EXHIBIT 4.1
▇▇▇▇▇▇ CORPORATION
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered
into as of August 15, 2000, by and among ▇▇▇▇▇▇ CORPORATION, a Delaware
corporation (the "Company"), and the purchasers listed on Schedule A attached
hereto (collectively, the "Purchasers" and individually, a "Purchaser").
1. AUTHORIZATION OF SALE OF THE SHARES
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to 517,520 shares (the "Shares") of common stock, par
value $0.01 per share (the "Common Stock"), of the Company.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
2.1 Purchase and Sale
Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.
2.2 PURCHASE PRICE
The purchase price of each Share (the "Per Share Price") is provided on
Schedule B to this Agreement and shall be equal to 75 percent (75%) of the
average closing bid price of the Common Stock, as reported on the Nasdaq
National Market, for the thirty (30) day period concluding on the second day
immediately prior to the Closing Date (as defined below). The Company will not,
for ninety (90) days after the Closing Date (as defined below) without adjusting
the Per Share Price hereunder accordingly, sell (i) Shares at a price per share
less than the Per Share Price, or (ii) options, warrants or any other securities
that can be converted into, or otherwise exchanged for, shares of Common Stock
at a conversion or exercise price per share less than the Per Share Price. In
the event the Company shall, during the period ending ninety (90) days after the
Closing Date, sell any shares of Common Stock or any instruments that can be
converted into or otherwise exchanged for Common Stock (the "Subsequent Sale")
exercisable at a price per share (the "Subsequent Purchase Price") of less than
Per Share Price, the Per Share Price hereunder shall be adjusted to an amount
equal to the Subsequent Purchase Price, such that the Company shall, within ten
(10) business days of the Subsequent Sale, pay to the Purchaser an amount equal
to the number of Shares times the difference between $10.048 and the Subsequent
Purchase Price.
3. DELIVERY OF THE SHARES AT THE CLOSING
(A) The completion of the purchase and sale of the Shares (the
"Closing") shall occur at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel to the
Company, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m. Eastern Standard
Time on August 16, 2000 or such other time and date as may be agreed by the
parties (the "Closing Date").
(B) At the Closing, the Company shall authorize its transfer agent (the
"Transfer Agent") to issue to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or in such nominee name(s) as
designated by such Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver one certificate representing 414,016 Shares and one certificate
representing 103,504 Shares (the "Certificates") against delivery of payment for
the Shares by the Purchasers. Prior to the Purchasers' delivery of payment for
the Shares, the Company will deliver via facsimile a copy of the Certificates to
be delivered upon Closing to the office of the Purchasers (at the fax number
indicated on the signature pages attached hereto).
(C) The Company's obligation to complete the purchase and sale of the
Shares shall be subject to the following conditions, any one or more of which
may be waived by the Company:
(I) receipt by the Company from any stockholders holding rights to
require the Company to register the sale of any securities owned by such holder
in the Registration Statement (as defined below) of waivers of such rights
(including the waiver of any notice requirements related to such rights);
(II) receipt by the Company of same-day funds in the full amount of
the purchase price for the Shares being purchased under this Agreement; and
(III) the accuracy in all material respects of the representations
and warranties made by the Purchasers and the fulfillment in all material
respects of those undertakings of the Purchasers to be fulfilled before the
Closing.
(D) The Purchasers' obligations to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by a
Purchaser with respect to such Purchaser's obligation:
(I) the representations and warranties made by the Company in this
Agreement shall be accurate in all material respects and the undertakings of the
Company shall have been fulfilled in all material respects on or before the
Closing;
(II) the Company shall have delivered to the Purchasers a
certificate executed by the chairman of the board or president and the chief
financial or accounting officer of the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in Section 4 hereof are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and that the Company has complied with all the
agreements and satisfied all the conditions in this Agreement on its part to be
performed or satisfied on or before the Closing Date; and
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(III) the Company shall have delivered to Purchasers a legal
opinion in substantially the form attached hereto as Exhibit A.
(E) Each Purchaser's obligations under this Agreement are expressly not
conditioned on the purchase by any or all of the other Purchasers of the Shares
that they have agreed to purchase from the Company under this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):
4.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
4.2 CAPITALIZATION
(A) The authorized capital stock of the Company consists of 45,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock.
(B) As of August 1, 2000, the issued and outstanding capital stock of
the Company consisted of 7,912,694 shares of Common Stock. The shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights.
(C) The Company has reserved 3,282,416 shares of Common Stock for
issuance upon the exercise of stock options granted or available for future
grant under the Company's 1993 Amended and Restated Stock Incentive Plan and
1995 Non-Employee Director Stock Option Plan, and the Company has reserved
434,783 shares of Common Stock for issuance under the Company's 1995 Employee
Stock Purchase Plan.
(D) The Company has reserved 970,701 shares of Common Stock for
issuance upon the exercise of outstanding warrants to purchase Common Stock.
With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.
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4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES
(A) The Shares have been duly authorized for issuance and sale to the
Purchasers pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and encumbrances. The certificates
evidencing the Shares are in due and proper form under Delaware law.
(B) The issuance of the Shares is not subject to preemptive or other
similar rights. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Shares to be sold by the Company as contemplated in this Agreement.
(C) Subject to the accuracy of the Purchasers' representations and
warranties in Section 5 of this Agreement, the offer, sale, and issuance of the
Shares in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act and
from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.
4.4 FINANCIAL STATEMENTS
The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.
4.5 NO MATERIAL CHANGE
Since March 31, 2000,
(A) except as set forth on Schedule 4.5(a) there has been no material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, or in the
earnings, assets, business affairs or business prospects of the Company, whether
or not arising in the ordinary course of business;
(B) except as set forth on Schedule 4.5(b), there have been no
transactions entered into by the Company other than those in the ordinary course
of business, which are material with respect to the Company; and
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(C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
The Company has no material contingent obligations.
4.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,
(A) the Company is in compliance with all applicable Environmental Laws
(as defined below);
(B) the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals;
(C) there are no pending or, to the best knowledge of the Company,
threatened Environmental Claims (as defined below) against the Company; and
(D) under applicable law, there are no circumstances with respect to
any property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
4.7 NO DEFAULTS
The Company is not in violation of its certificate of incorporation or
bylaws or, except as set forth on Schedule 4.7 hereto, in material default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust,
or other instrument or material agreement to which the Company is a party or by
which it may be bound, or to which any of the property or assets of the Company
is subject.
4.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.
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4.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, might
materially and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, nor, to the
best knowledge of the Company, is there any reasonable basis therefor. The
Company is not in default with respect to any judgment, order or decree of any
court or governmental agency or instrumentality which, singly or in the
aggregate, would have a material adverse effect on the assets, properties or
business of the Company.
4.10 INTELLECTUAL PROPERTY
(A) The Company, to the best of its knowledge in the course of diligent
inquiry, owns or is licensed to use all patents, patent applications,
inventions, trademarks, trade names, applications for registration of
trademarks, service marks, service ▇▇▇▇ applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets that are material to the
business of the Company as now conducted and as proposed to be conducted (in
this Agreement called the "Proprietary Rights"), or is seeking, or will seek, to
obtain rights to use such Proprietary Rights that are material to the business
of the Company as proposed to be conducted.
(B) The Company does not have any knowledge of, and the Company has not
given or received any notice of, any pending conflicts with or infringement of
the rights of others with respect to any Proprietary Rights or with respect to
any license of Proprietary Rights which are material to the business of the
Company.
(C) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(D) The Company is not subject to any judgment, order, writ, injunction
or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.
(E) The Company has not received written notice of any pending conflict
with or infringement upon such third-party proprietary rights.
(F) The Company has not entered into any consent, indemnification,
forbearance to ▇▇▇ or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.
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(G) The Company has complied, in all material respects, with its
obligations relating to the protection of the Proprietary Rights which are
material to the business of the Company used pursuant to licenses.
(H) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.
4.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(A) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshalling, or other laws and rules of law affecting the enforceability of
creditors' rights generally and to general equitable principles).
(B) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject, and will not trigger anti-dilution
rights or other rights to acquire additional equity securities of the Company,
nor will such action result in any violation of the provisions of the articles
of incorporation or bylaws of the Company or any applicable statute, law, rule,
regulation, ordinance, decision, directive or order.
4.13 PROPERTIES
The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
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4.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
4.15 SECURITY MEASURES
The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.
4.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.
4.17 USE OF PROCEEDS; INVESTMENT COMPANY
The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
4.19 TAXES
The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
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4.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar
proceedings before any Federal, state, local or foreign government bodies that
involve or affect the Company, which, if the subject of an action unfavorable to
the Company, could involve a prospective material adverse change in or effect on
the condition, financial or otherwise, or in the earnings, assets, business
affairs or business prospects of the Company.
4.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
4.22 TRANSFER TAXES
On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers under this Agreement will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
4.24 GOVERNMENTAL CONSENTS
No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering, issuance or sale
of the Shares under this Agreement.
4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed by the Company
under the Exchange Act of 1934, as amended (the "Exchange Act.")
4.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:
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(A) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999;
(B) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1999, December 31, 1999 and March 31, 2000;
(C) the Company's Proxy Statement for its October 28, 1999 Annual
Meeting of Stockholders; and
(D) all other documents, if any, filed by the Company with the
Commission since June 30, 1999 pursuant to the reporting requirements of the
Securities Exchange Act.
4.27 CONTRACTS
The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
Each Purchaser represents, warrants and covenants to the Company as
follows:
(A) The Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(B) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 7 of this Agreement.
(C) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the Rules and Regulations.
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(D) The Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire, attached
to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchasers shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.
(E) The Purchaser has, in connection with its decision to purchase the
number of Shares set forth in Section 2 above, relied solely upon the Company
Documents and the representations and warranties of the Company contained in
this Agreement.
(F) The Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act and has completed
and returned the Investor Questionnaire previously provided by the Company.
