceeding for such purpose;
and (iii) of its becoming aware of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Securities Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at any time
the Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make all reasonable efforts to obtain
the withdrawal of such order at the earliest possible time.
SECTION 4.10 Amendments to the Registration Statement. The Company will
not (i) file any amendment to the Registration Statement that relates to the
Purchaser, this Agreement or the transactions contemplated hereby in any manner
whatsoever or make any amendment or supplement to the Prospectus that relates to
the Purchaser, this Agreement or the transactions contemplated hereby in any
manner whatsoever of which, in either case, the Purchaser shall not previously
have been advised or to which the Purchaser shall reasonably object after being
so advised or (ii) so long as, in the reasonable opinion of counsel for the
Purchaser, a Prospectus is required to be delivered in connection with any
purchase of Shares by the Purchaser, file any information, documents or reports
pursuant to the Exchange Act without delivering a copy of such information,
documents or reports to the Purchaser, promptly following such filing.
SECTION 4.11 Prospectus Delivery. The Company shall file with the
Commission a Prospectus Supplement on the first Trading Day immediately
following the end of each Draw Down Pricing Period, and will deliver to the
Purchaser, without charge, in such quantities as reasonably requested by the
Purchaser, copies of each form of Prospectus and Prospectus Supplement on each
Settlement Date. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of
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the Securities Act and with the securities or Blue Sky laws of the jurisdictions
in which the Shares may be sold by the Purchaser, in connection with the
offering and sale of the Shares and for such period of time thereafter as the
Prospectus is required by the Securities Act to be delivered in connection with
sales of the Shares. If during such period of time any event shall occur that in
the judgment of the Company and its counsel or in the opinion of counsel for the
Purchaser is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Securities Act or any other law, the Company will forthwith
prepare and, subject to the provisions of Section 4.10 above, file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Purchaser a reasonable number of copies thereof.
SECTION 4.12 Other Financing. If the Company enters into any definitive
financing agreement, the primary purpose of which would be to obtain equity
financing for the Company (an "Other Financing"), during the Draw Down Pricing
Period, the Company shall promptly notify the Purchaser of such Other Financing.
If the Company enters into an Other Financing, including, without limitation, an
underwritten public offering, during a Draw Down Pricing Period, the Purchaser
shall have the options set forth in Section 6.1(k) hereof. If between Draw Down
Pricing Periods the Company enters into (x) an Other Financing which provides
for the issuance of Common Stock or securities convertible, exercisable or
exchangeable for Common Stock at a net discount (after all fees and discounts
associated with the transaction) to the then current market price of the Common
Stock) or (y) the issuance of Common Stock with warrants, which have an exercise
price such that together with the price of the Common Stock would result in the
issuance of shares of Common Stock at a per share price below the then current
market price of the Common Stock, which Common Stock the Company is obligated to
register (in either case, a "PIPE Financing"), the Purchaser shall have the
option, which option shall be exercised no later than five (5) Trading Days
after receipt by the Purchaser of the notice of such Other Financing, to
purchase (x) up to the maximum Draw Down Amount that would be applicable under
this Agreement based on the Threshold Price equal to the price per share to be
paid for the Common Stock in the Other Financing or (y) such other amount
mutually agreed upon by the Company and the Purchaser. As used herein, "Other
Financing" shall not include the Company (i) issuing shares of Common Stock in
connection with the Company's current or future option plans, stock purchase
plans, 401K plan and stockholder rights plans, including additional shares
authorized for issuance under any such plans from time to time in the future
(the primary purpose of which is not to raise equity) or upon exercise of any
currently outstanding warrants or options, (ii) issuing shares of Common Stock,
securities convertible into Common Stock or warrants to purchase shares of
Common Stock issued for the purposes of licensing agreements, strategic
agreements and/or collaborative agreements with third parties, (iii) issuing
shares of capital stock and/or warrants in connection with the formation and
maintenance of strategic partnerships, alliances or joint ventures or for the
acquisition of products, licenses, businesses (including divisions thereof) or
other assets, (iv) issuing securities by any subsidiary of the Company, (v)
issuing the securities which are set forth on Schedule 4.12 and (vi) issuing
warrants to purchase Common Stock in connection with equipment financing or
leasing arrangements (each a "Permitted Transaction").
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SECTION 4.13 Notices. The Company shall immediately notify the Purchaser
that (i) a Material Adverse Effect or Material Change in Ownership has occurred
or (ii) the Company has entered into an Other Financing (as defined in Section
4.12 hereof).
