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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of January
8, 1998, by and among Oncor, Inc., a Maryland corporation, with headquarters
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and
the investors listed on the Schedule of Buyers attached hereto (individually, a
"BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized the following new series of its
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"): the
Company's Series A Convertible Preferred Stock (the "PREFERRED SHARES"), which
shall be convertible into shares of the Company's Common Stock, par value $.01
per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Articles Supplementary of the
Preferred Shares, substantially in the form attached hereto as Exhibit A (the
"ARTICLES SUPPLEMENTARY");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, initially an aggregate of 500 of the Preferred Shares
(the "INITIAL PREFERRED SHARES") in the respective amounts set forth opposite
each Buyer's name on the Schedule of Buyers and one warrant for each Preferred
Share purchased in substantially the form attached hereto as Exhibit E (the
"WARRANT"), to acquire 250 shares of Common Stock, which Warrants shall expire
five years after the date of issuance;
D. Subject to the terms and conditions set forth in this
Agreement, each Buyer may have the right to purchase a number of additional
Preferred Shares, along with the related Warrants, equal to up to the sum of
(i) the number of Initial Preferred Shares held by such Buyer on the date which
is 180 days after the Initial Closing Date (as defined in Section 1(b)), (ii)
the number of Initial Preferred Shares converted by such Buyer at a Conversion
Price equal to the Fixed Conversion Price of the Initial Preferred Shares (each
as defined in the Articles Supplementary) prior to the date which is 180 days
after the Initial Closing Date, (iii) the number of Put Preferred Shares (as
defined below) held by such Buyer on the date which is 180 days after the
applicable Put Closing Date (as defined in Section 1(d)) and (iv) the number of
Put Preferred Shares converted by such Buyer at a Conversion Price equal to the
Fixed Conversion Price of such Put Preferred Shares prior to the date which is
180 days after the
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applicable Put Closing Date (the "ADDITIONAL PREFERRED SHARES"). In addition,
the Company may have the right to cause the Buyers to purchase up to an
aggregate of 750 Preferred Shares, along with the related Warrants, (pro rata
based on the number of Initial Preferred Shares each Buyer purchased in
relation to the total number of Initial Preferred Shares) (the "PUT PREFERRED
SHARES") (the Initial Preferred Shares, the Additional Preferred Shares and the
Put Preferred Shares collectively are referred to in this Agreement as the
"PREFERRED SHARES");
E. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit B (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to
provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
a. Purchase of Preferred Shares. Subject to
satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a),
the Company shall issue and sell to the Buyers and the Buyers severally shall
purchase from the Company an aggregate of 500 Initial Preferred Shares, in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers along with one Warrant for each Preferred Share purchased (the "INITIAL
CLOSING"). Subject to satisfaction (or waiver) of the conditions set forth in
Sections 1(c), 6(b) and 7(b), at the option of each Buyer, the Company shall
issue and sell to each such Buyer and each such Buyer shall purchase from the
Company at multiple closings, if applicable, an aggregate of up to that number
of Additional Preferred Shares, along with the related Warrants, equal to the
sum of (i) the number of Initial Preferred Shares held by such Buyer on the
date which is 180 days after the Initial Closing Date, (ii) the number of
Initial Preferred Shares converted by such Buyer at a Conversion Price equal to
the Fixed Conversion Price prior to the date which is 180 days after the
Initial Closing Date, (iii) the number of Put Preferred Shares held by such
Buyer on the date which is 180 days after the Put Closing Date and (iv) the
number of Put Preferred Shares converted by such Buyer at a Conversion Price
equal to the Fixed Conversion Price prior to the date which is 180 days after
the Put Closing Date (the "ADDITIONAL CLOSINGS"). Subject to satisfaction (or
waiver) of the conditions set forth in Sections 1(d), 1(e), 6(c) and 7(c), the
Company may require that each Buyer purchase that number of additional
Preferred Shares, along with the related Warrants, equal to such Buyer's pro
rata portion of up to 750 Preferred Shares (based on the number of Initial
Preferred Shares each Buyer purchased in relation to the total number of
Initial Preferred Shares purchased by the Buyers) (the "PUT CLOSING"). The
Initial Closing, the Additional Closings and the Put Closing collectively are
referred to in this Agreement as the "CLOSINGS." The purchase price (the
"PURCHASE PRICE") of each Preferred Share and the related Warrant at each of
the Closings shall be $10,000.