5.2 RESALES OF SHARES
(A) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without satisfying the requirements of the Securities Act and
the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the
Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate:
(I) in the form of Appendix III to this Agreement;
(II) executed by an officer of, or other authorized person
designated by, the Purchaser; and
(III) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied.
(B) The Purchaser acknowledges that there may occasionally be times
when the Company determines the use of the prospectus forming a part of the
Registration Statement (the "Prospectus," as further defined in Section 7.3.1
below) should be suspended until such time as an amendment or supplement to the
Registration Statement or the Prospectus has been filed by the Company and any
such amendment to the Registration Statement is declared effective by the
Commission, or until such time as the Company has filed an appropriate report
with the Commission pursuant to the Exchange Act. The Purchaser hereby covenants
that it will not sell any Shares pursuant to the Prospectus during the period
commencing at the time at which the Company gives the Purchaser written notice
of the suspension of the use of the Prospectus and ending at the time the
Company gives the Purchaser written notice that the Purchaser may thereafter
effect sales pursuant to the Prospectus. The Company may, upon written notice to
the Purchasers, suspend the use of the Prospectus for up to thirty (30) days in
any 365-day period based on the reasonable determination of the Company's Board
of Directors that there is a significant business purpose for such
determination, such as pending corporate developments, public filings with the
SEC or similar events. The Company shall in no event be required to disclose the
business purpose for which it has suspended the use of the Prospectus if the
Company determines in its good faith judgment that the business purpose should
remain confidential.
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(C) The Purchaser further covenants to notify the Company promptly of
the sale of any of its Shares, other than sales pursuant to a Registration
Statement contemplated in Section 7 of this Agreement or sales upon termination
of the transfer restrictions pursuant to Section 7.4 of this Agreement.
5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(A) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, marshalling, or other laws and rules of law affecting the
enforceability of creditors' rights generally and to general equitable
principles).
(B) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchasers in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchasers of the Shares being purchased and the
payment therefor.
7. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
COVENANTS
7.1 FORM D FILING; REGISTRATION OF SHARES
7.1.1 REGISTRATION STATEMENT; EXPENSES
The Company shall:
12
(A) file in a timely manner a Form D relating to the sale of the Shares
under this Agreement, pursuant to Securities and Exchange Commission Regulation
D.
(B) as soon as practicable after the Closing Date, but in no event
later than the forty-fifth (45th) day following the Closing Date, prepare and
file with the Commission a Registration Statement on Form S-3 (or, if the
Company is ineligible to use Form S-3, then on Form S-1) relating to the sale of
the Shares by the Purchasers from time to time on the Nasdaq National Market (or
the facilities of any national securities exchange on which the Company's Common
Stock is then traded) or in privately negotiated transactions (the "Registration
Statement");
(C) provide to Purchasers any information required to permit the sale
of the Shares under rule 144A of the Securities Act;
(D) subject to receipt of necessary information from the Purchasers,
use its best efforts to cause the Commission to notify the Company of the
Commission's willingness to declare the Registration Statement effective on or
before one hundred and twenty (120) days after the Closing Date;
(E) notify Purchasers promptly upon the Registration Statement being
declared effective by the Commission;
(F) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Shares may be resold by the Purchasers without registration or without
regard to any volume limitations by reason of Rule 144(k) under the Securities
Act or any other rule of similar effect or (iii) all of the Shares have been
sold pursuant to the Registration Statement or Rule 144(k) under the Securities
Act or any other rule of similar effect;
(G) promptly furnish to the Purchasers with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchasers;
(H) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;
(I) file documents required of the Company for customary Blue Sky
clearance in all states requiring Blue Sky clearance; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
(J) bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 7.1.1 and the registration of the Shares
pursuant to the Registration Statement, including fees and expenses (whether
external or internal) of up to $15,000 of the Purchaser, but not including any
fees and expenses of any other advisers to the Purchasers or brokerage fees and
commissions incurred by the Purchasers.
13
7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT
In the event that the Registration Statement is not declared effective
by within one hundred and twenty (120) days after the Closing Date, the Company
shall pay to each Purchaser liquidated damages in an amount equal to one percent
(1%) of the total purchase price of the Shares purchased by such Purchaser
pursuant to this Agreement for each thirty (30) day period thereafter (prorated
for partial periods) until the Registration Statement is declared effective.
7.2 TRANSFER OF SHARES AFTER REGISTRATION
Each Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.
7.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.
7.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the Prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations under
this Agreement or under law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.
14
7.3.2 INDEMNIFICATION BY THE PURCHASER
Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser, which consent shall not be unreasonably withheld)
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon (i) any
failure on the part of such Purchaser to comply with the covenants and
agreements contained in Sections 5.2 or 7.2 of this Agreement respecting the
sale of the Shares or (ii) the inaccuracy of any representation made by such
Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement to the Registration Statement or Prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser expressly
for use therein; provided, however, that the Purchaser shall not be liable for
any such untrue or alleged untrue statement or omission or alleged omission of
which the Purchaser has delivered to the Company in writing a correction before
the occurrence of the transaction from which such loss was incurred, and the
Purchaser will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.
15
7.3.3 INDEMNIFICATION PROCEDURE
(A) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 7.3, promptly notify the indemnifying party in writing
of the claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.
(B) In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
(I) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action) or
(II) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. Notwithstanding the provisions of this
Section 7.3, the Purchaser shall not be liable for any indemnification
obligation under this Agreement in excess of the amount of gross proceeds
received by the Purchaser from the sale of the Shares.
16
7.3.4 CONTRIBUTION
If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement:
(A) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock or
(B) if the allocation provided by clause (a) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
The respective relative benefits received by the Company on the one
hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company pursuant to this
Agreement for the Shares purchased by such Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the "Difference") between
the amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.3.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 7.3.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 7.3.4; provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under Section 7.3 for purposes of indemnification. The Company
and each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation (even
if the Purchaser were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, no Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.
17
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the effective date of
the Registration Statement covering the Shares or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
7.5 INFORMATION AVAILABLE
So long as the Registration Statement is effective covering the resale
of Shares owned by any Purchaser, the Company will furnish to such Purchaser:
(A) as soon as practicable after available (but in the case of the
Company's Annual Report to Stockholders, within 90 days after the end of each
fiscal year of the Company), one copy of:
(I) its Annual Report to Stockholders (which Annual Report shall
contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants);
(II) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K;
(III) if not included in substance in its Quarterly Reports to
Stockholders, its quarterly reports on Form 10-Q; and
(IV) a full copy of the particular Registration Statement covering
the Shares (the foregoing, in each case, excluding exhibits);
(B) upon the request of the Purchaser, a reasonable number of copies of
the Prospectus to supply to any other party requiring the Prospectus.
7.6 RULE 144 INFORMATION
For two years after the date of this Agreement, the Company shall file
all reports required to be filed by it under the Securities Act, the Rules and
Regulations and the Exchange Act and shall take such further action to the
extent required to enable the Purchasers to sell the Shares pursuant to Rule 144
under the Securities Act (as such rule may be amended from time to time).
7.7 STOCK OPTION MATTERS
The Company shall, within thirty (30) days of the Closing Date, adopt
such amendments to the Company's existing stock option plans and the Company's
By-laws to provide that, unless approved by the holders of a majority of the
shares present and entitled to vote at a duly convened meeting of stockholders,
the company shall not grant any stock options with an exercise price that is
less than 100% of the fair market value of the underlying stock on the date of
grant or reduce the exercise price of any stock option granted under any
existing or future stock option plan. This By-law may not be amended or repealed
without the affirmative vote of the holders of a majority of the shares present
and entitled to vote at a duly convened meeting of stockholders.
18
8. BROKER'S FEE
The Purchasers acknowledge that the Company intends to pay to ▇▇ ▇▇▇▇▇
Securities Corporation ("▇▇ ▇▇▇▇▇"), the placement agent, a fee in the form of
cash and a warrant to purchase Common Stock in respect of the sale of the Shares
to certain of the Purchasers. Each of the parties to this Agreement hereby
represents that, on the basis of any actions and agreements by it, there are no
other brokers or finders entitled to compensation in connection with the sale of
the Shares to the Purchasers. The Company shall indemnify and hold harmless the
Purchasers from and against all fees, commissions or other payments owing by the
Company to ▇▇ ▇▇▇▇▇ or any other person or firm acting on behalf of the Company
hereunder.
9. NOTICES
All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:
(A) if to the Company, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(B) if to a Purchaser, at its address as set forth on the signature
page to this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
19
Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.
10. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchasers of a majority of
the Shares sold pursuant to this Agreement.
11. TERMINATION
This Agreement may be terminated as to any Purchaser, at the option of
such Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.
12. EXPENSES
Each party to this Agreement shall pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and
related documents (including legal and accounting fees and expenses).
Notwithstanding the foregoing, the Company agrees to reimburse the Purchasers an
amount not to exceed $50,000 for all expenses reasonably incurred by the
Purchasers in connection with the transactions contemplated by this Agreement,
including expenses for attorneys, consultants and travel.
13. HEADINGS
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
14. SEVERABILITY
If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware and the federal law of the United States of
America.
16. NO CONFLICTS OF INTEREST.
The Company represents, warrants and covenants that, to the best of its
knowledge, no officer or employee of the State of Wisconsin Investment Board has
or will receive, directly or indirectly, a personal interest in the Company or
its property or anything of substantial economic value for his or her private
benefit from the Company, or anyone acting on its behalf, in connection with the
investment made pursuant to this Agreement.
20
17. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature pages follow]
21
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
▇▇▇▇▇▇ CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Vice President-Finance,
Chief Financial Officer,
Secretary and Treasurer
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Investment Director
Address:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE A
PURCHASERS
------------------------------------------------------------ ---------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES OF COMMON STOCK
OF PURCHASER BEING PURCHASED
------------------------------------------------------------ ---------------------------------------------------------
STATE OF WISCONSIN INVESTMENT BOARD 517,520
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------ ---------------------------------------------------------
SCHEDULE B
TOTAL PURCHASE PRICE AND PER SHARE PRICE
The aggregate number of shares of common stock, $0.01 par value, of
▇▇▇▇▇▇ Corporation to be sold and purchased pursuant to the Share Purchase
Agreement (the "Agreement") shall be 517,520 shares at a Per Share Sale Price
(as defined in Section 2.2 of the Agreement) of $10.048 and a total purchase
price of $5.2 million.
