SECURITIES PUT AGREEMENT
Exhibit
10.2
This
Securities Put Agreement (this “Agreement”)
is
dated as of March 29, 2006, among VendingData Corporation, a Nevada corporation
(the “Company”),
and
Bricoleur Partners, L.P., Bricoleur Enhanced, L.P., BRIC 6, L.P. and Bricoleur
Offshore Ltd. (each, including its successors and assigns, a “Purchaser”
and
collectively the “Purchasers”).
RECITALS
A. WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”)
and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, up to $5,000,000 shares of Common Stock (as defined below),
as
more fully described in this Agreement.
B. WHEREAS,
concurrent with close of the purchase and sale of securities under this
Agreement, the Company will sell to the Purchasers $7 million of 7% Senior
Secured Notes (“Notes”) pursuant to that certain Note Purchase Agreement
(“Note
Purchase Agreement”)
of the
same date herewith and, in addition, the Company will sell 2,400,000 shares
of
Common Stock, at a price of $2.50 per share, pursuant to a certain Securities
Purchase Agreement (“Securities
Purchase Agreement”)
between the Company and the accredited investors named therein (“Share
Purchasers”).
AGREEMENT
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms have the meanings indicated
in
this Section 1.1:
“Action”
shall
have the meaning ascribed to such term in Section 3.1(j).
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such
terms are used in and construed under Rule 144 under the Securities Act. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States.
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“Change
in Control”
shall
mean the occurrence of any of the following events: (i) a sale of all or
substantially all of the assets of the Company; (ii) a liquidation or
dissolution of the Company; (iii) a merger or consolidation in which the
Company is not the surviving corporation,
unless
the
stockholders of the Company immediately prior to such consolidation, merger
or
reorganization, own more than 50% of the Company’s voting power immediately
after such;
(iv) a reverse merger in which the Company is the surviving corporation but
the shares of Common Stock and securities convertible into Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; (v) any consolidation or merger of the Company, or any other
corporate reorganization, in which the stockholders of the Company immediately
prior to such consolidation, merger or reorganization, own less than 50% of
the
Company’s voting power immediately after such consolidation, merger or
reorganization; or (vi) any Person other than ▇▇▇▇▇ ▇▇▇▇▇▇ becomes the
owner, directly or indirectly, of securities of the Company representing more
than 50% of the combined voting power of the Company’s then outstanding
securities; provided,
however,
that a
“Change in Control” shall not include any transaction the sole purpose of which
is to change the state of the Company’s incorporation
“Closing”
means
each Closing of the purchase and sale of the Subscription Shares pursuant to
Section 2.1.
“Closing
Date”
means,
as to each Closing, the date, which shall be a Business Day, designated in
the
relevant Subscription Notice for the Closing of the purchase and sale of the
Subscription Shares set forth in such notice.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any other
class
of securities into which such securities may hereafter be reclassified or
changed into.
“Common
Stock Equivalents”
means
any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation,
any
debt, preferred stock, rights, options, warrants or other instrument that is
at
any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Company
Counsel”
means
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP.
“Disclosure
Schedules”
means
the Disclosure Schedules of the Company delivered in connection with each
Closing.
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“Effective
Date”
means
the date that the initial Registration Statement filed by the Company pursuant
to the Registration Rights Agreement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“GAAP”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Intellectual
Property Rights”
shall
have the meaning ascribed to such term in Section 3.1(o).
“Liens”
means
a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction.
“Material
Adverse Effect”
shall
have the meaning assigned to such term in Section 3.1(b).
“Material
Permits”
shall
have the meaning ascribed to such term in Section 3.1(m).
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated the date hereof, among the Company,
and
the Purchasers, in the form of Exhibit
A
attached
hereto.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Subscription
Shares.
“Required
Approvals”
shall
have the meaning ascribed to such term in Section 3.1(e).
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
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“Short
Sales”
shall
include all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act (but
shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).
“Subscription
Amount”
means,
as to each Closing, the aggregate dollar amount to be paid for the Subscription
Shares at the Closing as specified in the Subscription Notice.
“Subscription
Commitment Amount”
means,
as to each Purchaser, the total amount committed by the Purchasers for the
Purchase of Subscription Shares, from time to time, as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Commitment Amount”, in United States Dollars and in immediately
available funds.
“Subscription
Shares”
means,
as to each Closing, the aggregate number of shares of Common Stock to be
purchased by the Purchasers.