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b. The Initial Closing Date. The date and time of the
Initial Closing (the "INITIAL CLOSING DATE") shall be 10:00 a.m. Central Time,
within two (2) business days following the date hereof, subject to satisfaction
(or waiver) of the conditions to the Initial Closing set forth in Sections 6(a)
and 7(a) (or such later date as is mutually agreed to by the Company and the
Buyers). The Initial Closing shall occur on the Initial Closing Date at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
c. The Additional Closing Dates. The date and time of
each of the Additional Closings (the "ADDITIONAL CLOSING DATES") shall be 10:00
a.m. Central Time, on the date specified in an Additional Share Notice (as
defined below), subject to satisfaction (or waiver) of the conditions to the
Additional Closing set forth in Sections 6(b) and 7(b) and the conditions set
forth in this paragraph (or such later date as is mutually agreed to by the
Company and the Buyers). During the period beginning on and including the date
which is 180 days after the Initial Closing Date and ending on and including
the date which is the five year anniversary of the Initial Closing Date, but
subject to the requirements of Sections 6(b) and 7(b), each Buyer may purchase
Additional Preferred Shares by delivering written notice to the Company (an
"ADDITIONAL SHARE NOTICE") at least seven days but not more than 20 days prior
(an "ADDITIONAL SHARE NOTICE DATE") to the Additional Closing Date set forth in
such Buyer's Additional Share Notice. Each Additional Share Notice shall set
forth (i) the number of Additional Preferred Shares, along with the related
Warrants, to be purchased by such Buyer at the Additional Closing, (ii) the
aggregate Purchase Price for such Additional Preferred Shares and the related
Warrant, and (iii) the date selected by the Buyer for the Additional Closing
Date, which Additional Closing Date shall be not later than the date which is
the five year anniversary of the Initial Closing Date. Notwithstanding the
foregoing, no Buyer shall be entitled to deliver an Additional Share Notice
unless on the date of the delivery of the Additional Share Notice the Market
Price (as defined in the Articles Supplementary) of the Common Stock is greater
than the Fixed Conversion Price then in effect for the Initial Preferred
Shares. Each Additional Closing shall occur on the applicable Additional
Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
d. The Put Closing Date. The date and time of the Put
Closing (the "PUT CLOSING DATE") shall be 10:00 a.m. Central Time, on the date
specified in the Company's Put Share Notice (as defined below), subject to
satisfaction (or waiver) of the conditions to the Put Closing set forth in
Sections 6(c) and 7(c) and the conditions set forth in Section 1(e), (or such
later date as is mutually agreed to by the Company and the Buyers). During the
period (the "COMPANY PUT RIGHT PERIOD") beginning on and including the date
which is 180 days after the Initial Closing Date and ending on the date which
is 360 days after the Initial Closing Date, but subject to the requirements of
Sections 6(c) and 7(c) and satisfaction of the Put Notice Conditions (as
defined in Section 1(e)), the Company may require each Buyer to purchase Put
Preferred Shares by delivering written notice to each of the Buyers (a "PUT
SHARE NOTICE") at least 30 days but not more than 45 days (the "PUT SHARE
NOTICE DATE") prior to the Put Closing Date set forth in the Put Share Notice.
The Put Share Notice shall set forth (i) each Buyer's pro
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rata portion (based on the number of Initial Preferred Shares each Buyer
purchased in relation to the total number of Initial Preferred Shares purchased
by the Buyers) of the aggregate number of Put Preferred Shares, along with the
related Warrant, (which aggregate number shall not exceed 750 Preferred Shares)
which the Company is requiring each Buyer to purchase at the Put Closing, (ii)
the aggregate Purchase Price for each such Buyer's Put Preferred Shares and the
related Warrants and (iii) the date selected by the Company for the Put Closing
Date, which Put Closing Date shall be not later than the date which is 360 days
after the Initial Closing Date. The Put Closing shall occur on the Put Closing
Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The Initial Closing Date, the Additional
Closing Dates and the Put Closing Date collectively are referred to in this
Agreement as the "CLOSING DATES."
e. The Put Notice Conditions. Notwithstanding anything
in this agreement to the contrary, the Company shall not be entitled to deliver
a Put Share Notice and require the Buyers to purchase the Put Preferred Shares
along with the related Warrants unless, in addition to the satisfaction of the
requirements of Sections 6(c) and 7(c), all of the following conditions (the
"PUT NOTICE CONDITIONS") are satisfied: (i) either (A) the Company's
stockholders shall have approved the issuance of the Securities (as defined in
Section 2(a)) on or prior to the Put Share Notice Date, (B) the Company shall
have been advised in writing by The American Stock Exchange, Inc. ("AMEX") (or
The New York Stock Exchange, Inc. or The Nasdaq Stock Market, Inc., if the
Common Stock is then listed on such exchange) that the rules of such exchange
would not require the approval of the stockholders of the Company for the
issuance of a number of Conversion Shares equal to at least 20% of the number
of shares of Common Stock issued and outstanding on the Initial Closing Date,
or (C) the number of Conversion Shares issued and issuable upon the conversion
of the Initial Preferred Shares, any Additional Preferred Shares and the Put
Preferred Shares as of the Put Share Notice Date and the Put Closing Date is
not greater than 12.5% of the number of shares of Common Stock issued and
outstanding on the Initial Closing Date; (ii) during the period beginning 90
days prior to the Put Closing Date and ending on and including the Put Closing
Date, the registration statement (the "REGISTRATION STATEMENT") covering the
resale of the Conversion Shares and Warrant Shares has been declared effective
by the SEC and at all times has been effective and available for the sale of no
less than 125% of the sum of (A) the number of Conversion Shares then issuable
upon the conversion of all outstanding Preferred Shares and the Put Preferred
Shares to be issued by the Company, (B) the number of Warrant Shares then
issuable upon exercise of all outstanding Warrants and the Warrants to be
issued in connection with the Put Preferred Shares and (C) the number of
Conversion Shares and Warrant Shares that are then held by the Buyers; (iii)
during the period beginning on the Initial Closing Date and ending on and
including the Put Closing Date, the Common Stock is listed on AMEX and has not
been suspended from trading at any time during such period, nor is there any
pending or threatened delisting or suspension; (iv) no event constituting a
Major Transaction (as defined in Section 3(c) of the Articles Supplementary),
including an agreement to consummate a Major Transaction, or a Triggering Event
(as defined in Section 3(d) of the Articles Supplementary) shall have occurred
from the period beginning on and including the Initial Issuance Date and ending
on and including the Put
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Closing Date; (v) on each day during the period beginning 30 days prior to the
Put Share Notice Date and ending on and including the Put Share Notice Date,
the Market Price of the Common Stock has not been less than the Fixed
Conversion Price for the Initial Preferred Shares then in effect; (vi) during
the period beginning on the Put Share Notice Date and ending on and including
the Put Closing Date, the Market Price of the Common Stock has not been less
than 85% of the Market Price of the Common Stock on the Put Share Notice Date;
(vii) during the period beginning on the Initial Closing Date and ending on and
including the Put Closing Date, the Company shall have delivered Conversion
Shares upon conversion of the Preferred Shares and Warrant Shares upon exercise
of the Warrants to the Buyers on a timely basis as set forth in Section
2(f)(ii) of the Articles Supplementary and Sections 2(a) and 2(b) of the
Warrants, respectively, and (viii) there has not previously been a Put Closing.