EXHIBIT A
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SUBJECT TO INTERNAL REVIEW AND CLEARANCE]
August ___, 2000
To the Purchasers of
Common Stock of ▇▇▇▇▇▇ Corporation
listed on Exhibit A attached hereto
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇ Corporation (the "Company"), a
Delaware corporation, in connection with the preparation, execution, and
delivery of the Share Purchase Agreement (the "Agreement") dated as of the date
hereof by and among the Company and you, pursuant to which the Company has
issued and sold to you an aggregate of 517,520 shares (the "Shares") of its
common stock, $0.01 par value per share ("Common Stock"). Capitalized terms used
in this opinion and not otherwise defined herein have the respective meanings
ascribed to them in the Agreement.
We have examined copies, executed on behalf of the Company, of the
Agreement. We have also reviewed such agreements, instruments, certificates,
corporate and public records, and other documents as we have deemed necessary
for purposes of this opinion.
As to any opinion below relating to the existence, qualification, or
standing of the Company, our opinion relies entirely upon and is limited by
those certificates of public officials attached hereto as Exhibit B.
For purposes of this opinion we have assumed without any investigation
(1) the legal capacity of each natural person, (2) the full power and authority
of each person other than the Company to execute, deliver and perform each
document heretofore executed and delivered or hereafter to be executed and
delivered and to do each other act heretofore done or hereafter to be done by
such person, (3) the due authorization, execution and delivery by each person
other than the Company of each document heretofore executed and delivered or
hereafter to be executed and delivered by such person, (4) the legality,
validity, binding effect and enforceability as to each person other than the
Company of each document heretofore executed and delivered or hereafter to be
executed and delivered and of each other act heretofore done or hereafter to be
done by such person, (5) the genuineness of each signature on, and the
completeness and authenticity of, each document and record purporting to be an
original, (6) the conformity to the original of each document and record
purporting to be a copy of an original, and (7) the completeness and
authenticity of the original of each document whether examined in original or
copy form.
With respect to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention, or other state of
mind), we have relied entirely upon (1) the representations of the Company and
you set forth in the Agreement, and (2) certificates of officers of the Company
(including without limitation the certificate attached as Exhibit C) and have
assumed, without independent inquiry or investigation, the accuracy of those
representations and certificates.
When an opinion set forth below is given to the best of our knowledge,
or with another similar qualification, the relevant knowledge or awareness is
limited to the actual knowledge or awareness of the individual lawyers currently
in this firm who have participated directly in the specific transactions to
which this opinion relates, and without any special or additional inquiry or
investigation undertaken for the purposes of this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Each opinion set forth below is subject to the following general
qualifications:
(a) as to any agreement or instrument delivered by the
Company, we assume that the Company has received the agreed-to
consideration therefor;
(b) as to any agreement or instrument to which the Company is
a party, we assume that such agreement or instrument is the binding
obligation of each other party thereto;
(c) the enforceability of any obligation of the Company may be
subject to, affected by or limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, marshalling, or
other laws and rules of law affecting the enforcement generally of
creditors' rights and remedies (including such as may deny giving
effect to waivers of debtors' or guarantors' rights), and may be
subject to or limited by considerations of public policy;
(d) the enforceability of any obligation of the Company to
provide indemnification or contribution in connection with any
liability under federal or state securities laws or under applicable
environmental laws may be subject to limitations arising under federal
or state securities laws or public policy on the enforceability of
provisions providing for indemnity or contribution;
(e) no opinion is given herein as to the availability of any
specific or equitable relief of any kind or as to the enforceability of
any contractual provision relating to remedies after default;
(f) the enforcement of any of your rights may in all cases be
subject to an implied duty of good faith and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity); and
(g) we assume, with your permission and without independent
inquiry or investigation that the Company has made no offers or sales
of any securities that should be integrated with the offer and sale of
the Shares to you and that from and after the date of this opinion,
there will be no offers or sales of the securities of the Company by
any party that could be integrated with any offers or sales of the
securities of the Company made on or prior to the date hereof other
than any such future offers and sales which are either exempted from or
registered in compliance with the registration provisions of the
Securities Act of 1933, as amended.
We assume without independent inquiry or investigation that you have
been granted access to information concerning the Company sufficient to make an
informed investment decision with respect to your purchase of the Shares, that
you have had the opportunity to question and receive answers from the Company's
management with respect to your purchase of the Shares, and that all material
information necessary to your investment decision has been accurately disclosed
to you.
Our opinions in paragraph 4 below with respect to the nonassessability
of the Shares issuable to you under the Agreement mean only that the ownership
of such shares, without more, will not subject the owners thereof to an
obligation to make further payments to the Company, and do not mean that such
holders are immune from other liabilities, such as to the Company for unlawful
dividends, to the Company's creditors under a "piercing the corporate veil"
theory, to laborers, servants, or employees for unpaid wages, and the like.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
This opinion is limited solely to the laws of the Commonwealth of Massachusetts
as applied by courts located in Massachusetts, the General Corporation Law of
the State of Delaware as applied by courts located in Delaware, and the federal
laws of the United States of America, to the extent that the same may apply to
or govern the transactions contemplated by the Agreement, and does not cover
matters arising under the laws of any other jurisdiction. No opinion is given as
to the choice of law that any tribunal may apply to the transactions referred to
herein or as to the applicability of, compliance with, or the effect of, the
securities or "Blue Sky" laws of any state. No opinion is given as to any
securities law, including any state or federal "antifraud" provisions, except as
specifically set forth in paragraph 6 below.
Based upon and subject to the foregoing, it is our opinion that, except
as disclosed in or contemplated by the Agreement (including the schedules and
exhibits thereto):
1. The Company is a corporation validly existing under the laws of the
State of Delaware and in corporate good standing with the Office of the
Secretary of State of the State of Delaware.
2. The Company has the requisite corporate power to own or lease its
properties and to conduct its business as presently conducted as described in
the Company's annual report on Form 10-K for the year ended June 30, 1999, to
execute, deliver, and perform its obligations under the Agreement and to sell
and issue the Shares.
3. The execution, delivery and performance of the Agreement have been
duly authorized by all requisite corporate action on the part of the Company and
the Agreement has been duly executed and delivered on behalf of the Company. The
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
4. The issuance, sale and delivery of the Shares have been duly
authorized by all requisite corporate action on the part of the Company, and
when issued, sold and delivered in accordance with the Agreement, and the
certificates evidencing the Shares are countersigned by or issued by the
Company's transfer agent and registrar, the Shares will be validly issued and
outstanding, fully paid and nonassessable.
5. Except for filings pursuant to federal or state securities laws, no
permit, authorization, consent, or approval of or by, or any notification of or
filing with, any federal government authority that has not been made or obtained
is or will be necessary for (i) the valid execution and delivery of the
Agreement by the Company or (ii) the issuance, sale and delivery of the Shares.
6. Based in part on the representations of the Purchasers set forth in
Section 5 of the Agreement, the offer and sale of the Shares to the Purchasers
pursuant to and in accordance with the Agreement, do not require registration
under the Securities Act of 1933, as amended.
7. To the best of our knowledge, there is no litigation, suit, or
similar proceeding or governmental investigation pending or overtly threatened
in writing against the Company that calls into question the validity or
enforceability of the Agreement, or that may adversely affect the Company's
ability to consummate the transactions thereby contemplated.
8. The Company's execution, delivery, and performance of its
obligations under the Agreement and the consummation of the transactions thereby
contemplated, will not (i) violate any provision of the Company's Certificate of
Incorporation or by-laws, each as amended and in effect as of the date hereof,
(ii) result in any default under any material contract, obligation, or
commitment binding on the Company and known to us, in each case except for any
violations that individually or in the aggregate will not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
This opinion is rendered to you for your benefit in connection with the
transactions contemplated by the Agreement and may not be referred to or used
for any other purpose, or delivered to, or relied upon by, any other party,
including, without limitation, any of the Purchasers or their assignees or
designees, without our prior written consent. The opinions set forth herein are
based upon applicable law and facts as of the date of this opinion letter, and
we assume no obligation to update any opinions set forth herein to reflect any
fact or circumstances that may hereafter come to our attention or any changes in
law that may hereafter occur.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
EXHIBIT A
PURCHASERS
------------------------------------------------------------ ---------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES OF COMMON STOCK
OF PURCHASER BEING PURCHASED
------------------------------------------------------------ ---------------------------------------------------------
STATE OF WISCONSIN INVESTMENT BOARD 517,520
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------ ---------------------------------------------------------
EXHIBIT B
SCHEDULE OF EXCEPTIONS
SCHEDULE 4.5 NO MATERIAL CHANGE.
SCHEDULE 4.5(A)
See Schedule 4.7.
SCHEDULE 4.5(B)
The Company is currently in negotiations with a third party regarding
the sale by the Company of substantially all of the assets of Vigilant Networks,
Inc., its subsidiary. A definitive purchase and sale agreement with respect to
this proposed transaction, however, has not yet been executed.
SCHEDULE 4.7. NO DEFAULTS.
The Company's continued investment in its subsidiary, Vigilant
Networks, Inc. has resulted in its failure to meet certain financial covenants
of its credit agreement with its banks at March 31, 2000. The Company obtained a
waiver of such non-compliance from the banks for the quarter ended March 31,
2000 and the covenant requirements for the quarter ended June 30, 2000 have been
amended. The Company expects that if the investment and operating losses of
Vigilant Networks, Inc. continue as projected, the Company likely will again be
in violation of certain financial covenants of its credit agreement with its
banks at September 30, 2000 and, in such instance, if the Company is unable to
obtain a waiver of such non-compliance from the banks, its credit agreement
could be in default and could be called by the banks.