“Subscription
Notice”
shall
mean a written notice to the Purchasers, delivered via facsimile, setting forth
the Subscription Amount that the Company requests from the Purchasers, including
the Subscription Price and the Closing Date. The Company shall be entitled
to
send a Subscription Notice only during the fifteen Business Day period
immediately following the Company’s filing with the Commission of an Annual
Report on Form 10-K or 10-KSB or Quarterly Report on Form 10-Q or 10-QSB. The
Company shall only send a Subscription Notice between 6:30 A.M. and 1:30 P.M.
(Pacific time) on a Trading Day; provided, however, the Company shall not be
entitled to send a Subscription Notice after 1:00 P.M. if it subsequently issues
a press release on that same Trading Day. Unless otherwise mutually agreed
by
the Purchasers and the Company in writing, the Closing Date shall be no sooner
than five (5) Business Days and no later than fifteen (15) Business Days after
the date on which the Subscription Notice is received by the Purchasers.
“Subscription
Price”
means,
as to each Subscription Share purchased in a Closing, eighty percent (80%)
of
the VWAP on the same Trading Day on which the Company delivers the Subscription
Notice; provided that in no event shall the Subscription Price exceed $3.50
per
Subscription Share (subject to adjustment for any stock split, reverse stock
split or other similar event affecting the Common Stock after the date hereof).
“Subsidiary”
means
any subsidiary of the Company as set forth on Schedule
3.1(a).
“Shareholder
Approval”
means
such approval as may be required by the applicable rules and regulations of
the
American Stock Exchange (or any successor entity) from the shareholders of
the
Company in accordance with Section 14 of the Exchange Act with respect to the
transactions contemplated by the Transaction Documents.
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“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
the
OTC Bulletin Board.
“Transaction
Documents”
means
this Agreement and the Registration Rights Agreement and any other documents
or
agreements executed in connection with the transactions contemplated
hereunder.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
Upon
the terms and subject to the conditions set forth herein, the Company agrees
to
sell, and each Purchaser agrees to purchase, severally and not jointly, the
Purchaser’s pro rata share of the Subscription Shares to be purchased by the
Purchasers at each Closing. Each Closing shall be for a minimum of at least
one
million dollars ($1,000,000) of Subscription Shares. Each Purchaser’s pro rata
share of the Subscription Shares shall be determined by multiplying the
Subscription Shares by a fraction the numerator of which is the Purchaser’s
Subscription Commitment Amount and the denominator of which is $5,000,000.
The
Purchasers shall purchase the Subscription Shares at each Closing at a purchase
price equal to the Subscription Price. At each Closing, each Purchaser shall
deliver to the Company, via wire transfer or a certified check, immediately
available funds equal to their portion of the Subscription Amount, and the
Company shall deliver to each Purchaser their respective Subscription Shares
to
be issued at the Closing. Upon satisfaction of the conditions set forth in
Sections 2.2 and 2.3, Closing shall occur at the offices of the Company, or
such
other location as the parties shall mutually agree, on the Closing Date
(“Closing Date”) set forth in the Subscription Notice. Unless otherwise mutually
agreed by the Purchasers and the Company in writing, the Closing Date shall
be
no sooner than five (5) Business Days and no later than fifteen (15) Business
Days after the date on which the Subscription Notice is received by the
Purchasers. The Purchasers shall have no obligation to purchase Subscription
Shares after five (5) years from the date of this Agreement, or if sooner,
at
any time after the Purchasers have purchased an aggregate of five million
dollars ($5,000,000) of Subscriptions Shares. In addition, the Purchasers shall
have no obligation to purchase Subscription Shares at any time after a Change
of
Control. If mutually agreed by two or more Purchasers, such Purchasers may
agree
to adjust the relative amounts of their Subscription Commitment Amounts,
Subscription Amounts or the amount of Subscription Shares to be purchased by
them at any Closing, provided that the sum of such amounts is not thereby
reduced.