f. Form of Payment. On each of the Closing Dates, (i)
each Buyer shall pay the Purchase Price to the Company for the Preferred Shares
and the Warrants to be issued and sold to such Buyer at the respective Closing,
by wire transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver to each
Buyer, stock certificates (in the denominations as such Buyer shall request)
(the "STOCK CERTIFICATES") representing such number of the Preferred Shares
which such Buyer is then purchasing (as indicated opposite such Buyer's name on
the Schedule of Buyers) along with a Warrant exercisable for 250 shares of
Common Stock for each Preferred Share purchased, duly executed on behalf of the
Company and registered in the name of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Investment Purpose. Such Buyer (i) is acquiring the
Preferred Shares and the Warrants, (ii) upon conversion of the Preferred
Shares, will acquire the Conversion Shares then issuable and (iii) upon
exercise of the Warrants, will acquire the shares of Common Stock issuable upon
exercise thereof (the "WARRANT SHARES") (the Preferred Shares, the Conversion
Shares, the Warrants and the Warrant Shares collectively are referred to herein
as the "SECURITIES"), for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933
Act.
b. Accredited Investor Status. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
c. Reliance on Exemptions. Such Buyer understands that
the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements
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of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and such Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire
such securities.
d. Information. Such Buyer and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below. Such Buyer
understands that its investment in the Securities involves a high degree of
risk and that it is possible that such Buyer may not be able to recoup any or
all of its investment made hereby. Such Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities.
e. No Governmental Review. Such Buyer understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.
f. Transfer or Resale. Such Buyer understands that
except as provided in the Registration Rights Agreement: (i) the Securities
have not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Buyer shall have
delivered to the Company an opinion of counsel, in a form reasonably acceptable
to the Company and its legal counsel, to the effect that such Securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration, or (C) such Buyer provides the Company
with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) ("RULE 144"); (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the ▇▇▇▇ ▇▇▇) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act
or any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
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g. Legends. Such Buyer understands that the
certificates or other instruments representing the Preferred Shares and the
Warrants and, until such time as the sale of the Conversion Shares and the
Warrant Shares have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement, the stock certificates representing the
Conversion Shares and the Warrant Shares, except as set forth below, shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY AND ITS LEGAL COUNSEL, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it
is stamped, if (i) such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a form reasonably acceptable to the Company and
its legal counsel, to the effect that a public sale, assignment or transfer of
such Securities may be made without registration under the 1933 Act, or (iii)
such holder provides the Company with reasonable assurances that such
Securities can be sold pursuant to Rule 144 without any restriction as to the
number of securities acquired as of a particular date that can then be
immediately sold. Each Buyer acknowledges, covenants and agrees to sell the
Securities represented by a certificate(s) from which the legend has been
removed, only pursuant to (i) a registration statement effective under the 1933
Act, or (ii) advice of counsel that such sale is exempt from registration
required by Section 5 of the 1933 Act.
h. Authorization; Enforcement. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country
specified in its address on the Schedule of Buyers.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company and its
subsidiaries (a complete list of which as of the date hereof and as of the
applicable Closing Date is set forth in Schedule 3(a)) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power to own their properties and to carry on their business as now being
conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations,
financial condition of the Company and its subsidiaries, if any, taken as a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith.
b. Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority
to enter into and perform this Agreement, the Registration Rights Agreement,
and the Irrevocable Transfer Agent Instructions (as defined in Section 5) and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the
"TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents, the Warrants and the Articles Supplementary by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders unless otherwise herein provided for, (iii) the Transaction
Documents and the Warrants have been duly executed and delivered by the
Company, (iv) the Transaction Documents and the Warrants constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies, and (v)
prior to the Initial Closing Date, the Articles Supplementary will be filed
with the Secretary of State of the State of Maryland and prior to each of the
Closing Dates will be in full force and effect, enforceable against the Company
in accordance with its terms.
c. Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (i) 50,000,000 shares of
Common Stock, of which as of the date hereof,
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27,953,805 shares were issued and outstanding, 4,624,331 shares are reserved
for issuance pursuant to the Company's stock option plans and 2,741,852 shares
are reserved for issuance pursuant to securities (other than the Preferred
Shares and the Warrants) exercisable or exchangeable for, or convertible into,
shares of Common Stock and (ii) 1,000,000 shares of Preferred Stock, none of
which as of the date hereof, were issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except as disclosed in Schedule 3(c), no shares
of Common Stock or Preferred Stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in Schedule 3(c), as of the effective date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company or any
of its subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries; (ii) there are no outstanding debt securities; (iii) there are no
agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); and (iv) there are no outstanding
securities of the Company or any of its subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to redeem a security of the Company or any of its
subsidiaries. Except as disclosed in Schedule 3(c), there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement.
The Company has furnished to the Buyers true and correct copies of the
Company's Charter, as amended and as in effect on the date hereof (the
"CHARTER"), and the Company's By-laws, as in effect on the date hereof (the
"BY-LAWS"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
d. Issuance of Securities. The Preferred Shares and the
Warrants are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, (ii) free
from all taxes, liens and charges with respect to the issue thereof and (iii)
entitled to the rights and preferences set forth in the Articles Supplementary.