ARTICLE V
CONDITIONS TO CLOSING, DRAW DOWNS AND CALL OPTIONS
SECTION 5.1 Conditions Precedent to the Obligation of the Company to
Issue a Draw Down Notice or Grant a Call Option and Sell the Shares. The
obligation hereunder of the Company to enter into this Agreement and to issue a
Draw Down Notice or grant a Call Option and sell the Shares to the Purchaser is
subject to the satisfaction or waiver, at or before each Draw Down or Call
Option request (the "Draw Down Exercise Date"), of each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser in this Agreement shall be true
and correct in all material respects as of the date when made and as of each
Draw Down Exercise Date and each Settlement Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date.
(b) Registration Statement. The Company shall have a dollar amount of
Shares registered under the Registration Statement which are in a dollar amount
equal to or in excess of the number of Shares issuable pursuant to such Draw
Down Notice or Call Option. The Registration Statement registering the Shares
shall have been declared effective by the Commission and shall have been amended
or supplemented, as required, to disclose the sale of the Shares prior to each
Draw Down Exercise Date or each Settlement Date, as applicable, and there shall
be no stop order suspending the effectiveness of the Registration Statement.
(c) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to each Draw Down Exercise Date or each
Settlement Date, as applicable.
(d) No Injunction. No statute, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(e) No Suspension, Etc. Trading in the Common Stock shall not have been
suspended by the Commission or the Nasdaq National Market or an Alternate Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to such Draw Down Exercise
Date and applicable Settlement Date), and, at any time prior to each Draw Down
Exercise Date, trading in securities generally as reported on the Nasdaq
National Market or an Alternate Market shall not have been suspended or limited,
or minimum prices shall not have been established on securities whose trades are
reported by the
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Nasdaq National Market or an Alternate Market, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in any financial market which, in each
case, in the judgment of the Company, makes it impracticable or inadvisable to
issue the Shares.
(f) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company, or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
SECTION 5.2 Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to enter this Agreement is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Closing Date, as
though made at that time, except for representations and warranties that speak
as of a particular date.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) Effective Registration Statement. The Registration Statement
registering the Shares shall have been declared effective by the Commission
prior to the Closing Date and there shall be no stop order suspending the
effectiveness of the Registration Statement.
(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 authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company, or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(f) Opinion of Counsel, Etc. At the Closing, the Purchaser shall have
received an opinion of counsel to the Company, dated the Closing Date, in the
form of Exhibit A
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hereto, a Secretary's Certificate, dated the Closing Date, in the form of
Exhibit B hereto and a Compliance Certificate, dated the Closing Date, in the
form of Exhibit C hereto.
SECTION 5.3 Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down or Call Option Grant and Purchase the Shares. The obligation
hereunder of the Purchaser to accept a Draw Down or Call Option grant and to
acquire and pay for the Shares on the Settlement Date is subject to the
satisfaction or waiver, at or before each Draw Down Exercise Date and each
Settlement Date, as applicable, of each of the conditions set forth below. The
conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of
the representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Draw Down Exercise
Date and Settlement Date, as applicable, as though made at that time, except for
representations and warranties that speak as of a particular date.
(b) Registration Statement. The Company shall have a dollar amount of
Shares registered under the Registration Statement which are in a dollar amount
equal to or in excess of the number of Shares issuable pursuant to such Draw
Down Notice or Call Option. The Registration Statement registering the offer and
sale of the Shares shall have been declared effective by the Commission and
shall have been amended or supplemented, as required, to disclose the sale of
the Shares prior to each Draw Down Exercise Date or each Settlement Date, as
applicable, and there shall be no stop order suspending the effectiveness of the
Registration Statement.
(c) No Suspension, Etc. Trading in the Common Stock shall not have been
suspended by the Commission or the Nasdaq National Market or an Alternate Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to each Draw Down Exercise
Date), and, at any time prior to such Draw Down Exercise Date or such Settlement
Date, trading in securities generally as reported by the Nasdaq National Market
or an Alternate Market shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by the Nasdaq National Market or an Alternate Market, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities, nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in any financial
market which, in each case, in the reasonable judgment of the Purchaser, makes
it impracticable or inadvisable to purchase the Shares. The Common Stock shall
be listed on Nasdaq or an Alternate Market.
(d) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Draw Down Exercise Date and the
Settlement Date and shall have delivered the Compliance Certificate
substantially in the form attached hereto as Exhibit C.