2.2 Deliveries.
(a) On
or
prior to each Closing, the Company shall deliver or cause to be delivered to
each Purchaser the following:
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(i) as
to the
initial Closing only, this Agreement duly executed by the Company;
(ii) as
to the
initial Closing only, the Registration Rights Agreement duly executed by the
Company;
(iii) as
to the
initial Closing only, a legal opinion of Company Counsel, in the form acceptable
to the Purchasers in their reasonable discretion;
(iv) as
to the
initial Closing only, the Securities Purchase Agreement duly executed by the
Share Purchasers and the Company, and evidence that the full $6,000,000 purchase
price for the common shares sold thereby has been received by the
Company;
(v) as
to the
initial Closing only, the Note Purchase Agreement duly executed by the
Purchasers and the Company, and evidence that the full $7,000,000 purchase
price
for the Notes sold thereby has been received by the Company;
(vi) a
Subscription Notice prepared and delivered in accordance herewith;
(vii) a
copy of
the irrevocable instructions to the Company’s transfer agent instructing the
transfer agent to deliver, on an expedited basis, certificates evidencing the
Subscription Shares purchased by each Purchaser hereunder registered in the
name
of each Purchaser;
(viii) the
Disclosure Schedules, as updated as necessary; and
(ix) an
Officer’s Certificate in the form acceptable to the Purchasers in their
reasonable discretion.
(b) On
or
prior to each Closing, each Purchaser shall deliver or cause to be delivered
to
the Company the following:
(i) as
to the
initial Closing only, this Agreement duly executed by such
Purchaser;
(ii) as
to the
initial Closing only, the Registration Rights Agreement duly executed by the
Purchaser; and
(iii) such
Purchaser’s pro rata Subscription Amount by wire transfer or cashier’s check to
the account as specified by the Company.
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2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with each Closing are subject
to the following conditions being met:
(i) the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein;
(ii) all
obligations, covenants and agreements of the Purchasers required to be performed
at or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Purchasers of the items set forth in Section 2.2(b) of this
Agreement; and
(iv) the
Company shall have obtained Shareholder Approval.
(b) The
respective obligations of the Purchasers hereunder in connection with each
Closing are subject to the following conditions being met:
(i) the
accuracy of the representations and warranties of the Company contained herein
as of the date of this Agreement;
(ii) the
accuracy of the representations and warranties of the Company contained herein,
as modified by the Disclosure Schedule delivered at such Closing, provided
that
any additional or different disclosure included in such Disclosure
Schedule
(considered collectively) do not constitute, and could not reasonably be
expected to have or result in, a Material Adverse Effect.
(iii) all
obligations, covenants and agreements of the Company required to be performed
at
or prior to the Closing Date shall have been performed; and
(iv) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;
(v) the
Company shall have obtained Shareholder Approval; and
(vi) the
Company is not in breach or default of any obligation, covenant or agreement
under the Note Purchase Agreement, Registration Rights Agreement, the Notes,
the
Warrants or the Security Agreement (as the terms Notes, Warrants and Security
Agreement are defined in the Note Purchase Agreement).
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ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
Except
as
set forth under the corresponding section of the disclosure schedules delivered
to the Purchasers concurrently herewith or at any Closing (the “Disclosure
Schedules”) which Disclosure Schedules shall be deemed a part hereof, the
Company hereby makes the representations and warranties set forth below to
each
Purchaser as of the date hereof and as of each Closing:
(a) Subsidiaries.
All of
the direct and indirect subsidiaries of the Company are set forth on
Schedule
3.1(a).
The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) Organization
and Qualification.
The
Company and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and
to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect on
the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the Company and the Subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c) Authorization;
Enforcement.
Subject
to Shareholder Approval, the Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by
each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals. Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium
and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar
as
indemnification and contribution provisions may be limited by applicable
law.
8
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company,
the issuance and sale of the Subscription Shares and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a
default) under, result in the creation of any Lien upon any of the properties
or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which
any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or
a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected.
(e) Filings,
Consents and Approvals.
Except
as set forth on Schedule 3.1(e),
the
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section
4.4
of this Agreement, (ii) the filing with the Commission of the Registration
Statement, (iii) application(s) to each applicable Trading Market for the
listing of the Subscription Shares for trading thereon in the time and manner
required thereby, (iv) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws, and (vi)
the
Company shall have obtained Shareholder Approval
(collectively, the “Required
Approvals”).
(f) Issuance
of the Subscription Shares.
The
Subscription Shares are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents and subject to Shareholder
Approval, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock the Subscription Shares issuable pursuant
to this Agreement.
9
(g) Capitalization.
The
capitalization of the Company is as set forth on Schedule
3.1(g).
No
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the
Subscription Shares or as set forth on Schedule
3.1(g),
there
are no outstanding options, warrants, script rights to subscribe to, calls
or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exercisable or exchangeable for, or giving
any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company
or
any Subsidiary is or may become bound to issue additional shares of Common
Stock
or Common Stock Equivalents. The issuance and sale of the Subscription Shares
will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in
a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation
of
any preemptive rights or similar rights to subscribe for or purchase securities.