5,587,965 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f) below) have been duly authorized
and reserved for issuance upon conversion of the Preferred Shares and upon
exercise of the Warrants. Upon conversion or exercise in accordance with the
Articles Supplementary or the Warrants, as the case may be, the Conversion
Shares and the Warrant Shares will be validly issued, duly listed, fully paid
and nonassessable and free from all taxes, liens and charges with respect to
the issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. Assuming the
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accuracy of each Buyer's representations and warranties contained in Section 2,
the issuance by the Company of the Securities is exempt from registration under
the 1933 Act.
e. No Conflicts. Except as disclosed in Schedule 3(e),
the execution, delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the reservation for issuance
and issuance of the Conversion Shares and Warrant Shares) will not (i) result
in a violation of the Charter, any articles supplementary of any outstanding
series of Preferred Stock of the Company or the Bylaws; (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its subsidiaries is a party; or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected. Except as disclosed in Schedule 3(e), neither the Company
nor its subsidiaries is in violation of any term of or in default under (i) its
Charter, any articles supplementary of any outstanding series of Preferred
Stock or By-laws or their organizational charter or by-laws, respectively, or
(ii) any material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its subsidiaries. The business of the Company and
its subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, ordinance or regulation of any governmental entity except
in such situations, if any, where such a violation would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under or contemplated by the Transaction Documents or the
Articles Supplementary in accordance with the terms hereof or thereof. Except
as disclosed in Schedule 3(e), all consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof. The Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company is
not in violation of the listing requirements of AMEX as in effect on the date
hereof and on each of the Closing Dates and is not aware of any facts which
would reasonably lead to delisting of the Common Stock by AMEX in the
foreseeable future.
f. SEC Documents; Financial Statements. Since December
31, 1995, the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"1934 ACT") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as
the "SEC DOCUMENTS"). The
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Company has delivered to the Buyers or their respective representatives true
and complete copies of the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). No other information provided by or on
behalf of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d) of this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstance under which they are or were made, not misleading.
Neither the Company nor any of its subsidiaries or any of their officers,
directors, employees or agents have provided the Buyers with any material,
nonpublic information.
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g), from December 31, 1996 until the date hereof and until the
applicable Closing Date there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition, liabilities or results of operations of the Company or its
subsidiaries. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or any of its subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
h. Absence of Litigation. As of the date hereof and the
applicable Closing Date, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the
Company, the Common Stock or any of the Company's subsidiaries or any of the
Company's or the Company's subsidiaries' officers or directors in their
capacities as such, except as expressly set forth in Schedule 3(h).
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i. Acknowledgment Regarding Buyers' Purchase of
Preferred Shares. The Company acknowledges and agrees that each of the Buyers
is acting solely in the capacity of arm's length purchaser with respect to the
Transaction Documents and the transactions contemplated thereby. The Company
further acknowledges that each Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any of the Buyers or any of their respective representatives or agents
in connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to such Buyer's purchase of the Securities. The
Company further represents to each Buyer that the Company's decision to enter
into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.
j. No Undisclosed Events, Liabilities, Developments or
Circumstances. As of the date hereof and the applicable Closing Date, no
event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on
a registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
disclosed.
k. No General Solicitation. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the ▇▇▇▇ ▇▇▇) in connection with the offer or
sale of the Securities.
l. No Integrated Offering. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would require registration of any
of the Securities under the 1933 Act or cause this offering of Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of AMEX, nor will the Company or any of its
subsidiaries take any action or steps that would require registration of the
Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
m. Employee Relations. As of the date hereof and the
applicable Closing Date, neither the Company nor any of its subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its subsidiaries, is any such dispute threatened. Neither the Company nor
any of its subsidiaries is a party to a collective bargaining agreement, and
the Company and its subsidiaries believe that relations with their employees
are good.
n. Intellectual Property Rights. As of the date hereof
and the applicable Closing Date, the Company and its subsidiaries own or
possess adequate rights or licenses to
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use all trademarks, trade names, service marks, service ▇▇▇▇ registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. Except as set forth on
Schedule 3(n), none of the Company's trademarks, trade names, service marks,
service ▇▇▇▇ registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or are expected
to expire or terminate within two years from the date of this Agreement. The
Company and its subsidiaries do not have any knowledge of any infringement by
the Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service marks,
service ▇▇▇▇ registrations, trade secret or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others and, except as set forth on Schedule 3(n), there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service ▇▇▇▇ registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. The Company and
its subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their intellectual properties.
o. Environmental Laws. As of the date hereof and the
applicable Closing Date, the Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, in each case except
where the failure to do so would not have a Material Adverse Effect.
p. Title. The Company and its subsidiaries have good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or such
as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or
any of its subsidiaries. Any real property and facilities held under lease by
the Company or any of its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
q. Insurance. As of the date hereof and the applicable
Closing Date, the Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as management of the Company
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believes to be prudent and customary in the businesses in which the Company and
its subsidiaries are engaged. Neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of the Company and its subsidiaries, taken as a whole.
r. Regulatory Permits. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, in each case except where the failure to possess such
certificates would not have a Material Adverse Effect, and neither the Company
nor any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
except such notices of revocation or modification which would not have a
Material Adverse Effect.
s. Internal Accounting Controls. The Company and each
of its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
t. No Materially Adverse Contracts, Etc. Neither the
Company nor any of its subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the
future to have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is a party to any contract or agreement which in the judgment of
the Company's officers has or is expected to have a Material Adverse Effect.
u. Tax Status. Except as set forth on Schedule 3(u),
the Company and each of its subsidiaries has made or filed all federal and
state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no
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unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no basis for any
such claim.
v. Certain Transactions. Except as set forth on
Schedule 3(v) or in the SEC Documents and except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties
and other than the grant of stock options disclosed on Schedule 3(c), none of
the officers, directors, or employees of the Company is presently a party to
any transaction with the Company or any of its subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
w. Dilutive Effect. The Company understands and
acknowledges that the number of Conversion Shares issuable upon conversion of
the Preferred Shares and the Warrant Shares issuable upon exercise of the
Warrants will increase in certain circumstances. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Preferred Shares in accordance with this Agreement and the Articles
Supplementary and its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants, is, in each
case, absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.