SCHEDULE 4.13. PROPERTIES.
The Company's principal executive offices, property and facilities
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ and certain
properties and facilities that are adjacent to the Company's principal executive
offices, all of which are owned by the Company, are subject to a $6 million
mortgage held by Chase Bank as collateral for the Company's existing credit
agreements. In addition, all of the Company's assets are pledged as collateral
for its existing credit agreements.
APPENDIX I
▇▇▇▇▇▇ CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
----------------------------------
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
----------------------------------
3. The mailing address of the Registered Holder listed in response to item 1
above:
----------------------------------
----------------------------------
----------------------------------
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
-----------------------------------
APPENDIX II
▇▇▇▇▇▇ CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
5. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
-------------------------------------------------------
6. Please provide the number of shares that you or your organization will
own immediately after Closing, including those Shares purchased by you
or your organization pursuant to this Purchase Agreement and those
shares purchased by you or your organization through other
transactions:
-------------------------------------------------------
7. Have you or your organization had any position, office or other
material relationship within the past three years with ▇▇▇▇▇▇
Corporation or its affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
--------------------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.
PRINT OR TYPE:
Name of Purchaser (Individual or Institution):
--------------------------------------------------------------------------------
Name of Individual representing Purchaser (if an Institution)
--------------------------------------------------------------------------------
Title of Individual representing Purchaser (if an Institution):
--------------------------------------------------------------------------------
SIGNATURE:
Individual Purchaser or Individual representing Purchaser:
--------------------------------------------------------------------------------
EXHIBIT 4.2
▇▇▇▇▇▇ CORPORATION
PLACEMENT AGENT AGREEMENT
AUGUST 16, 2000
WHEREAS, ▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"),
has entered into a Share Purchase Agreement, dated as of August 15, 2000 (the
"Purchase Agreement"), with the State of Wisconsin Investment Board (the
"Purchaser"), pursuant to which the Company shall issue to the Purchaser $5.2
million of common stock, par value $0.01 ("Common Stock"), of the Company;
WHEREAS, ▇▇ ▇▇▇▇▇ Securities Corporation (the "Placement Agent") has
served as placement agent in connection with the negotiation, execution and
delivery of the Purchase Agreement and the issuance of shares of Common Stock to
the Purchaser and the Company has agreed to pay a fee to the Placement Agent in
the form of cash and a warrant to purchase Common Stock in respect of such
service;
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Placement Agent hereby agree as follows:
1. PLACEMENT AGENT CONSIDERATION
1.1 AUTHORIZATION OF CASH PAYMENT AND ISSUANCE OF THE WARRANT
Subject to the terms and conditions of this Agreement, the Warrant (as
defined below) and the Purchase Agreement, the Company has authorized (a) the
payment of $338,000 (the "Cash Payment") and (b) the issuance of the Warrant
(the "Warrant") to purchase up to 20,701 shares (the "Warrant Shares") of Common
Stock at an exercise price per share as provided in the Warrant, on the terms
and subject to the conditions set forth in the Warrant, to the Placement Agent
as consideration for its service in respect of the sale of shares of Common
Stock to the Purchaser pursuant to the terms of the Purchase Agreement.
1.2 ISSUANCE OF THE WARRANT
Subject to the terms and conditions of this Agreement and the Purchase
Agreement, the Company agrees to pay the Cash Payment and to issue the Warrant
to the Placement Agent at the Closing.
1.3 EXERCISE PRICE
The exercise price for the Warrant shall be as provided in the terms
and conditions of the Warrant.
2. PAYMENT AND DELIVERY OF THE WARRANT AT THE CLOSING
(A) The completion of the purchase and sale of Common Stock by the
Purchaser from the Company, the payment of the Cash Payment and the issuance of
the Warrant (the "Closing") shall occur at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP,
counsel to the Company, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at 10:00 a.m.
Eastern Standard Time on August 16, 2000 or such other time and date as may be
agreed by the parties (the "Closing Date").
(B) The Company's obligation to complete the payment of the Cash
Payment and the issuance of the Warrant shall be subject to the following
conditions, any one or more of which may be waived by the Company:
(I) the execution and delivery of the Purchase Agreement by the
Purchaser and the Company and the completion of the purchase and sale of the
shares of Common Stock by the Purchaser as provided in the Purchase Agreement,
including the receipt by the Company of same-day funds in the full amount of the
purchase price for the shares of Common Stock purchased by the Purchaser under
the Purchase Agreement; and
(II) the accuracy in all material respects of the representations
and warranties made by the Placement Agent and the fulfillment in all material
respects of those undertakings of the Placement Agent to be fulfilled before the
Closing.
(C) The Placement Agent' obligations to accept delivery of the Warrant
shall be subject to the following conditions, any one or more of which may be
waived by a Placement Agent with respect to the Placement Agent's obligation:
(I) the representations and warranties made by the Company in this
Agreement shall be accurate in all material respects and the undertakings of the
Company shall have been fulfilled in all material respects on or before the
Closing;
(II) the Company shall have delivered to Placement Agent a legal
opinion in substantially the form attached hereto as Exhibit A.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Placement Agent as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):
3.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
2
3.2 CAPITALIZATION
(A) The authorized capital stock of the Company consists of 45,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock.
(B) As of August 1, 2000, the issued and outstanding capital stock of
the Company consisted of 7,912,694 shares of Common Stock. The shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights.
(C) The Company has reserved 3,282,416 shares of Common Stock for
issuance upon the exercise of stock options granted or available for future
grant under the Company's 1993 Amended and Restated Stock Incentive Plan and
1995 Non-Employee Director Stock Option Plan, and the Company has reserved
434,783 shares of Common Stock for issuance under the Company's 1995 Employee
Stock Purchase Plan.
(D) The Company has reserved 970,701 shares of Common Stock for
issuance upon the exercise of outstanding warrants to purchase Common Stock.
With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.
3.3 ISSUANCE AND DELIVERY OF THE WARRANT AND THE WARRANT SHARES
(A) The Warrant has been duly authorized for issuance to the Placement
Agent pursuant to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against the consideration set forth in this
Agreement, will be validly issued and fully paid and nonassessable and free and
clear of all pledges, liens and encumbrances. The Warrant is in due and proper
form under Delaware law. The Warrant shares have been reserved for issuance to
the Placement Agent pursuant to the terms and conditions of the Warrant.
(B) The issuance of the Warrant is not subject to preemptive or other
similar rights. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance of the
Warrant by the Company as contemplated in this Agreement.
(C) Subject to the accuracy of the Placement Agent's representations
and warranties in Section 4 of this Agreement, the offer and issuance of the
Warrant in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act and
from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.
3
3.4 FINANCIAL STATEMENTS
The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.
3.5 NO MATERIAL CHANGE
Since March 31, 2000,
(A) except as set forth on Schedule 3.5(a), there has been no material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, or in the
earnings, assets, business affairs or business prospects of the Company, whether
or not arising in the ordinary course of business;
(B) except as set forth on Schedule 3.5(b), there have been no
transactions entered into by the Company other than those in the ordinary course
of business, which are material with respect to the Company; and
(C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
The Company has no material contingent obligations.
3.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,
(A) the Company is in compliance with all applicable Environmental Laws
(as defined below);
(B) the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals;
(C) there are no pending or, to the best knowledge of the Company,
threatened Environmental Claims (as defined below) against the Company; and
(D) under applicable law, there are no circumstances with respect to
any property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.
4
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
3.7 NO DEFAULTS
The Company is not in violation of its certificate of incorporation or
bylaws or, except as set forth on Schedule 3.7 hereto, in material default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust,
or other instrument or material agreement to which the Company is a party or by
which it may be bound, or to which any of the property or assets of the Company
is subject.
3.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.
3.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, might
materially and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, nor, to the
best knowledge of the Company, is there any reasonable basis therefor. The
Company is not in default with respect to any judgment, order or decree of any
court or governmental agency or instrumentality which, singly or in the
aggregate, would have a material adverse effect on the assets, properties or
business of the Company.
3.10 INTELLECTUAL PROPERTY
(A) The Company, to the best of its knowledge in the course of diligent
inquiry, owns or is licensed to use all patents, patent applications,
inventions, trademarks, trade names, applications for registration of
trademarks, service marks, service ▇▇▇▇ applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets that are material to the
business of the Company as now conducted and as proposed to be conducted (in
this Agreement called the "Proprietary Rights"), or is seeking, or will seek, to
obtain rights to use such Proprietary Rights that are material to the business
of the Company as proposed to be conducted.
5
(B) The Company does not have any knowledge of, and the Company has not
given or received any notice of, any pending conflicts with or infringement of
the rights of others with respect to any Proprietary Rights or with respect to
any license of Proprietary Rights which are material to the business of the
Company.
(C) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(D) The Company is not subject to any judgment, order, writ, injunction
or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.
(E) The Company has not received written notice of any pending conflict
with or infringement upon such third-party proprietary rights.
(F) The Company has not entered into any consent, indemnification,
forbearance to ▇▇▇ or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.
(G) The Company has complied, in all material respects, with its
obligations relating to the protection of the Proprietary Rights which are
material to the business of the Company used pursuant to licenses.
(H) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.
3.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
3.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(A) This Agreement and the Warrant have been duly executed and
delivered by the Company constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, marshalling, or other laws and rules of law affecting the
enforceability of creditors' rights generally and to general equitable
principles).
6
(B) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject, and will not trigger anti-dilution
rights or other rights to acquire additional equity securities of the Company,
nor will such action result in any violation of the provisions of the articles
of incorporation or bylaws of the Company or any applicable statute, law, rule,
regulation, ordinance, decision, directive or order.
3.13 PROPERTIES
The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
3.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
3.15 SECURITY MEASURES
The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.
3.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.