Other than Shareholder Approval, there are no further approval or authorization
of any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Subscription Shares. Except as set forth on
Schedule
3.1(g),
there
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company’s
stockholders.
(h) SEC
Reports; Financial Statements.
The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the period commencing
January 1, 2005 through the date hereof and any Closing (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. Except
as set forth on Schedule
3.1(h),
as of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, as applicable, and none
of
the SEC Reports, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under
which they were made, not misleading. Except as set forth on Schedule
3.1(h),
the
financial statements of the Company included in the SEC Reports complied in
all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time
of
filing. Except as set forth on Schedule
3.1(h),
such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
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(i) Material
Changes; Undisclosed Events, Liabilities or Developments.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report or as
set
forth on Schedule
3.1(i),
(i)
there has been no event, occurrence or development that has had or that could
reasonably be expected by the Company to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made
any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares
of
its capital stock and (v) the Company has not issued any equity securities
to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information.
(j) Litigation.
There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting
the
Company, any Subsidiary or any of their respective properties before or by
any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”)
which
materially adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Subscription Shares.
There is no Action that has not been disclosed in the SEC Reports. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably
be
expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company, and neither the Company or any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees
are
good. No executive officer, to the knowledge of the Company, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company or any of its Subsidiaries to any liability with respect
to
any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating
to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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(l) Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment.
(m) Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in
the
SEC Reports, except where the failure to possess such permits could not have
or
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”),
and
neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(n) Title
to Assets.
Except
as set forth on Schedule
3.1(n),
the
Company and the Subsidiaries have good and marketable title in fee simple to
all
real property owned by them that is material to the business of the Company
and
the Subsidiaries and good and marketable title in all personal property owned
by
them that is material to the business of the Company and the Subsidiaries,
in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the
use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries
are
held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.
(o) Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or material for use in connection with
their
respective businesses as described in the SEC Reports (collectively, the
“Intellectual
Property Rights”).
Neither the Company nor any Subsidiary has received a notice (written or
otherwise) that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
12
(p) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount. Neither the
Company nor any 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 without a significant increase in cost.
(q) Transactions
With Affiliates and Employees.
Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (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 entity in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii)
for
other employee benefits, including stock option agreements under any stock
option plan of the Company.
(r) ▇▇▇▇▇▇▇▇-▇▇▇▇▇;
Internal Accounting Controls.
The
Company is in material compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
of 2002 which are applicable to it as of the Closing Date.
(s) Certain
Fees.
No
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or
on
behalf of other Persons for fees of a type contemplated in this Section that
may
be due in connection with the transactions contemplated by the Transaction
Documents as a result of any action taken by the Company or its
Affiliates.
(t) Private
Placement.
Assuming the accuracy of the Purchasers representations and warranties set
forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Subscription Shares by the Company to the Purchasers
as
contemplated hereby. Subject to receipt of Shareholder Approval, the issuance
and sale of the Subscription Shares hereunder does not contravene the rules
and
regulations of the Trading Market.
(u) Investment
Company.
The
Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Subscription Shares, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will
not become subject to the Investment Company Act.
13
(v) Registration
Rights.
Other
than each of the Purchasers, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.
(w) Listing
and Maintenance Requirements.
The
Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, and the Company has taken no action designed to, or which to
its
knowledge is likely to have the effect of, terminating the registration of
the
Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
The Company has not, in the 12 months preceding the date hereof, received notice
from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing
or
maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be,
in
compliance with all such listing and maintenance requirements.
(x) Application
of Takeover Protections.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation
as a
result of the Company’s issuance of the Subscription Shares and the Purchasers’
ownership of the Subscription Shares.
(y) Disclosure.
All
disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Disclosure Schedules to this Agreement, with respect to the representations
and warranties made herein are true and correct with respect to such
representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(z) No
Integrated Offering.
Assuming
the accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, 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 cause this offering of the Subscription Shares to
be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions of any Trading Market
on
which any of the securities of the Company are listed or
designated.
14
(aa) Tax
Status.
Except
as set forth on Schedule
3.1(aa),
and for
matters that would not, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect, the Company and each Subsidiary
has filed all necessary federal, state and foreign income and franchise tax
returns and has paid or accrued all taxes shown as due thereon, and the Company
has no knowledge of a tax deficiency which has been asserted or threatened
against the Company or any Subsidiary.