x. No Other Agreements. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Buyers at each of the Closings
pursuant to this Agreement under applicable securities or "Blue Sky" laws of
the states of the United States, and shall provide evidence of any such action
so taken to the Buyers on or prior to the Closing Date. In connection
therewith, each of the Buyers shall, within five business days of any request
of
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the Company, provide to the Company any information reasonably requested by the
Company in order to comply with this Section 4(b).
c. Reporting Status. Until the earlier of (i) the date
as of which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares and the Warrant Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall have sold
all the Conversion Shares and the Warrant Shares and (B) none of the Preferred
Shares or Warrants is outstanding (the "REGISTRATION PERIOD"), the Company
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds
from the sale of the Preferred Shares for substantially the same purposes and
in substantially the same amounts as indicated in Schedule 4(d).
e. Financial Information. The Company agrees to send
the following to each Investor (as that term is defined in the Registration
Rights Agreement) during the Registration Period: (i) within two (2) days after
the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements or amendments filed pursuant to the 1933 Act; (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of its subsidiaries and (iii) copies of any
notices and other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available or giving
thereof to the stockholders.
f. Reservation of Shares. The Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 150% of the number of shares of Common Stock needed
to provide for the issuance of the Conversion Shares and the Warrant Shares.
g. Additional Financing. Subject to the exceptions
described below, the Company agrees that during the period beginning on the
date hereof and ending 180 days following each of the Initial Closing Date and
the Put Closing Date, if any, neither the Company nor its subsidiaries will,
without the prior written consent of the holders of a majority of the Preferred
Shares then outstanding, negotiate or contract with any party for any equity
financing (including any debt financing with an equity component) or issue any
equity securities of the Company or any subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any subsidiary
(including debt securities with an equity component) in any form (each, an
"EQUITY FINANCING"). The restrictions on Equity Financings set forth in this
Section 4(g) shall not prohibit (i) the issuance of securities by the Company
pursuant to any bona fide corporate partnering arrangement (as defined below)
entered into by the Company or any
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of its subsidiaries, or (ii) the issuance of securities by the Company in
connection with a firm commitment, underwritten public offering. As used in
this Section 4(g), the term "bona fide corporate partnering arrangement" shall
mean any strategic licensing, joint development, joint marketing or other
similar cooperative arrangement entered into by the Company or any of its
subsidiaries with a corporation or other entity with which the Company or such
subsidiary will have a continuing significant business relationship or with a
subsidiary of such corporation or other entity other than as investor, on the
one hand, and issuer, on the other hand.
h. Listing. The Company shall promptly secure the
listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) upon each national securities exchange and automated
quotation system (including AMEX), if any, upon which shares of Common Stock
are then listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such listing of
all Registrable Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall seek to maintain the Common Stock's
authorization for listing on AMEX, the Nasdaq National Market or The New York
Stock Exchange, Inc. ("NYSE"). Neither the Company nor any of its subsidiaries
shall take any action which may result in the delisting or suspension of the
Common Stock on AMEX, the Nasdaq National Market or NYSE. The Company shall
promptly provide to each Buyer copies of any notices it receives from AMEX, the
Nasdaq National Market or NYSE regarding the continued eligibility of the
Common Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(h).
i. Expenses. Subject to Section 9(l) below, following
the Initial Closing, the Company shall reimburse the Buyers for the Buyers'
expenses (including attorneys fees and expenses) in connection with negotiating
and preparing the Transaction Documents and consummating the transactions
contemplated thereby up to an aggregate of $35,000.
j. Transactions With Affiliates. So long as (i) any
Preferred Shares or Warrants are outstanding or (ii) any Buyer owns Conversion
Shares or Warrant Shares with a market value equal to or greater than $500,000,
the Company shall not, and shall cause each of its subsidiaries not to, enter
into, amend, modify or supplement, or permit any subsidiary to enter into,
amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any subsidiary's officers, directors, person who
were officers or directors at any time during the previous two years,
stockholders who beneficially own 5% or more of the Common Stock, or affiliates
or with any individual related by blood, marriage or adoption to any such
individual or with any entity in which any such entity or individual owns a 5%
or more beneficial interest (each a "Related Party"), except for (a) customary
employment arrangements and benefit programs on reasonable terms, (b) any
agreement, transaction, commitment or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable from a
person other than such Related Party as determined by a majority of the
disinterested directors of the Company, (c) any agreement, transaction,
commitment or arrangement which is approved by a majority of the disinterested
directors of the
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Company. For purposes hereof, any director who is also an officer of the
Company or any subsidiary of the Company shall not be a disinterested director
with respect to any such agreement, transaction, commitment or arrangement.
"AFFILIATE" for purposes hereof means, with respect to any person or entity,
another person or entity that, directly or indirectly, (i) has a 5% or more
equity interest in that person or entity, (ii) has 5% or more common ownership
with that person or entity, (iii) controls that person or entity, or (iv)
shares common control with that person or entity. "Control" or "controls" for
purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or entity.
k. Filing of Form 8-K. On or before the tenth (10th) day
following each of the Closing Dates, the Company shall file a Form 8-K with the
SEC describing the terms of the transaction contemplated by the Transaction
Documents and consummated at such Closing, in each case in the form required by
the 1934 Act.
l. Underwriting Lock-Up Agreement. At any time during
the period beginning on and including the Initial Closing Date and ending on
the date which is four years after the Initial Closing Date, the Company may
require that all, but not less than all, of the holders of the Preferred Shares
enter into a "lock-up" agreement with the underwriters of a public offering of
the Common Stock pursuant to which the holders would agree not to sell any
Conversion Shares or Warrant Shares during the period beginning on the date
designated by the Company, which date shall be not less than 20 business days
after the holders' receipt of such notice, and ending on the date which is the
earlier of the closing date of such offering and 90 days after the beginning of
the lock-up period as designated by the Company (the "UNDERWRITING LOCK-UP
PERIOD"). The Company shall exercise this right by delivering written notice
(the "LOCK-UP REQUEST NOTICE") of such request to all of the holders of the
Preferred Shares then outstanding at least 20 business days prior to the date
on which the Underwriting Lock-Up Period will begin, but in no event prior to
the filing of the registration statement for such proposed offering. The
Lock-up Request Notice shall state (i) that the underwriters of such offering
have requested that the holders of the Preferred Shares enter into a "lock-up"
agreement, (ii) the date on which the Underwriting Lock-Up Period will begin,
and (iii) the name of the managing underwriters of the proposed offering.