7
3.17 INVESTMENT COMPANY
The Company is not now, and after the sale of shares of Common Stock to
the Purchaser under the Purchase Agreement and the application of the net
proceeds from the sale of such shares will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
3.19 TAXES
The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
3.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar
proceedings before any Federal, state, local or foreign government bodies that
involve or affect the Company, which, if the subject of an action unfavorable to
the Company, could involve a prospective material adverse change in or effect on
the condition, financial or otherwise, or in the earnings, assets, business
affairs or business prospects of the Company.
3.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
3.22 TRANSFER TAXES
On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the issuance and
transfer of the Warrant to the Placement Agent under this Agreement will be, or
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will be or will have been fully complied with.
8
3.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
3.24 GOVERNMENTAL CONSENTS
No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering or issuance of the
Warrant under this Agreement.
3.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed by the Company
under the Exchange Act of 1934, as amended (the "Exchange Act.")
3.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Placement Agent before the Closing, is or will be true and correct in all
material respects as of their respective final dates and that the Company
Documents do not omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading:
(A) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999;
(B) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1999, December 31, 1999 and March 31, 2000;
(C) the Company's Proxy Statement for its October 28, 1999 Annual
Meeting of Stockholders; and
(D) all other documents, if any, filed by the Company with the
Commission since June 30, 1999 pursuant to the reporting requirements of the
Securities Exchange Act.
3.27 CONTRACTS
The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.
9
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT
4.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
The Placement Agent represents, warrants and covenants to the Company
as follows:
(A) The Placement Agent is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments
representing an investment decision like that involved in the acceptance of the
Warrant, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to accept the Warrant.
(B) The Placement Agent is acquiring a warrant for the number of shares
of Common Stock set forth in Section 2 above in the ordinary course of its
business and for its own account for investment (as defined for purposes of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976 and the regulations
thereunder) only, and has no present intention of distributing the Warrant or
the Warrant Shares nor any arrangement or understanding with any other persons
regarding the distribution of the Warrant or the Warrant Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 6 of this Agreement.
(C) The Placement Agent will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) the Warrant or the Warrant Shares
except in compliance with the Securities Act and the Rules and Regulations.
(D) The Placement Agent has completed or caused to be completed the
Registration Statement Questionnaire, attached to this Agreement as Appendix I,
for use in preparation of the Registration Statement (as defined in Section 6.3
below), and the answers to the Questionnaires are true and correct as of the
date of this Agreement and will be true and correct as of the effective date of
the Registration Statement; provided that the Placement Agent shall be entitled
to update such information by providing notice thereof to the Company before the
effective date of such Registration Statement.
(E) The Placement Agent has, in connection with its decision to accept
the Warrant for the number of shares of Common Stock set forth in Section 2
above, relied solely upon the Company Documents and the representations and
warranties of the Company contained in this Agreement.
(F) The Placement Agent is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated under the Securities Act and has
completed and returned the Investor Questionnaire previously provided by the
Company.
4.2 RESALES OF WARRANT AND WARRANT SHARES
(A) The Placement Agent hereby covenants with the Company not to make
any sale of the Warrant or the Warrant Shares without satisfying the
requirements of the Securities Act and the Rules and Regulations, including, in
the event of any resale under the Registration Statement, the prospectus
delivery requirements under the Securities Act, and the Placement Agent
acknowledges and agrees that the Warrant Shares are not transferable on the
books of the Company pursuant to a resale under the Registration Statement
unless the certificate submitted to the transfer agent evidencing the Warrant
Shares is accompanied by a separate officer's certificate:
10
(I) in the form of Appendix III to this Agreement;
(II) executed by an officer of, or other authorized person
designated by, the Placement Agent; and
(III) to the effect that (A) the Warrant Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied.
(B) The Placement Agent acknowledges that there may occasionally be
times when the Company determines the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section 6.3
below) should be suspended until such time as an amendment or supplement to the
Registration Statement or the Prospectus has been filed by the Company and any
such amendment to the Registration Statement is declared effective by the
Commission, or until such time as the Company has filed an appropriate report
with the Commission pursuant to the Exchange Act. The Placement Agent hereby
covenants that it will not sell any Warrant Shares pursuant to the Prospectus
during the period commencing at the time at which the Company gives the
Placement Agent written notice of the suspension of the use of the Prospectus
and ending at the time the Company gives the Placement Agent written notice that
the Placement Agent may thereafter effect sales pursuant to the Prospectus. The
Company may, upon written notice to the Placement Agent, suspend the use of the
Prospectus for up to thirty (30) days in any 365-day period based on the
reasonable determination of the Company's Board of Directors that there is a
significant business purpose for such determination, such as pending corporate
developments, public filings with the SEC or similar events. The Company shall
in no event be required to disclose the business purpose for which it has
suspended the use of the Prospectus if the Company determines in its good faith
judgment that the business purpose should remain confidential.
(C) The Placement Agent further covenants to notify the Company
promptly of the sale of the Warrant or any of its Warrant Shares, other than
sales pursuant to a Registration Statement contemplated in Section 6 of this
Agreement or sales upon termination of the transfer restrictions pursuant to
Section 6.4 of this Agreement.
4.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(A) This Agreement has been duly executed and delivered by the
Placement Agent and constitutes a valid and binding obligation of the Placement
Agent, enforceable against the Placement Agent in accordance with its terms
(subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, marshalling, or other laws and rules of law
affecting the enforceability of creditors' rights generally and to general
equitable principles).
(B) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Placement Agent pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Placement Agent is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Placement Agent is subject, nor
will such action result in any violation of the provisions of the charter or
bylaws of the Placement Agent or any applicable statute, law, rule, regulation,
ordinance, decision, directive or order.
11
5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Placement Agent in this Agreement and in the Warrant delivered pursuant
to this Agreement shall survive the execution of this Agreement, the delivery to
the Placement Agent of the Warrant and the payment therefor.
6. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
COVENANTS
6.1 FORM D FILING; REGISTRATION STATEMENT; EXPENSES
The Company shall:
(A) file in a timely manner a Form D relating to the issuance of the
Warrant under this Agreement, pursuant to Securities and Exchange Commission
Regulation D.
(B) as soon as practicable after the Closing Date, but in no event
later than the forty-fifth (45th) day following the Closing Date, prepare and
file with the Commission a Registration Statement on Form S-3 (or, if the
Company is ineligible to use Form S-3, then on Form S-1) relating to the sale of
the Warrant Shares by the Placement Agent from time to time on the Nasdaq
National Market (or the facilities of any national securities exchange on which
the Company's Common Stock is then traded) or in privately negotiated
transactions (the "Registration Statement");
(C) provide to Placement Agent any information required to permit the
sale of the Warrant Shares under rule 144A of the Securities Act;
(D) subject to receipt of necessary information from the Placement
Agent, use its best efforts to cause the Commission to notify the Company of the
Commission's willingness to declare the Registration Statement effective on or
before one hundred and twenty (120) days after the Closing Date;
(E) notify Placement Agent promptly upon the Registration Statement
being declared effective by the Commission;
12
(F) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Warrant Shares may be resold by the Placement Agent without registration or
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (iii) all of the Warrant
Shares have been sold pursuant to the Registration Statement or Rule 144(k)
under the Securities Act or any other rule of similar effect;
(G) promptly furnish to the Placement Agent with respect to the Warrant
Shares registered under the Registration Statement such reasonable number of
copies of the Prospectus, including any supplements to or amendments of the
Prospectus, in order to facilitate the public sale or other disposition of all
or any of the Shares by the Placement Agent;
(H) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;
(I) file documents required of the Company for customary Blue Sky
clearance in all states requiring Blue Sky clearance; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
(J) bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 6.1 and the registration of the Warrant Shares
pursuant to the Registration Statement, including fees and expenses (whether
external or internal) of up to $15,000 of the Placement Agent, but not including
any fees and expenses of any other advisers to the Placement Agent or brokerage
fees and commissions incurred by the Placement Agent.
6.2 TRANSFER OF WARRANT SHARES AFTER REGISTRATION
The Placement Agent agrees that it will not effect any disposition of
the Warrant Shares or its right to receive the Warrant Shares that would
constitute a sale within the meaning of the Securities Act, except as
contemplated in the Registration Statement referred to in Section 6.1 or as
otherwise permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding the
Placement Agent or its plan of distribution.
6.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 6.1.
13
6.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each of the Placement
Agent, each director and officer of the Placement Agent, and each person, if
any, who controls the Placement Agent within the meaning of the Securities Act,
against any losses, claims, damages, liabilities or expenses, joint or several,
to which the Placement Agent or such controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the Prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any of
them, in light of the circumstances under which they were made, not misleading,
or arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations under this Agreement or
under law, and will reimburse the Placement Agent, each director and officer of
the Placement Agent, and each such controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Placement Agent,
director and officer of the Placement Agent, and or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Prospectus or any amendment or
supplement of the Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Placement Agent expressly for use in the Registration Statement or the
Prospectus, or (ii) the failure of the Placement Agent to comply with the
covenants and agreements contained in Sections 4.2 or 6.2 of this Agreement
respecting resale of the Warrant Shares, or (iii) the inaccuracy of any
representations made by the Placement Agent in this Agreement or (iv) any untrue
statement or omission of a material fact required to make such statement not
misleading in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Placement Agent before the pertinent sale or sales by the
Placement Agent.
14
6.3.2 INDEMNIFICATION BY THE PLACEMENT AGENT
The Placement Agent will indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages, liabilities or expenses to
which the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person may become subject, under the
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Placement Agent, which consent shall not be unreasonably withheld) insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any failure on
the part of the Placement Agent to comply with the covenants and agreements
contained in Sections 4.2 or 6.2 of this Agreement respecting the sale of the
Shares or (ii) the inaccuracy of any representation made by the Placement Agent
in this Agreement or (iii) any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement to the Registration Statement or Prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Placement Agent
expressly for use therein; provided, however, that the Placement Agent shall not
be liable for any such untrue or alleged untrue statement or omission or alleged
omission of which the Placement Agent has delivered to the Company in writing a
correction before the occurrence of the transaction from which such loss was
incurred, and the Placement Agent will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
6.3.3 INDEMNIFICATION PROCEDURE
(A) Promptly after receipt by an indemnified party under this Section
6.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 6.3, promptly notify the indemnifying party in writing
of the claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 6.3 or to the extent it is not prejudiced as a result of such failure.