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(e) 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 authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(f) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company, or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(g) No Material Adverse Effect; No Material Change in Ownership. No
Material Adverse Effect except continued losses from operations or Material
Change in Ownership shall have occurred.
ARTICLE VI
DRAW DOWN TERMS; CALL OPTION
SECTION 6.1 Draw Down Terms. Subject to the satisfaction of the
conditions set forth in this Agreement and subject to Section 6.3 below, the
parties agree as follows:
(a) The Company, may, in its sole discretion, issue a Draw Down Notice
with respect to a Draw Down during each Draw Down Pricing Period of up to (i)
$10,000,000 if the Threshold Price is equal to or greater than $30.00 and less
than $33.00, and (ii) an additional $1,000,000 for every $3.00 increase in the
Threshold Price above $30.00 up to $75.00; provided, that if the Threshold Price
is equal to or greater than $75.00, then the Draw Down Amount shall be
$25,000,000; provided, however, that for every $3.00 decrease in the Threshold
Price below $30.00 to $15.00, the Draw Down Amount shall be decreased by
$1,000,000, incrementally; provided, further, that the Company may, in its sole
discretion, issue a Draw Down Notice with respect to any Draw Down Amount at any
Threshold Price or any Draw Down Discount Percentage pursuant to terms mutually
agreed upon by the Purchaser and the Company, which Draw Down the Purchaser will
be obligated to accept. Prior to issuing any Draw Down Notice, the Company shall
have Shares registered under the Registration Statement which are valued in a
dollar amount equal to or in excess of the Draw Down Amount.
(b) The number of Shares to be issued in connection with each Draw Down
shall be equal to the sum of the quotients (for each Trading Day of the Draw
Down Pricing Period for which the VWAP equals or exceeds the Threshold Price) of
(x) 1/18th (or such other fraction the denominator of which equals the number of
Trading Days during the Draw Down Pricing Period) of the Draw Down Amount
divided by (y) the applicable Draw Down Discount Percentage (or such other
percentage mutually agreed upon by the parties) multiplied by the VWAP of the
Common Stock for such Trading Day.
(c) Only one Draw Down shall be allowed in each Draw Down Pricing
Period.
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(d) The number of Shares purchased by the Purchaser with respect to each
Draw Down shall be determined on a daily basis during each Draw Down Pricing
Period and settled on the second Trading Day following the end of each Draw Down
Pricing Period (the "Settlement Date").
(e) There shall be a minimum of five (5) Trading Days between Draw
Downs, unless otherwise mutually agreed upon between the Purchaser and the
Company.
(f) There shall be a maximum of twenty-four (24) monthly Draw Downs
during the term of this Agreement.
(g) Each Draw Down will expire on the end of the last Trading Day of
each Draw Down Pricing Period.
(h) If the VWAP on a given Trading Day in a Draw Down Pricing Period is
less than the Threshold Price, then the total amount of the Draw Down for the
relevant Draw Down Pricing Period will be reduced by 1/18th (or such other
fraction the denominator of which equals the number of Trading Days during the
Draw Down Pricing Period). At no time shall the Threshold Price be set below
$15.00, unless mutually agreed upon by the Company and the Purchaser. If trading
in the Common Stock is suspended for any reason for more than three (3) hours in
any Trading Day, at the Purchaser's option, the price of the Common Stock shall
be deemed to be below the Threshold Price for that Trading Day and the Draw Down
for the relevant Draw Down Pricing Period shall be reduced by 1/18th (or such
other fraction the denominator of which equals the number of Trading Days during
the Draw Down Pricing Period). Notwithstanding anything in the foregoing to the
contrary, for each Trading Day during the Draw Down Pricing Period that the VWAP
is less than the Threshold Price or is deemed to be below the Threshold Price
pursuant to the immediately preceding sentence, the Purchaser may elect in its
sole discretion to purchase Shares at a price equal to the Threshold Price
multiplied by the Draw Down Discount Percentage at the end of such Draw Down
Pricing Period. The Purchaser will inform the Company via facsimile transmission
no later than 8:00 p.m. (eastern time) on the last Trading Day of such Draw Down
Pricing Period as to the number of Shares, if any, the Purchaser chooses to
purchase under such circumstances set forth in this Section 6.1(h).