(bb) No
General Solicitation.
Neither
the Company nor any person acting on behalf of the Company has offered or sold
any of the Subscription Shares by any form of general solicitation or general
advertising. The Company has offered the Subscription Shares for sale only
to
the Purchasers and certain other “accredited investors” within the meaning of
Rule 501 under the Securities Act.
(cc) Acknowledgment
Regarding Purchasers’ Purchase of Subscription Shares.
The
Company acknowledges and agrees that each of the Purchasers is acting solely
in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated thereby. The Company further
acknowledges that no Purchaser is 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
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Subscription Shares. The
Company further represents to each Purchaser that the Company’s decision to
enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby
by
the Company and its representatives.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or similar action on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser
in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
15
(b) Own
Account.
Such
Purchaser understands that the Subscription Shares are “restricted securities”
and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Subscription Shares as principal for its
own
account and not with a view to or for distributing or reselling such
Subscription Shares or any part thereof in violation of the Securities Act
or
any applicable state securities law, has no present intention of distributing
any of such Subscription Shares in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Subscription Shares (this representation and warranty
not
limiting such Purchaser’s right to sell the Subscription Shares pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws) in violation of the Securities Act or any applicable
state securities law. Such Purchaser is acquiring the Subscription Shares
hereunder in the ordinary course of its business.
(c) Purchaser
Status.
At the
time such Purchaser was offered the Subscription Shares, it was, and at the
date
hereof it is, an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act.
(d) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Subscription Shares, and has so evaluated the merits and risks of such
investment. Such Purchaser is able to bear the economic risk of an investment
in
the Subscription Shares and, at the present time, is able to afford a complete
loss of such investment.
(e) General
Solicitation.
Such
Purchaser is not purchasing the Subscription Shares as a result of any
advertisement, article, notice or other communication regarding the Subscription
Shares published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
(f) Short
Sales and Confidentiality Prior To The Date Hereof.
Other
than the transaction contemplated hereunder or under the Note Purchase
Agreement, such Purchaser has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
engaged in any transaction, including Short Sales, in the securities of the
Company since March 15, 2006 (“Discussion
Date”).
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have
no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the representation set
forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Subscription
Shares covered by this Agreement. Other than to other Persons party to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
16
(g) Access
to Information.
Such
Purchaser acknowledges that it has received and had the opportunity to review
(i) copies of the SEC Reports, and (ii) the terms of the Note Purchase Agreement
and Equity Put Agreement, and all exhibits thereto. Such Purchaser further
acknowledges that it or its representatives have been afforded (iii) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Subscription Shares, the merits and risks of investing
in
the Subscription Shares, and the terms of the Note Purchase Agreement and Equity
Put Agreement; (iv) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management
and
prospects sufficient to enable it to evaluate its investment in the Subscription
Shares; and (v) the opportunity to obtain such additional information which
the
Company possesses or can acquire without unreasonable effort or expense that
is
necessary to verify the accuracy and completeness of the information contained
in the SEC Reports.
(h) Restrictions
on Subscription Shares.
Such
Purchaser understands that the Subscription Shares have not been registered
under the Securities Act and may not be offered, resold, pledged or otherwise
transferred except (a) pursuant to an exemption from registration under the
Securities Act or pursuant to an effective registration statement in compliance
with Section 5 under the Securities Act, (b) in accordance with all applicable
securities laws of the states of the United States and other jurisdictions
and
(c) the lock-up provisions of Section 4.1(b) below.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Transfer
Restrictions.
(a) The
Subscription Shares may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Subscription Shares other
than pursuant to an effective registration statement or Rule 144, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Subscription Shares under the
Securities Act.
(b) In
addition to transfer restrictions under the Securities Act, the Purchasers
agree
that any Subscription Shares purchased hereunder shall be subject to a lock-up
for a period of six months from the date of issuance and during such period
shall not be sold, assigned or otherwise disposed of by Purchasers except to
a
Permitted Transferee (as defined below) in accordance with subpart (d) below.
(c) The
Purchasers agree to the imprinting, so long as is required by this Section
4.1,
of a legend on any of the Subscription Shares in the following
form:
17
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE “RESTRICTED SECURITIES” AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE SECURITIES ACT. SUCH SECURITIES
MAY
NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
THEREUNDER, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE
SATISFACTION OF COUNSEL TO THE ISSUER. IN ADDITION, THESE SECURITIES ARE SUBJECT
TO A CONTRACTUAL LOCK-UP THE TERMS OF WHICH ARE SET FORTH IN A SECURITIES PUT
AGREEMENT DATED MARCH 29, 2006 A COPY OF WHICH IS ON FILE WITH THE COMPANY.