(B) In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 6.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
15
(I) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action) or
(II) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. Notwithstanding the provisions of this
Section 6.3, the Placement Agent shall not be liable for any indemnification
obligation under this Agreement in excess of the amount of the product of the
number of Warrant Shares issuable upon exercise of the Warrant multiplied by the
exercise price of the Warrant.
6.3.4 CONTRIBUTION
If the indemnification provided for in this Section 6.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 6.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement in such
proportion as is appropriate to reflect the relative fault of the Company and
the Placement Agent in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
The relative fault of the Company and the Placement Agent shall be
determined by reference to, among other things, whether the untrue or alleged
statement of a material fact or the omission or alleged omission to state a
material fact or the inaccurate or the alleged inaccurate representation or
warranty relates to information supplied by the Company or by the Placement
Agent and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 6.3.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in Section 6.3.3 with respect to
the notice of the threat or commencement of any threat or action shall apply if
a claim for contribution is to be made under this Section 6.3.4; provided,
however, that no additional notice shall be required with respect to any threat
or action for which notice has been given under Section 6.3 for purposes of
indemnification. The Company and the Placement Agent agree that it would not be
just and equitable if contribution pursuant to this Section 6.3 were determined
by any method of allocation which does not take account of the equitable
considerations referred to in this paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section
6.3, the Placement Agent shall not be liable for any contribution obligation
under this Agreement in excess of the amount of the product of the number of
Warrant Shares issuable upon exercise of the Warrant multiplied by the exercise
price of the Warrant.
16
6.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 4 or this Section 6 upon the
transferability of the Warrant Shares shall cease and terminate as to any
particular number of the Warrant Shares upon the passage of two years from the
effective date of the Registration Statement covering the Warrant Shares or at
such time as an opinion of counsel satisfactory in form and substance to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
6.5 INFORMATION AVAILABLE
So long as the Registration Statement is effective covering the resale
of Warrant Shares owned by the Placement Agent, the Company will furnish to such
Purchaser:
(A) as soon as practicable after available (but in the case of the
Company's Annual Report to Stockholders, within 90 days after the end of each
fiscal year of the Company), a full copy of the particular Registration
Statement covering the Warrant Shares (the foregoing, in each case, excluding
exhibits);
(B) upon the request of the Placement Agent, a reasonable number of
copies of the Prospectus to supply to any other party requiring the Prospectus.
6.6 RULE 144 INFORMATION
For two years after the date of this Agreement, the Company shall file
all reports required to be filed by it under the Securities Act, the Rules and
Regulations and the Exchange Act and shall take such further action to the
extent required to enable the Placement Agent to sell the Warrant Shares
pursuant to Rule 144 under the Securities Act (as such rule may be amended from
time to time).
7. NOTICES
All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:
17
(A) if to the Company, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall designate to
the Placement Agent in writing; and to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(B) if to the Placement Agent, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director
▇▇ ▇▇▇▇▇ Securities Corporation
1221 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Placement Agent shall
designate to the Company in writing; and to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ Raysman ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.
8. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Placement Agent.
9. EXPENSES
Each party to this Agreement shall pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and
related documents (including legal and accounting fees and expenses) or
otherwise incurred in connection with the transactions contemplated by this
Agreement, the Purchase Agreement and the Warrant. Notwithstanding the
foregoing, the Company agrees to reimburse the Placement Agent an amount not to
exceed $50,000 for all expenses reasonably incurred by the Placement Agent in
connection with the transactions contemplated by this Agreement, the Purchase
Agreement and the Warrant, including expenses for attorneys, consultants and
travel.
18
10. HEADINGS
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
11. SEVERABILITY
If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware and the federal law of the United States of
America.
13. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature pages follow]
19
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
▇▇▇▇▇▇ CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Vice President-Finance,
Chief Financial Officer,
Secretary and Treasurer
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
EXHIBIT A
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SUBJECT TO INTERNAL REVIEW AND CLEARANCE]
August ___, 2000
▇▇ ▇▇▇▇▇ Securities Corporation
1221 Avenue of the Americas, 12th Floor
New York, N.Y. 10020
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇ Corporation (the "Company"), a
Delaware corporation, in connection with the preparation, execution, and
delivery of (1) the Share Purchase Agreement (the "Purchase Agreement") dated as
of the date hereof by and among the Company and the State of Wisconsin
Investment Board (the "Purchaser"), pursuant to which the Company has issued and
sold to the Purchaser [________] shares of its common stock, $0.01 par value per
share ("Common Stock") and (2) the Placement Agent Agreement (the "Placement
Agent Agreement") dated as of the date hereof by and among the Company and ▇▇
▇▇▇▇▇ Securities Corporation (the "Placement Agent"), pursuant to which, as
partial consideration for your service as placement agent for the aforementioned
issuance and sale of Common Stock to the Purchaser, the Company has issued to
you a Warrant (the "Warrant") to purchase an aggregate of [________] shares of
Common Stock. Capitalized terms used in this opinion and not otherwise defined
herein have the respective meanings ascribed to them in the Purchase Agreement.
We have examined copies, executed on behalf of the Company of the
Purchase Agreement, the Placement Agent Agreement and the Warrant. We have also
reviewed such agreements, instruments, certificates, corporate and public
records, and other documents as we have deemed necessary for purposes of this
opinion.
As to any opinion below relating to the existence, qualification, or
standing of the Company, our opinion relies entirely upon and is limited by
those certificates of public officials attached hereto as Exhibit A.
For purposes of this opinion we have assumed without any investigation
(1) the legal capacity of each natural person, (2) the full power and authority
of each person other than the Company to execute, deliver and perform each
document heretofore executed and delivered or hereafter to be executed and
delivered and to do each other act heretofore done or hereafter to be done by
such person, (3) the due authorization, execution and delivery by each person
other than the Company of each document heretofore executed and delivered or
hereafter to be executed and delivered by such person, (4) the legality,
validity, binding effect and enforceability as to each person other than the
Company of each document heretofore executed and delivered or hereafter to be
executed and delivered and of each other act heretofore done or hereafter to be
done by such person, (5) the genuineness of each signature on, and the
completeness and authenticity of, each document and record purporting to be an
original, (6) the conformity to the original of each document and record
purporting to be a copy of an original, and (7) the completeness and
authenticity of the original of each document whether examined in original or
copy form.
With respect to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention, or other state of
mind), we have relied entirely upon (1) the representations of the Company set
forth in the Purchase Agreement, the Placement Agent Agreement and the Warrant
and (2) certificates of officers of the Company (including without limitation
the certificate attached as Exhibit B) and have assumed, without independent
inquiry or investigation, the accuracy of those representations and
certificates.
When an opinion set forth below is given to the best of our knowledge,
or with another similar qualification, the relevant knowledge or awareness is
limited to the actual knowledge or awareness of the individual lawyers currently
in this firm who have participated directly in the specific transactions to
which this opinion relates, and without any special or additional inquiry or
investigation undertaken for the purposes of this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Each opinion set forth below is subject to the following general
qualifications:
(a) as to any agreement or instrument delivered by the
Company, we assume that the Company has received the agreed-to
consideration therefor;
(b) as to any agreement or instrument to which the Company is
a party, we assume that such agreement or instrument is the binding
obligation of each other party thereto;
(c) the enforceability of any obligation of the Company may be
subject to, affected by or limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, marshalling, or
other laws and rules of law affecting the enforcement generally of
creditors' rights and remedies (including such as may deny giving
effect to waivers of debtors' or guarantors' rights), and may be
subject to or limited by considerations of public policy;
(d) the enforceability of any obligation of the Company to
provide indemnification or contribution in connection with any
liability under federal or state securities laws or under applicable
environmental laws may be subject to limitations arising under federal
or state securities laws or public policy on the enforceability of
provisions providing for indemnity or contribution;
(e) no opinion is given herein as to the availability of any
specific or equitable relief of any kind or as to the enforceability of
any contractual provision relating to remedies after default;
(f) the enforcement of any of your rights may in all cases be
subject to an implied duty of good faith and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity); and
(g) we assume, with your permission and without independent
inquiry or investigation that the Company has made no offers or sales
of any securities that should be integrated with the offer and sale of
the Shares to you and that from and after the date of this opinion,
there will be no offers or sales of the securities of the Company by
any party that could be integrated with any offers or sales of the
securities of the Company made on or prior to the date hereof other
than any such future offers and sales which are either exempted from or
registered in compliance with the registration provisions of the
Securities Act of 1933, as amended.
We assume without independent inquiry or investigation that you have
been granted access to information concerning the Company sufficient to make an
informed investment decision, that you have had the opportunity to question and
receive answers from the Company's management with respect to your acceptance of
the Warrant as a form of consideration for your service as placement agent and
that all material information necessary to your investment decision has been
accurately disclosed to you.
Our opinions in paragraph 4 below with respect to the nonassessability
of the shares issuable to you upon the due exercise of the Warrant in accordance
with the terms of the Warrant (the "Warrant Shares") mean only that the
ownership of such shares, without more, will not subject the owners thereof to
an obligation to make further payments to the Company, and do not mean that such
holders are immune from other liabilities, such as to the Company for unlawful
dividends, to the Company's creditors under a "piercing the corporate veil"
theory, to laborers, servants, or employees for unpaid wages, and the like.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
This opinion is limited solely to the laws of the Commonwealth of Massachusetts
as applied by courts located in Massachusetts, the General Corporation Law of
the State of Delaware as applied by courts located in Delaware, and the federal
laws of the United States of America, to the extent that the same may apply to
or govern the transactions contemplated by the Agreement, and does not cover
matters arising under the laws of any other jurisdiction. No opinion is given as
to the choice of law that any tribunal may apply to the transactions referred to
herein or as to the applicability of, compliance with, or the effect of, the
securities or "Blue Sky" laws of any state. No opinion is given as to any
securities law, including any state or federal "antifraud" provisions, except as
specifically set forth in paragraph 6 below.