(i) The Company must inform the Purchaser via facsimile transmission
before 9:30 a.m. (eastern time) on the first Trading Day of the Draw Down
Pricing Period in substantially in the form attached hereto as Exhibit D (the
"Draw Down Notice") of the Draw Down Amount the Company wishes to exercise. In
addition to the Draw Down Amount, the Company shall set the Threshold Price with
each Draw Down Notice and shall designate the first Trading Day of the Draw Down
Pricing Period. Notwithstanding anything in the foregoing to the contrary, if
the Company wishes the Draw Down Exercise Date to be the first day of the Draw
Down Pricing Period, the Draw Down Notice must be delivered to the Purchaser and
receipt of such Draw Down Notice confirmed by the Purchaser prior to 9:30 a.m.
(eastern time) on the date of such Draw Down Exercise Date.
(j) On each Settlement Date, the Company shall deliver the Shares
purchased by the Purchaser to the Purchaser or to The Depositary Trust Company
("DTC") on the Purchaser's behalf via the Deposit Withdrawal Agent Commission
system ("DWAC"), and upon
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receipt of the Shares, the Purchaser shall cause payment therefor to be made to
the account designated by the Company by wire transfer of immediately available
funds provided that the Shares are received no later than 1:00 p.m., eastern
time, or next day available funds if the Shares are received thereafter.
(k) If during any Draw Down Pricing Period the Company shall enter into
an Other Financing (other than shares of Common Stock issued under this
Agreement or pursuant to a Permitted Transaction), the Purchaser may in its sole
discretion (i) purchase the Draw Down Amount of shares of Common Stock and/or
exercise Call Options granted during such Draw Down Pricing Period on the terms
at which the Company issued shares of Common Stock in the Other Financing during
such Draw Down Pricing Period, net of any third party's discount and fees, (ii)
purchase the Draw Down Amount of shares of Common Stock and/or exercise Call
Options granted during such Draw Down Pricing Period at the applicable Draw Down
Discount Percentage times the VWAP for such Draw Down Pricing Period, or (iii)
elect not to purchase any Shares during such Draw Down Pricing Period. The
Purchaser shall notify the Company of its election on the Trading Day preceding
the Settlement Date.
(l) If on the Settlement Date, the Company fails to deliver the Shares
to be purchased by the Purchaser, and such failure continues for ten (10)
Trading Days, the Company shall pay, in cash, as liquidated damages and not as a
penalty to the Purchaser an amount equal to two percent (2%) of the Draw Down
Amount for the initial thirty (30) days and each additional thirty (30) day
period thereafter until such failure has been cured, which shall be pro rated
for such periods less than thirty (30) days (the "Periodic Amount"). Cash
payments to be made pursuant to this clause (1) shall be due and payable
immediately upon demand in immediately available cash funds.
(m) If during any Draw Down Pricing Period the Company reasonably
believes an event may occur which would require the suspension of the
Registration Statement, the Company shall notify the Purchaser before
commencement of trading on any Trading Day (a "Section 6.1(m) Notice") and
reduce the number of Trading Days in such Draw Down Pricing Period. The last
Trading Day of such Draw Down Pricing Period shall be the Trading Day preceding
the receipt of the Section 6.1(m) Notice; provided, however, that if the Company
delivers the Section 6.1(m) Notice during trading hours on a Trading Day, then
the last Trading Day of such Draw Down Pricing Period shall be the Trading Day
on which the Section 6.1(m) Notice was received by the Purchaser.
The Purchaser will purchase the Truncated Draw Down Allocation for each
of the Trading Days prior to receipt of the Section 6.1(m) Notice, for an
aggregate purchase price determined in accordance with clauses (b) and (i) of
this Section 6.1.
In addition, the Purchaser may, at its option, elect to purchase Shares
in an additional dollar amount equal to the product of the Draw Down Amount
Requested, first multiplied by (x) a fraction, the numerator of which equals one
(1) and the denominator of which equals eighteen (18) or such other number of
Trading Days in such Draw Down Pricing Period as the parties may have mutually
agreed upon with respect to such Draw Down Pricing Period (eighteen or such
other mutually agreed upon number being referred to herein as the "Trading Day
Number"), and next multiplied by (y) that number that is equal to the Trading
Day Number
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minus the number of Trading Days in the reduced Draw Down Pricing Period. The
price per share for such additional dollar amount shall equal (i) the aggregate
total of Truncated Draw Down Allocation Amounts during the reduced Draw Down
Pricing Period divided by (ii) the number of Shares to be purchased during such
reduced Draw Down Pricing Period.