Notwithstanding the foregoing, the Company shall not be entitled to require the
holders to enter into a "lock-up" agreement unless (A) the Underwriting Lock-Up
Period is not more than 90 days, (B) the Underwriting Lock-Up Period shall
terminate immediately upon (I) the termination or abandonment or indefinite
delay of the underwritten offering, (II) the announcement of a pending or
consummated Major Transaction or (III) the occurrence of a Triggering Event,
(C) all officers and directors of the Company enter into substantially similar
"lock-up" agreements, (D) such underwritten public offering is completed at a
price per share to the public of not less than $5.50 per share (subject to
adjustment as a result of any stock split, stock dividend, recapitalization,
reverse stock split, consolidation, exchange or similar event) and generates
aggregate gross proceeds to the Company of at least $12,000,000, (E) there has
been no other Underwriting Lock-Up Period, and (F) during the period beginning
on and including the date which is twenty business days prior to the filing of
the registration statement for the proposed offering and
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ending on and including the first day of the Underwriting Lock-Up Period, the
Registration Statement has been effective and there has been no stop order or
other regulatory prohibition on trading of the Common Stock. In the event the
Company requires an Underwriting Lock-Up Period, the Mandatory Conversion Date
(as defined in the Articles Supplementary) and the Expiration Date (as defined
in the Warrant) shall be extended two days for each day in the Underwriting
Lock-Up Period as provided in Section 2(g) of the Articles Supplementary and in
Section 1(b) of the Warrant, respectively.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by each Buyer to the Company upon conversion of the Preferred Shares or
exercise of the Warrants (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS").
Prior to registration of the Conversion Shares and the Warrant Shares under the
1933 Act, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this Section 5,
and stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Conversion Shares and the Warrant Shares, prior to registration of
the Conversion Shares and the Warrant Shares under the ▇▇▇▇ ▇▇▇) will be given
by the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section 5 shall affect in any way each Buyer's obligations and
agreements set forth in Section 2(g) to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Securities. If a Buyer
provides the Company with an opinion of counsel, in a form reasonably
acceptable to the Company and its legal counsel, that registration of a resale
by such Buyer of any of such Securities is not required under the 1933 Act, the
Company shall permit the transfer, and, in the case of the Conversion Shares
and the Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by such
Buyer and without any restrictive legends. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 5, that the Buyers shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
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a. Initial Closing Date. The obligation of the Company
hereunder to issue and sell the Initial Preferred Shares and the related
Warrants to each Buyer at the Initial Closing is subject to the satisfaction,
at or before the Initial Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the
Transaction Documents and delivered the same to the Company.
(ii) The Articles Supplementary shall have been filed with
the Secretary of State of the State of Maryland.
(iii) Such Buyer shall have delivered to the Company the
Purchase Price for the Preferred Shares and the related Warrants being
purchased by such Buyer at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided
by the Company.
(iv) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when
made and as of the Initial Closing Date as though made at that time
(except for representations and warranties that speak as of a specific
date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions
required by this Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Initial Closing Date.
b. Additional Closing Dates. The obligation of the
Company hereunder to issue and sell the Additional Preferred Shares and the
related Warrants to each Buyer at each of the Additional Closings is subject to
the satisfaction, at or before the respective Additional Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have complied with the requirements
of Section 1(c).
(ii) Such Buyer shall have delivered to the Company the
Purchase Price for the Additional Preferred Shares and the related
Warrants being purchased by such Buyer at the Additional Closing by
wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.
(iii) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when
made and as of the Additional Closing Date as though made at that time
(except for representations and warranties that speak as of
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a specific date), and such Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Transaction Documents to be performed,
satisfied or complied with by such Buyer at or prior to the Additional
Closing Date.
c. Put Closing Date. The obligation of the Company
hereunder to issue and sell the Put Preferred Shares and the related Warrants
to each Buyer at the Put Closing is subject to the satisfaction, at or before
the Put Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:
(i) Such Buyer shall have delivered to the Company the
Purchase Price for the Put Preferred Shares and the related Warrants
being purchased by such Buyer at the Put Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided
by the Company.
(ii) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the date when
made and as of the Put Closing Date as though made at that time
(except for representations and warranties that speak as of a specific
date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions
required by this Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Put Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
a. Initial Closing Date. The obligation of each Buyer
hereunder to purchase the Initial Preferred Shares and the related Warrants at
the Initial Closing is subject to the satisfaction, at or before the Initial
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:
(i) The Company shall have executed each of the
Transaction Documents, and delivered the same to such Buyer.
(ii) The Articles Supplementary shall have been filed with
the Secretary of State of the State of Maryland, and a copy thereof
certified by such Secretary of State shall have been delivered to such
Buyer.
(iii) The Common Stock shall be authorized for listing on
AMEX, the Nasdaq National Market or NYSE, trading in the Common Stock
issuable upon conversion of the Initial Preferred Shares and the
exercise of the related Warrants to be traded on the
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Nasdaq National Market, NYSE or AMEX shall not have been suspended by
the SEC, The Nasdaq Stock Market, Inc., NYSE or AMEX and all of the
Conversion Shares and Warrant Shares issuable upon conversion of the
Initial Preferred Shares and exercise of the related Warrants to be
sold at the Initial Closing shall be listed upon AMEX, the Nasdaq
National Market or NYSE.