Based upon and subject to the foregoing, it is our opinion that, except
as disclosed in or contemplated by the Purchase Agreement, the Placement Agent
Agreement or the Warrant (including any schedules and exhibits thereto):
1. The Company is a corporation validly existing under the laws of the
State of Delaware and in corporate good standing with the Office of the
Secretary of State of the State of Delaware.
2. The Company has the requisite corporate power to own or lease its
properties and to conduct its business as presently conducted as described in
the Company's annual report on Form 10-K for the year ended June 30, 1999, to
execute, deliver, and perform its obligations under the Purchase Agreement, the
Placement Agent Agreement and the Warrant, to issue the Warrant and to issue the
Warrant Shares upon due exercise of and in accordance with the terms of the
Warrant.
3. The execution, delivery and performance of the Purchase Agreement,
the Placement Agent Agreement and the Warrant have been duly authorized by all
requisite corporate action on the part of the Company and the Purchase
Agreement, the Placement Agent Agreement and the Warrant have been duly executed
and delivered on behalf of the Company. The Purchase Agreement, the Placement
Agent Agreement and the Warrant constitute legal, valid and binding agreements
of the Company, enforceable against the Company in accordance with their
respective terms.
4. The issuance and delivery of the Warrant have been duly authorized
by all requisite corporate action on the part of the Company, and the Warrant
Shares, when issued upon the due exercise of and in accordance with the terms of
the Warrant, and when the certificates evidencing the Warrant Shares are
countersigned by or issued by the Company's transfer agent and registrar, will
be validly issued and outstanding, fully paid and nonassessable.
5. Except for filings pursuant to federal or state securities laws, no
permit, authorization, consent, or approval of or by, or any notification of or
filing with, any federal government authority that has not been made or obtained
is or will be necessary for (i) the valid execution and delivery of the Purchase
Agreement, the Placement Agent Agreement and the Warrant by the Company or (ii)
the issuance and delivery of the Warrant.
6. Based in part on the representations of the Placement Agent set
forth in the Placement Agent Agreement and the Warrant, the offer and issuance
of the Warrant to the Placement Agent pursuant to and in accordance with the
Placement Agent Agreement and the Warrant, do not require registration under the
Securities Act of 1933, as amended.
7. To the best of our knowledge, there is no litigation, suit, or
similar proceeding or governmental investigation pending or overtly threatened
in writing against the Company that calls into question the validity or
enforceability of the Purchase Agreement, the Placement Agent Agreement or the
Warrant, or that may adversely affect the Company's ability to consummate the
transactions thereby contemplated.
8. The Company's execution, delivery, and performance of its
obligations under the Purchase Agreement, the Placement Agent Agreement or the
Warrant and the consummation of the transactions thereby contemplated, will not
(i) violate any provision of the Company's Certificate of Incorporation or
by-laws, each as amended and in effect as of the date hereof, (ii) result in any
default under any material contract, obligation, or commitment binding on the
Company and known to us, in each case except for any violations that
individually or in the aggregate will not have a material adverse effect on the
condition, financial or otherwise, or the earnings, assets, business affairs or
business prospects of the Company.
This opinion is rendered to you for your benefit in connection with the
transactions contemplated by the Purchase Agreement, the Placement Agent
Agreement or the Warrant and may not be referred to or used for any other
purpose, or delivered to, or relied upon by, any other party without our prior
written consent. The opinions set forth herein are based upon applicable law and
facts as of the date of this opinion letter, and we assume no obligation to
update any opinions set forth herein to reflect any fact or circumstances that
may hereafter come to our attention or any changes in law that may hereafter
occur.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
EXHIBIT A
PURCHASERS
------------------------------------------------------------ ---------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES OF COMMON STOCK
OF PURCHASER BEING PURCHASED
------------------------------------------------------------ ---------------------------------------------------------
STATE OF WISCONSIN INVESTMENT BOARD [_____________]
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------ ---------------------------------------------------------
EXHIBIT B
SCHEDULE OF EXCEPTIONS
SCHEDULE 3.5. NO MATERIAL CHANGE.
SCHEDULE 3.5(A)
See Schedule 3.7
SCHEDULE 3.5(B)
The Company is currently in negotiations with a third party regarding
the sale by the Company of substantially all of the assets of Vigilant Networks,
Inc., its subsidiary. A definitive purchase and sale agreement with respect to
this proposed transaction, however, has not yet been executed.
SCHEDULE 3.7. NO DEFAULTS.
The Company's continued investment in its subsidiary, Vigilant
Networks, Inc. has resulted in its failure to meet certain financial covenants
of its credit agreement with its banks at March 31, 2000. The Company obtained a
waiver of such non-compliance from the banks for the quarter ended March 31,
2000 and the covenant requirements for the quarter ended June 30, 2000 have been
amended. The Company expects that if the investment and operating losses of
Vigilant Networks, Inc. continue as projected, the Company likely will again be
in violation of certain financial covenants of its credit agreement with its
banks at September 30, 2000 and, in such instance, if the Company is unable to
obtain a waiver of such non-compliance from the banks, its credit agreement
could be in default and could be called by the banks.
SCHEDULE 3.13. PROPERTIES.
The Company's principal executive offices, property and facilities
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, which are
owned by the Company, are subject to a $6 million mortgage held by Chase Bank as
collateral for the Company's existing credit agreement. In addition, all of the
Company's assets are pledged as collateral for its existing credit agreements.
APPENDIX I
▇▇▇▇▇▇ CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
-------------------------------------------------------
2. Please provide the number of shares that you or your organization will
own immediately after Closing, including those Shares purchased by you
or your organization pursuant to this Purchase Agreement and those
shares purchased by you or your organization through other
transactions:
-------------------------------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three years with ▇▇▇▇▇▇
Corporation or its affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
APPENDIX II
CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
--------------------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.
PRINT OR TYPE:
Name of Purchaser (Individual or Institution):
--------------------------------------------------------------------------------
Name of Individual representing Purchaser (if an Institution)
--------------------------------------------------------------------------------
Title of Individual representing Purchaser (if an Institution):
--------------------------------------------------------------------------------
SIGNATURE:
Individual Purchaser or Individual representing Purchaser:
--------------------------------------------------------------------------------
EXHIBIT 4.3
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON RESALE AND MAY NOT BE RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 20,701 SHARES
OF THE
COMMON STOCK
OF
▇▇▇▇▇▇ CORPORATION
VOID AFTER AUGUST 16, 2005
This certifies that, for value received, ▇▇ ▇▇▇▇▇ Securities
Corporation or its permitted assigns ("HOLDER"), is entitled, subject to the
terms and conditions of this Warrant, at any time before 5:00 p.m. Eastern
Standard Time on August 16, 2005 (the "EXPIRATION DATE"), to purchase from
▇▇▇▇▇▇ Corporation, a Delaware corporation (the "COMPANY"), up to
Twenty-Thousand Seven Hundred and One (20,701) shares of the Company's Common
Stock, $0.01 par value per share (the "WARRANT STOCK"), at a price of $10.04 per
share (the "PURCHASE PRICE"). The Purchase Price and the number and character of
shares of Warrant Stock purchasable hereunder are subject to adjustment as
provided herein. Unless the context otherwise requires, the term "WARRANT STOCK"
shall mean the stock and other securities and property at any time issuable upon
exercise of this Warrant. The term "WARRANT" as used herein, shall include this
Warrant and any warrants delivered in substitution or exchange therefor as
provided herein.
1. EXERCISE.
1.1 Method of Exercise. Subject to the terms and conditions of
this Warrant, the Holder may exercise this Warrant in whole or in part, at any
time or from time to time, on any business day prior to the Expiration Date by
surrendering this Warrant at the principal executive office of the Company,
together with an executed Notice of Exercise in the form attached hereto as
Exhibit 1 and payment in full of the Purchase Price for the number of shares of
Warrant Stock to be purchased upon such exercise of this Warrant.
1.2 Form of Payment. Payment may be made by (i) check payable
to the Company's order, (ii) wire transfer of funds to the Company, (iii)
cancellation of indebtedness of the Company to the Holder or (iv) any
combination of the foregoing.
1.3 Partial Exercise. Upon a partial exercise of this Warrant,
this Warrant shall be surrendered by the Holder and the Company shall promptly
issue a new Warrant of like tenor for purchase of the number of remaining shares
of Warrant Stock not previously purchased.
1.4 No Fractional Shares. No fractional shares may be issued
upon any exercise of this Warrant, and any fractions shall be rounded down to
the nearest whole number of shares. If upon any exercise of this Warrant a
fraction of a share results, the Company shall pay the cash value of any such
fractional share, calculated on the basis of the Warrant Price.
1.5 Net Exercise Election. The Holder may elect to convert all
or a portion of this Warrant, without payment by the Holder of any
consideration, by the surrender of this Warrant to the Company, with the net
exercise election selected in the Notice of Exercise, into the number of shares
of Warrant Stock computed using the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Warrant Stock to be issued to the Holder.
Y = the number of shares of Warrant Stock issuable upon exercise of
the Warrant (or, if a partial exercise, the appropriate portion thereof).
A = the fair market value of one (1) share of Warrant Stock, as of the
time of net exercise.
B = the Purchase Price (as adjusted to the date of such calculation).
For purposes of the above calculation, the fair market value of one (1) share of
Warrant Stock shall be the product of (i) the closing price quoted on the Nasdaq
National Market or on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Wall Street Journal for the five
(5) trading days prior to the date of determination of fair market value and
(ii) the number of shares of Common Stock into which each share of Warrant Stock
is convertible at the time of such exercise.
2
1.6 Stock Certificates. In the event of any exercise of the
rights represented by this Warrant, as promptly as practicable on or after the
date of exercise and in any event within ten (10) days thereafter, the Company
at its expense shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates for the number of shares of
Warrant Stock issuable upon such exercise.