Upon receipt of the Section 6.1(m) Notice, the Purchaser may (x) elect
to purchase the Common Stock at the Threshold Price for any Trading Day that the
VWAP was below the Threshold Price during the reduced Draw Down Pricing Period
in accordance with Section 6.1(i) hereof, (y) elect to purchase the Common Stock
in the additional amount as set forth in the preceding paragraph of this Section
6.1(m), and (z) elect to exercise any unexercised Call Options (for a Call
Option Amount not to exceed $1,000,000) by issuing a Call Option Notice to the
Company, in each such case, no later than 10:00 a.m. (eastern time) on the first
Trading Day after the end of the reduced Draw Down Pricing Period. The exercise
price of the Call Option shall be based on the VWAP on the last Trading Day of
the reduced Draw Down Pricing Period (in lieu of the VWAP as specified in clause
(A) of Section 6.2(b) hereof) and otherwise determined in accordance with
Section 6.2(b) hereof.
The Settlement Date for the Truncated Draw Down Amount exercised during
an effected Draw Down Pricing Period shall be the second Trading Day after
receipt of the Section 6.1(m) Notice.
SECTION 6.2 Purchaser's Call Option. Subject to the satisfaction of the
conditions set forth in this Agreement and subject to Section 6.3 below, the
parties agree as follows:
(a) During each Draw Down Pricing Period, the Company at its sole
discretion may grant to the Purchaser the right to exercise multiple call
options of up to the applicable Draw Down Amount (a "Call Option"). The amount
of the Call Option shall be set forth in the Draw Down Notice. For each Trading
Day during a Draw Down Pricing Period, the Purchaser may exercise a Call Option
by providing notice to the Company of the exercise of a Call Option (the "Call
Option Notice"), substantially in the form attached hereto as Exhibit E.
(b) The number of shares of Common Stock to be issued in connection with
each Call Option shall equal the quotient of (i) the Call Option Amount and (ii)
the product of the applicable Draw Down Discount Percentage and the greater of
(A) the VWAP for the Common Stock on the day the Purchaser issues its Call
Option Notice and (B) the Threshold Price.
(c) Each Call Option exercised shall be settled on the applicable
Settlement Date.
(d) The Threshold Price designated by the Company in its Draw Down
Notice shall apply to each Call Option.
(e) For each Call Option that the Purchaser exercises pursuant to this
Section 6.2, the Purchaser must issue via facsimile a Call Option Notice to the
Company no later than 8:00 p.m. (eastern time) on the day such Call Option is
exercised. If the Purchaser does not
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exercise a Call Option by 8:00 p.m. (eastern time) on the last Trading Day of
the applicable Draw Down Pricing Period, the Purchaser's Call Options with
respect to that Draw Down Pricing Period shall terminate.
SECTION 6.3 Aggregate Limit. Notwithstanding anything to the contrary
herein, in no event may the Company issue a Draw Down Notice or grant a Call
Option to the extent that the sale of shares of Common Stock pursuant thereto
and pursuant to all prior Draw Down Notices or Call Options issued hereunder
would cause the Company to sell or the Purchaser to purchase shares of Common
Stock which in the aggregate are in a dollar amount in excess of the Aggregate
Limit. If the Company issues a Draw Down Notice or Call Option that otherwise
would permit the Purchaser to purchase shares of Common Stock which would cause
the aggregate purchases by Purchaser hereunder to exceed the Aggregate Limit,
such Draw Down Notice or Call Option shall be void ab initio to the extent of
the amount by which the value of shares of Common Stock otherwise issuable
pursuant to such Draw Down Notice or Call Option together with the value of all
other Common Stock purchased by the Purchaser pursuant hereto would exceed the
Aggregate Limit.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination by Mutual Consent. The term of this Agreement
shall expire on the earlier of (i) twenty-eight (28) months from the date of
execution of this Agreement, (ii) the date that all of the shares of Common
Stock registered under the Registration Statement have been issued and sold, and
(iii) the date the Purchaser shall have purchased $125,000,000 of Common Stock
(the "Investment Period"). This Agreement may be terminated at any time by
mutual consent of the parties.
SECTION 7.2 Company Termination. The Company may terminate this
Agreement effective upon thirty (30) days' written notice; provided, however,
that such termination does not occur during a Draw Down Pricing Period or prior
to a Settlement Date.