(iv) The representations and warranties of the Company
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Initial
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company
at or prior to the Initial Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the
Company, dated as of the Initial Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such
Buyer including, without limitation, an update as of the Initial
Closing Date regarding the representation contained in Section 3(c)
above.
(v) Such Buyer shall have received the opinion of the
Company's counsel dated as of the Initial Closing Date, in form, scope
and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Initial Preferred Shares being
purchased by such Buyer at the Initial Closing.
(vii) The Board of Directors of the Company shall have
adopted the resolutions in a form reasonably acceptable to such Buyer
(the "RESOLUTIONS").
(viii) As of the Initial Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares
and the exercise of the Warrants, at least 5,587,965 shares of Common
Stock.
(ix) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each domestic subsidiary in
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such corporation's state of incorporation issued by the Secretary of
State of the state of incorporation as of a date within 10 days of the
Initial Closing.
(xi) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the adoption of the
Resolutions, (B) certified copies of its Charter and (C) Bylaws, each
as in effect at the Initial Closing.
(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by the
Transaction Documents as such Buyer or its counsel may reasonably
request.
b. Additional Closing Dates. The obligation of each
Buyer hereunder to purchase the Additional Preferred Shares and the related
Warrants at each of the Additional Closings is subject to the satisfaction, at
or before the Additional Closing Dates, of each of the following conditions,
provided that these conditions are for each Buyer's sole benefit and may be
waived by such Buyer at any time in its sole discretion:
(i) The Articles Supplementary shall be in full force and
effect and shall not have been amended since the Initial Closing Date,
and a copy thereof certified by the Secretary of State of the State of
Maryland shall have been delivered to such Buyer.
(ii) The Common Stock shall be authorized for listing on
AMEX, the Nasdaq National Market or NYSE, trading in the Common Stock
issuable upon conversion of the Additional Preferred Shares and the
exercise of the related Warrants to be traded on AMEX, the Nasdaq
National Market or NYSE shall not have been suspended by the SEC,
AMEX, The Nasdaq Stock Market, Inc. or NYSE and all of the Conversion
Shares and Warrant Shares issuable upon conversion of the Additional
Preferred Shares and the related Warrants to be sold at the Additional
Closing shall be listed upon AMEX, the Nasdaq National Market or NYSE.
(iii) The representations and warranties of the Company
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the
respective Additional Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date)
and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the respective Additional
Closing Date. Such Buyer shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of such
Additional Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such
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Buyer including, without limitation, an update as of such Additional
Closing Date regarding the representation contained in Section 3(c)
above.
(iv) Such Buyer shall have received the opinion of the
Company's counsel dated as of such Additional Closing Date, in form,
scope and substance reasonably satisfactory to such Buyer and in
substantially the form of Exhibit C attached hereto.
(v) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Additional Preferred Shares being
purchased by such Buyer at the Additional Closing.
(vi) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
(vii) As of such Additional Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the Preferred Shares
and the exercise of the Warrants, a number of shares of Common Stock
equal to at least 150% of the number of shares of Common Stock which
would be issuable upon conversion and exercise in full, as the case
may be, of the then outstanding Preferred Shares and Warrants,
including for such purposes the Additional Preferred Shares and the
related Warrants to be issued at such Additional Closing.
(viii) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(ix) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each domestic subsidiary in the state of such
corporation's state of incorporation issued by the Secretary of State
of the state of incorporation as of a date within 10 days of such
Additional Closing.
(x) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the adoption of the
Resolutions, (B) certified copies of its Charter and (C) Bylaws, each
as in effect at the Additional Closing.
(xi) During the period beginning on the Additional Share
Notice Date and ending on and including the Additional Closing Date,
the Company shall have delivered Conversion Shares upon conversion of
the Preferred Shares and Warrant Shares upon exercise of the Warrants
to the Buyers on a timely basis as set forth in Section 2(f)(ii) of
the Articles Supplementary and Sections 2(a) and 2(b) of the Warrants,
respectively.
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(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
c. Put Closing Date. The obligation of each Buyer
hereunder to purchase the Put Preferred Shares at the Put Closing is subject to
the satisfaction, at or before the Put Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole benefit
and may be waived by such Buyer at any time in its sole discretion:
(i) The Company shall have complied with the requirements
of Section 1(d) and all of the Put Notice Conditions set forth in
Section 1(e) shall have been satisfied.
(ii) The Articles Supplementary shall be in full force and
effect and shall not have been amended since the Put Closing Date, and
a copy thereof certified by the Secretary of State of the State of
Maryland shall have been delivered to such Buyer.
(iii) The Common Stock shall be authorized for listing on
AMEX, the Nasdaq National Market or NYSE, trading in the Common Stock
issuable upon conversion of the Put Preferred Shares and the exercise
of the related Warrants to be traded on AMEX, the Nasdaq National
Market or NYSE shall not have been suspended by the SEC, AMEX, The
Nasdaq Stock Market, Inc. or NYSE and all of the Conversion Shares
issuable upon conversion of the Put Preferred Shares and exercise of
the related Warrants to be sold at the Put Closing shall be listed
upon AMEX, the Nasdaq National Market or NYSE.
(iv) The representations and warranties of the Company
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Put
Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with
the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company
at or prior to the Put Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company,
dated as of the Put Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer
including, without limitation, an update as of the Put Closing Date
regarding the representation contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of the
Company's counsel dated as of the Put Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially
the form of Exhibit C attached hereto.
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(vi) The Company shall have executed and delivered to such
Buyer the Warrants and the Stock Certificates (in such denominations
as such Buyer shall request) for the Preferred Shares being purchased
by such Buyer at the Put Closing.
(vii) The Board of Directors of the Company shall have
adopted, and shall not have amended, the Resolutions.