1.7 Taxes. The issuance of the shares of Warrant Stock upon
the exercise of this Warrant, and the delivery of certificates or other
instruments representing such shares, shall be made without charge to the Holder
for any tax or other charge in respect of such issuance.
2. VALID ISSUANCE. All shares of Warrant Stock issued upon the exercise
of this Warrant shall be validly issued, fully paid and non-assessable, and free
from all taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein).
3. TRANSFER. This Warrant may not be transferred in whole or in part
unless such transfer complies with all applicable securities laws. Upon a valid
transfer of all or a portion of this Warrant, the Company shall promptly make
appropriate entries on the books of the Company maintained for such purpose at
the principal office of the Company. The Company shall promptly issue
substantially identical new Warrant(s) to the appropriate new Holder(s).
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number and
character of shares of Warrant Stock issuable upon exercise of this Warrant (or
any shares of stock or other securities or property at the time receivable or
issuable upon exercise of this Warrant) and the Purchase Price therefor, are
subject to adjustment upon occurrence of the following events:
4.1 Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. The Purchase Price of this Warrant and the number of
shares of Warrant Stock issuable upon exercise of this Warrant shall each be
proportionally adjusted to reflect any stock dividend, stock split, reverse
stock split, combination of shares, reclassification, recapitalization or other
similar event altering the number of outstanding shares of Warrant Stock.
4.2 Adjustment for Other Dividends and Distributions. In case
the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution with respect to the Warrant Stock payable in securities of the
Company then, and in each such case, the Holder of this Warrant, on exercise of
this Warrant at any time after the consummation, effective date or record date
of such event, shall receive, in addition to the shares of Warrant Stock (or
such other stock or securities) issuable on such exercise prior to such date,
the securities of the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant immediately prior thereto.
3
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in
either the Purchase Price or in the number of shares of Warrant Stock, or other
stock, securities or property receivable on the exercise of this Warrant, the
Chief Financial Officer of the Company shall compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based, including a statement of the adjusted Purchase Price. The Company
shall forthwith mail a copy of each such certificate to the Holder of this
Warrant.
6. MAJOR CORPORATE EVENTS.
6.1 Definitions: The following terms shall have the meanings
indicated:
(a) "Non-Surviving Combination" means any merger,
consolidation or other business combination by the Company with one or more
persons (other than a wholly owned subsidiary of the Company) in which the
Company is not the survivor, or a sale of all or substantially all of the assets
of the Company to one or more other persons, if, in connection with either of
the foregoing, consideration is distributed to holders of the Company's common
stock in exchange for all or substantially all of their equity interest in the
Company.
(b) "QPO" means the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement covering the
offer and sale of the Company's common stock to the public.
6.2 Non-Surviving Combination. The Company shall provide
notice to the Holder at least 15 business days prior to the expected closing of
any Non-Surviving Combination. The Holder shall have the right, at its option,
to:
(a) exercise this Warrant for Warrant Stock;
(b) receive from the survivor in any such Non-Surviving
Combination, a warrant issued by such survivor of a nature
and value as similar as is reasonably practicable to the
nature and value of this Warrant.
6.3 QPO. The Company shall provide notice to the Holder at
least 15 business days prior to the expected pricing date of a QPO. In
connection therewith, the Holder shall have the right at its option to:
(a) exercise this Warrant for Warrant Stock;
4
(b) put this Warrant to the Company at a price per common
equivalent equal to (i) the price per share of common
stock paid in the QPO minus (ii) the Purchase Price; this
amount shall be paid in cash to the Holder at the closing
of the QPO; or
(c) continue to hold this Warrant in accordance with the terms
hereof.
7. NO IMPAIRMENT. The Company shall not, by amendment of its Articles
of Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) shall not increase the par value of any shares of stock issuable
upon the exercise of this Warrant above the amount payable therefor upon such
exercise, and (b) shall take all action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
non-assessable shares of Warrant Stock upon the exercise of this Warrant.
8. NOTICES OF RECORD DATE. In case:
(a) the Company shall take a record of the holders of its
Warrant Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any stock
dividend; or
(b) of any consolidation or merger of the Company with or into
another corporation, or any conveyance of all or substantially all of the assets
of the Company to another corporation in which holders of the Company's stock
are to receive stock, securities or property of another corporation; or
(c) of any voluntary dissolution, liquidation or winding-up of
the Company;
then, and in each such case, the Company shall mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, and stating the
amount and character of such dividend, or (ii) the date on which such
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Warrant Stock (or such stock or securities as at the time are
receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Warrant Stock (or such other stock or securities) for securities
or other property deliverable upon such consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least ten
(10) days prior to the date therein specified.
5
8. LOSS OR MUTILATION. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant, and of a written indemnity agreement
reasonably satisfactory to the Company, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver in lieu thereof a new Warrant of like tenor.
9. RESERVATION OF WARRANT STOCK. The Company shall at all times reserve
and keep available for issue upon the exercise of this Warrant such number of
its authorized but unissued shares of Warrant Stock as shall be sufficient to
permit the exercise in full of this Warrant.
10. NO SHAREHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company.
11. REPRESENTATIONS OF THE HOLDER. The Holder hereby represents and
warrants to the Company that it:
11.1 Understands that: (a) the Warrant and Warrant Stock are
"restricted securities" under the federal securities laws since the sale of the
Warrant and Warrant Stock has not been registered under the Act; (b) the Warrant
and Warrant Stock may be resold without registration under the Act only in
certain limited circumstances; and (c) the Holder may be required to hold the
Warrant and Warrant Stock indefinitely unless such securities are subsequently
registered under the Act or an exemption from such registration is available.
11.2 Agrees that the Company may, prior to the registration of
the Warrant Shares under the Securities Act of 1933, as amended, place the
legend set forth below on any stock certificate(s) evidencing the Warrant
Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON RESALE
AND MAY NOT BE RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS.
12. STOCK PURCHASE AGREEMENT; REGISTRATION RIGHTS. This Warrant has
been issued pursuant to a letter agreement between the Company and the Holder,
dated August 11, 2000, and a Placement Agent Agreement, dated the date hereof
(the "PLACEMENT AGENT AGREEMENT"), between the Company and the Holder. The
Holder shall have and be entitled to exercise the rights of registration granted
under the Placement Agent Agreement.
13. NOTICES. All notices and other communications from the Company to
the Holder shall be mailed by first-class registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the Holder.
6
14. AMENDMENT; WAIVER. This Warrant may be amended or any provision
hereof waived only by an instrument in writing signed by the Company and the
Holder.
15. HEADINGS. The description headings in this Warrant are inserted for
convenience and shall not control or affect the meaning or construction of any
of the provisions hereof.
16. LAW GOVERNING. This Warrant shall be governed by the laws of the
State of New York without regard to principles of conflicts of laws.
Dated: August 16, 2000
▇▇▇▇▇▇ CORPORATION HOLDER:
▇▇ ▇▇▇▇▇ Securities Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------- ----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President-Finance, Title: Managing Director
Chief Financial Officer,
Secretary and Treasurer
7
Exhibit 1
NOTICE OF EXERCISE
To: ▇▇▇▇▇▇ CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(1) Standard Election. The undersigned Holder elects to purchase shares
of the Common Stock of ▇▇▇▇▇▇ Corporation (the "WARRANT STOCK"), pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price for such shares in full.
(2) Net Exercise Election. The undersigned Holder elects to convert the
Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 1.5 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of ▇▇▇▇▇▇ Corporation (the "WARRANT STOCK").
Please issue a certificate or certificates representing such shares of
Warrant Stock in the name specified below:
---------------------
(Name)
---------------------
(Address)
---------------------
(City, State, Zip Code)
---------------------
(Federal Tax Identification Number)
---------------------
(Date)
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By: ___________________________
Name:
Title:
8
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned Holder of this Warrant hereby sells,
assigns and transfers to the Assignee named below all of the rights of the
undersigned under the Warrant, with respect to the number of shares of Common
Stock set forth below:
Name of Assignee Address No. of Shares
---------------- ------- -------------
and does hereby irrevocably constitute and appoint ________________ Attorney to
make such transfer on the books of ___________________, maintained for the
purpose, with full power of substitution in the premises.
Dated: _____________________ ▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By: ___________________________
Name:
Title:
9
Schedule II
▇▇▇▇▇▇ CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 1998, 1999 AND 2000
(IN THOUSANDS)
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO (1)(2) END
DESCRIPTION OF PERIOD OPERATIONS DEDUCTIONS/OTHER OF PERIOD(3)
----------- --------- ---------- ---------------- ------------
Against trade receivables--
Year ended June 30, 1998
Allowance for doubtful accounts...... 217 364 (13) 568
Year ended June 30, 1999
Allowance for doubtful accounts...... 568 502 (552) 518
Year ended June 30, 2000
Allowance for doubtful accounts...... 518 225 (202) 541
Against inventories--
Year ended June 30, 1998
Allowance for excess and obsolete.... 4,732 3,433 (3,078) 5,087
Year ended June 30, 1999
Allowance for excess and obsolete.... 5,087 3,626 (5,453) 3,260
Year ended June 30, 2000
Allowance for excess and obsolete.... 3,260 2,051 (2,374) 2,937
Against deferred tax assets--
Year ended June 30, 1998
Valuation allowance.................. 4,322 4,883 -- 9,205
Year ended June 30, 1999
Valuation allowance.................. 9,205 1,495 -- 10,700
Year ended June 30, 2000
Valuation allowance.................. 10,700 1,469 -- 12,169
------------
(1) Accounts written-off.
(2) Merchandise disposals and/or impact of foreign currency.
(3) Inventory reserves include $213, $827 and $3,005 of restructuring reserves
as of June 30, 2000, June 30, 1999, and June 30, 1998, respectively. Accounts
receivable reserves include $211 of restructuring reserves as of June 30, 1998.
3