SECTION 7.3 Other Termination. The Company shall inform the Purchaser,
and the Purchaser shall have the right to terminate this Agreement within the
subsequent thirty (30) days (the "Event Period"), if (x) the Company enters into
an Other Financing (other than an underwritten public offering), including,
without limitation, an equity line of credit transaction and a PIPE Financing
which provides for (i) the issuance of Common Stock or securities convertible,
exercisable or exchangeable into Common Stock or the issuance of Common Stock
with warrants, which have an exercise price such that together with the price of
the Common Stock would result in the issuance of shares of Common Stock at a
discount to the then current market price of the Common Stock; provided,
however, that the Purchaser's termination right shall not apply if, after the
eight month anniversary of the Closing Date, the Company enters into a PIPE
Financing at a discount of up to seven percent (7%) of the then current market
price of the Common Stock, or (ii) a mechanism for the reset of the purchase
price of the Common Stock to below the then current market price of the Common
Stock, (y) a non-curable event resulting in a Material Adverse Effect except
continued losses from operations or Material Change in Ownership has occurred,
or (z) an event resulting in a Material Adverse Effect has occurred and such
event has not been cured within sixty (60) days of its occurrence. The Purchaser
may
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terminate this Agreement upon one (1) day's notice during the Event Period.
Notwithstanding anything to the contrary contained herein, the Purchaser may not
terminate this Agreement if the Company enters into an Other Financing which
provides for the issuance of Common Stock at the then current market price of
the Common Stock.
SECTION 7.4 Effect of Termination. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1, 7.2 or 7.3 herein, this Agreement shall
become void and of no further force and effect, except as provided in Section
9.9 hereof. Nothing in this Section 7.4 shall be deemed to release the Company
or the Purchaser from any liability for any breach under this Agreement, or to
impair the rights of the Company and the Purchaser to compel specific
performance by the other party of its obligations under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 General Indemnity.
(a) Indemnification by the Company. The Company will indemnify and hold
harmless the Purchaser, each of its directors, fund managers and officers, and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act from and against any
losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all reasonable attorneys' fees) to which the
Purchaser, each of its directors, fund managers and officers, and each person,
if any, who controls the Purchaser may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement relating to Common
Stock being sold to the Purchaser (including any Prospectus Supplement filed in
connection with the transactions contemplated hereunder which are a part of it),
or any amendment or supplement to it, or (ii) the omission or alleged omission
to state in that Registration Statement or any document incorporated by
reference in the Registration Statement, a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that the Company shall not be liable under this Section 8.1(a) to the extent
that a court of competent jurisdiction shall have determined by a final judgment
(with no appeals available) that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act, undertaken or omitted
to be taken by the Purchaser or such person through its bad faith or willful
misconduct; provided further, that the foregoing indemnity shall not apply to
any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto); and provided further,
that with respect to the Prospectus, the foregoing indemnity shall not inure to
the benefit of the Purchaser or any such person from
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whom the person asserting any loss, claim, damage, liability or expense
purchased Common Stock, if copies of the Prospectus were timely delivered to the
Purchaser pursuant hereto and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of the Purchaser or any such
person to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Common Stock to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense.
The Company will reimburse the Purchaser and each such controlling
person promptly upon demand for any legal or other costs or expenses reasonably
incurred by the Purchaser or any controlling person in investigating, defending
against, or preparing to defend against any such claim, action, suit or
proceeding, except that the Company will not be liable to the extent a claim or
action which results in a loss, claim, damage, liability or expense arises out
of, or is based upon, an untrue statement, alleged untrue statement, omission or
alleged omission, included in any Registration Statement, Prospectus or
Prospectus Supplement or any amendment or supplement to the thereto in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company for inclusion in the Registration Statement, Prospectus or
Prospectus Supplement.
(b) Indemnification by the Purchaser. The Purchaser will indemnify and
hold harmless the Company, each of its directors and officers, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against any
expenses (including reasonable costs of defense and investigation and all
attorneys' fees) to which the Company and each director, officer and person, if
any, who controls the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Prospectus Supplement or any
amendment or supplement to it or (ii) the omission or alleged omission to state
in the Registration Statement or any Prospectus or Prospectus Supplement or any
amendment or supplement to it a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, the untrue statement, alleged untrue statement, omission or
alleged omission was made in reliance upon, and in conformity with, written
information furnished by the Purchaser to the Company for inclusion in the
Registration Statement, the Prospectus or Prospectus Supplement or an amendment
or supplement thereto, and the Purchaser will reimburse the Company and each
such director, officer or controlling person promptly upon demand for any legal
or other costs or expenses reasonably incurred by the Company or the other
person in investigating, defending against, or preparing to defend against any
such claim, action, suit or proceeding.