(viii) As of the Put Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Preferred Shares and
the exercise of the Warrants, a number of shares of Common Stock equal
to at least 150% of the number of shares of Common Stock which would
be issuable upon conversion and exercise in full, as the case may be,
of the then outstanding Preferred Shares and Warrants, including for
such purposes the Put Preferred Shares and the related Warrants to be
issued at such Put Closing.
(ix) The Irrevocable Transfer Agent Instructions, in the
form of Exhibit D attached hereto, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
(x) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the
Company and each domestic subsidiary in the state of such
corporation's state of incorporation issued by the Secretary of State
of the state of incorporation as of a date within 10 days of the Put
Closing.
(xi) The Company shall have delivered to such Buyer a
secretary's certificate certifying as to (A) the adoption of the
Resolutions, (B) certified copies of its Charter and (C) Bylaws, each
as in effect at the Put Closing.
(xii) The Company shall have delivered to such Buyer such
other documents relating to the transactions contemplated by this
Agreement as such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of the Securities and all of their
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "INDEMNITEES") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any
26
27
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents, the Articles Supplementary or the
Warrants or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents, the Articles Supplementary or
the Warrants or any other certificate, instrument or document contemplated
hereby or thereby, or (c) any cause of action, suit or claim brought or made
against such Indemnitee and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Indemnitees, any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or the status
of such Buyer or holder of the Securities as an investor in the Company. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting the City of New York, borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. If any provision of
this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
b. Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature page
is delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
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c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyers, the
Company, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of this Agreement may be amended other than by an instrument in writing signed
by the Company and the holders of at least two-thirds (2/3) of the Preferred
Shares then outstanding, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
No such amendment shall be effective to the extent that it applies to less than
all of the holders of the Preferred Shares then outstanding. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents or the
Articles Supplementary unless the same consideration also is offered to all of
the parties to the Transaction Documents or holders of the Preferred Shares, as
the case may be.
f. Notices. Any notices consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically generated and kept on
file by the sending party); (iii) three (3) business days after being sent by
U.S. certified mail, return receipt requested, or (iv) one (1) business day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Oncor, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: President
With a copy to:
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Transfer Agent:
American Stock Transfer and Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers.
Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Preferred Shares. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the holders of two-thirds (2/3) of the
Preferred Shares then outstanding including by merger or consolidation. A
Buyer may assign some or all of its rights hereunder to affiliates or
associates of such Buyer, without the consent of the Company, and to others,
with the consent of the Company which consent shall not be unreasonably
withheld; provided, however, that any such assignment shall not release such
Buyer from its obligations hereunder unless such obligations are assumed by
such assignee and the Company has consented to such assignment and assumption.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4, 5 and 9, and the indemnification provisions set forth in Section 8,
shall survive each of the Closings. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.
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30
j. Publicity. The Company and each Buyer shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to
such transactions as is required by applicable law and regulations (although
each Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof).
k. Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
l. Termination. In the event that the Initial Closing
shall not have occurred with respect to a Buyer on or before three (3) business
days from the date hereof due to the Company's or such Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)), the
nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party; provided, however, that if this
Agreement is terminated pursuant to this Section 9(l), the Company shall remain
obligated to reimburse the non-breaching Buyers for the expenses described in
Section 4(i) above.
m. Placement Agent. The Company acknowledges that it
has not engaged a placement agent in connection with the sale of the Preferred
Shares and the Warrants. The Company shall be responsible for the payment of
brokers commissions relating to or arising out of the transactions contemplated
hereby, if any. The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, attorneys' fees
and out of pocket expenses) arising in connection with such claim.
n. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.
02A/352636
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IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
ONCOR, INC. THEMIS PARTNERS L.P.
By: Promethean Investment Group L.L.C.
Its: General Partner
By: /s/
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Its: Vice President and By: /s/
Chief Financial Officer ------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Its: President
HERACLES FUND
By: Promethean Investment Group L.L.C.
Its: Investment Advisor
By: /s/
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Its: President
▇▇▇▇▇▇▇▇, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.
Its: General Partner
By: /s/
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Operating Officer
RAPHAEL, L.P.
By: /s/
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Operating Officer
32
[signature page to Securities Purchase Agreement - p. 2 of 2]
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: /s/
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Officer
HALIFAX FUND, L.P.
By: The Palladin Group
Its: Investment Manager
By: Palladin Capital Management LLC
Its: General Partner
By: /s/
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Authorized Representative
33
SCHEDULE OF BUYERS
NUMBER OF
INITIAL
INVESTOR ADDRESS PREFERRED INVESTOR'S REPRESENTATIVES' ADDRESS
INVESTOR NAME AND FACSIMILE NUMBER SHARES AND FACSIMILE NUMBER
------------------------ ----------------------------------------- ----------- --------------------------------------
Themis Partners L.P. c/oPromethean Investment Group, L.L.C. 75 Promethean Investment Group, L.L.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10019 ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇. Attn: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: 312-902-1061
Heracles Fund Bank of Bermuda (Cayman) Limited 75 Promethean Investment Group, L.L.C.
▇.▇. ▇▇▇ ▇▇▇ 40 West 57th Street, Suite 1520
3rd Floor British ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇'▇ Drive Attn: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Georgetown, Grand Cayman ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Cayman Island, BWI Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: 312-902-1061
▇▇▇▇▇▇▇▇, L.P. c/oAngelo, ▇▇▇▇▇▇ & Co., ▇.▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - 26th Floor ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Raphael, L.P. c/oAngelo, ▇▇▇▇▇▇ & Co., ▇.▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - 26th Floor ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Ramius Fund, Ltd. c/oAngelo, ▇▇▇▇▇▇ & Co., ▇.▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - 26th Floor ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Halifax Fund, L.P. c/o CITCO Fund Services, Ltd. 250 The Palladin Group
Corporate Center, ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 31106 Suite 1500
SMB New York, New York 10019
Grand Cayman, Cayman Islands Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