SECTION 8.2 Indemnification Procedures. Promptly after a person receives
notice of a claim or the commencement of an action for which the person intends
to seek indemnification under paragraph (a) or (b) of Section 8.1, the person
will notify the indemnifying party in writing of the claim or commencement of
the action, suit or proceeding, but failure to notify the indemnifying party
will not relieve the indemnifying party from liability under paragraph (a) or
(b) of Section 8.1, except to the extent it has been materially prejudiced by
the
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failure to give notice. The indemnifying party will be entitled to participate
in the defense of any claim, action, suit or proceeding as to which
indemnification is being sought, and if the indemnifying party acknowledges in
writing the obligation to indemnify the party against whom the claim or action
is brought, the indemnifying party may (but will not be required to) assume the
defense against the claim, action, suit or proceeding with counsel satisfactory
to it. After an indemnifying party notifies an indemnified party that the
indemnifying party wishes to assume the defense of a claim, action, suit or
proceeding the indemnifying party will not be liable for any legal or other
expenses incurred by the indemnified party in connection with the defense
against the claim, action, suit or proceeding except that if, in the opinion of
counsel to the indemnifying party, one or more of the indemnified parties should
be represented separately from the indemnifying party in connection with a
claim, action, suit or proceeding because there may be one or more legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the
indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified parties. Each indemnified party, as a condition to
receiving indemnification as provided in Paragraph (a) or (b) or Section 8.1,
will cooperate in all reasonable respects with the indemnifying party in the
defense of any action or claim as to which indemnification is sought. No
indemnifying party will be liable for any settlement of any action effected
without its prior written consent. No indemnifying party will, without the prior
written consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.
If for any reason the indemnification provided for in this Agreement is
not available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in paragraph (a) or (b) of Section
8.1, each indemnifying party will, in lieu of indemnifying the indemnified
party, contribute to the amount paid or payable by the indemnified party as a
result of the loss or liability, (i) in the proportion which is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and by the indemnified party on the other from the sale of stock which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of the
sale of stock, but also the relative fault of the indemnifying party and the
indemnified party with respect to the statements or omissions which are the
subject of the claim, action, suit or proceeding that resulted in the loss or
liability, as well as any other relevant equitable considerations.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Fees and Expenses. Each party shall bear its own fees and
expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, at the Closing, all reasonable attorneys
fees and expenses (exclusive of disbursements and out-of-pocket expenses)
incurred by the Purchaser of up to $50,000 in connection with the preparation,
negotiation, execution and delivery of this Agreement. In addition, the Company
shall pay all reasonable fees and expenses incurred by the Purchaser in
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connection with any amendments, modifications or waivers of this Agreement or
incurred in connection with the enforcement of this Agreement, including,
without limitation, all reasonable attorneys' fees and expenses.
SECTION 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby irrevocably submits
to the jurisdiction of the United States District Court and other courts of the
United States sitting in the State of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Purchaser consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
SECTION 9.3 Entire Agreement; Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters. The parties hereto may not amend this Agreement or any
rights or obligations hereunder without the prior written consent of the Company
and each Purchaser to be affected by the amendment.
SECTION 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, by telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
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If to the Company: Leap Wireless International, Inc.
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Purchaser: Acqua Wellington North American
Equities Fund, Ltd.
c/o Fortis Fund Services (Bahamas) Ltd.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Centre
East Bay Street, P. O. Box SS-6238
Nassau, Bahamas
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.
SECTION 9.5 Waivers. No provision of this Agreement may be waived other
than by a written instrument signed by the party against whom enforcement of any
such waiver is sought. No waiver by either party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provisions, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
SECTION 9.6 Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
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SECTION 9.7 Successors and Assigns. The Purchaser may not assign this
Agreement to any person without the prior consent of the Company, which consent
will not be unreasonably withheld. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. After
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
SECTION 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
SECTION 9.9 Survival. The representations and warranties of the Company
and the Purchaser contained in Article III and the covenants contained in
Article IV shall survive the execution and delivery hereof and the Closing until
the termination of this Agreement, and the agreements and covenants set forth in
Article VIII of this Agreement shall survive the execution and delivery hereof
and the Closing hereunder.
SECTION 9.10 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
SECTION 9.11 Publicity. The Company shall not issue any press release or
otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby or the existence of this
Agreement without the prior written consent of the Purchaser which consent shall
not be unreasonably withheld. In the event the Company is required by law or
regulation to issue a press release or otherwise make a public statement or
announcement with respect to this Agreement or the transaction contemplated
hereby prior to or after the Closing, the Company shall consult with the
Purchaser on the form and substance of such press release or other disclosure.
SECTION 9.12 Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.
SECTION 9.13 Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
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[END OF PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
LEAP WIRELESS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President, Finance
and Treasurer
ACQUA WELLINGTON NORTH AMERICAN
EQUITIES FUND, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
36
EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
OPINION OF COUNSEL
37
EXHIBIT B
TO THE COMMON STOCK PURCHASE AGREEMENT
SECRETARY'S CERTIFICATE
38
EXHIBIT C
TO THE AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE
In connection with the issuance of shares of common stock of Leap
Wireless International, Inc., a Delaware corporation (the "Company"), pursuant
to the Draw Down Notice, dated ___________ delivered by the Company to Acqua
Wellington North American Equities Fund, Ltd. (the "Purchaser") pursuant to
Article VI of the Amended and Restated Common Stock Purchase Agreement effective
as of December 20, 2000, by and between the Company and Acqua Wellington North
American Equities Fund, Ltd. (the "Agreement"), the undersigned hereby certifies
as follows:
1. The undersigned is the duly elected Chief [Executive/Financial]
Officer of the Company.
2. The representations and warranties of the Company set forth in
Section 3.1 of the Agreement are true and correct in all material respects as
though made on and as of the date hereof, except as set forth in the attached
Schedules and for such representations and warranties that speak as of a
particular date.
3. The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Draw Down Exercise
Date and the Settlement Date related to the Draw Down Notice and has complied in
all material respects with all obligations and conditions contained in Section
5.3 of the Agreement.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Agreement.
The undersigned has executed this Certificate this _____ day of
_________, 2000.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
39
EXHIBIT D
TO THE AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
FORM OF DRAW DOWN NOTICE
Reference is made to the Amended and Restated Common Stock Purchase
Agreement effective as of December 20, 2000 (the "Purchase Agreement") between
Leap Wireless International, Inc., a Delaware corporation (the "Company"), and
Acqua Wellington North American Equities Fund, Ltd. Capitalized terms used and
not otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.
In accordance with and pursuant to Section 6.1 of the Purchase
Agreement, the Company hereby issues this Draw Down Notice to exercise a Draw
Down request for the Draw Down Amount indicated below.
Draw Down Amount:
------------------------------------------------------
Call Option Amount:
----------------------------------------------------
Draw Down Pricing Period start date:
-----------------------------------
Draw Down Pricing Period end date:
-------------------------------------
Settlement Date:
-------------------------------------------------------
Threshold Price:
-------------------------------------------------------
Minimum Threshold Price: $15.00
-----------------------------------------------
Market Capitalization:
-------------------------------------------------
Dollar Amount of Common Stock
Currently Unissued under the
Registration Statement:
------------------------------------------------
Dollar Amount of Common Stock
Currently Available under the
Aggregate Limit:
-------------------------------------------------------
Dated:
------------------------
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address:
Facsimile No.:
Wire Instructions:
----------------------
40
Contact Name:
---------------------------
Receipt Acknowledged:
Acqua Wellington North American Equities Fund, Ltd.
By:
-------------------------------------
Name:
Title:
41
EXHIBIT E
TO THE AMENDED AND RESTATED
COMMON STOCK PURCHASE AGREEMENT
FORM OF CALL OPTION NOTICE
To:
---------------
Fax #:
Reference is made to the Amended and Restated Common Stock Purchase
Agreement effective as of December 20, 2000 (the "Purchase Agreement") between
Leap Wireless International, Inc., a Delaware corporation (the "Company"), and
Acqua Wellington North American Equities Fund, Ltd. Capitalized terms used and
not otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.
In accordance with and pursuant to Section 6.2 of the Purchase
Agreement, the Purchaser hereby issues this Call Option Notice to exercise a
Call Option for the Call Option Amount indicated below.
Call Option Amount Exercised:
------------------------------------------
Number of Shares to be purchased:
--------------------------------------
VWAP on the date hereof:
-----------------------------------------------
Draw Down Discount Percentage:
-----------------------------------------
Settlement Date:
-------------------------------------------------------
Threshold Price:
-------------------------------------------------------
Minimum Threshold Price: $15.00
-----------------------------------------------
Dated:
---------------------
Acqua Wellington North American
Equities Fund, Ltd.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------