(d) Notwithstanding
the foregoing, any holder of Subscription Shares may transfer such securities
to
any Permitted Transferee who consents in a writing delivered to the Company
to
be bound by the applicable terms of this Agreement, subject to the Company’s
reasonable determination that such transfer does not require registration of
such transferred securities under the Securities Act.. With respect to any
such
holder, a “Permitted Transferee” means the spouse or lineal descendants of such
holder, any trust for the benefit of such holder or the benefit of the spouse
or
lineal descendants of such holder, any corporation or partnership in which
such
holder, the spouse and the lineal descendants of such holder are the direct
and
beneficial owners of substantially all of the equity interests (provided such
holder, spouse and lineal descendants agree in writing to remain the direct
and
beneficial owners of all such equity interests), the personal representative
of
such holder upon such holder’s death for purposes of administration of such
holder’s estate or upon such holder’s incompetency for purposes of the
protection and management of the assets of such holder; or for any holder that
is a partnership, limited liability company, corporation or other entity to
(i)
a partner or former partner of such partnership, a member or former member
of
such limited liability company or a shareholder of such corporation, (ii) the
estate of any such partner, member or shareholder, or (iii) any other Affiliate
of such holder; or for any Purchaser, to another Purchaser or an Affiliate
of a
Purchaser.
4.2 Furnishing
of Information.
As long
as any Purchaser owns Subscription Shares, the Company covenants to timely
file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as any Purchaser owns Subscription Shares,
if the Company is not required to file reports pursuant to the Exchange Act,
it
will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchasers
to sell the Subscription Shares under Rule 144. The Company further covenants
that it will take such further action as any holder of Subscription Shares
may
reasonably request, to the extent required from time to time to enable such
Person to sell such Subscription Shares without registration under the
Securities Act within the requirements of the exemption provided by Rule
144.
18
4.3 Integration.
The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Subscription Shares
in a manner that would require the registration under the Securities Act of
the
sale of the Subscription Shares to the Purchasers or that would be integrated
with the offer or sale of the Subscription Shares for purposes of the rules
and
regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent
transaction.
4.4 Securities
Laws Disclosure; Publicity.
The
Company shall, within one Trading Day of the Closing Date, issue a press release
disclosing the material terms of the transactions contemplated hereby, and
shall
file a Current Report on Form 8-K which shall attach the Transaction Documents
thereto by the fourth Business Day following the Closing Date. The press release
and Form 8-K shall be acceptable to the Purchasers in their reasonable
discretion. No Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the Company. The Company
shall not publicly disclose the name of any Purchaser, or include the name
of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except
(i)
as required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (ii) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers
with
prior notice of such disclosure permitted under this subclause
(ii).
4.5 Use
of
Proceeds. The Company shall use the net proceeds from the sale of the
Subscription Shares hereunder as set forth on Schedule 4.5 of the Disclosure
Schedule.
4.6 Listing
of Common Stock. The
Company hereby agrees to use best efforts to maintain the listing of the Common
Stock on a Trading Market, and as soon as reasonably practicable following
the
Closing to list all of the Subscription Shares on such Trading Market. The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Subscription Shares, and will take such other action as is necessary to cause
all of the Subscription Shares to be listed on such other Trading Market as
promptly as possible. The Company will take all action reasonably necessary
to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. The Company shall
file a Proxy Statement on Schedule 14A under the Exchange Act with the
Commission within 20 calendar days of the date hereof, setting forth all
information required with respect to the transactions contemplated hereby for
the purpose of obtaining Shareholder Approval, and shall pursue such Proxy
Statement through any Commission review, and shall cause such Proxy Statement
to
be mailed to its shareholders as required by the Exchange Act within 5 calendar
days of the completion of the Commission’s review, if any, and, to hold a
special meeting of its shareholders as soon as possible following its mailing.
The Company shall use all reasonable efforts to obtain such Shareholder
Approval.
19
4.7 Short
Sales and Confidentiality After The Date Hereof. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will engage in any transactions, including any Short
Sales, in the securities of the Company during the period commencing at the
Discussion Time and ending at the time that the transactions contemplated by
this Agreement are first publicly announced as described
in
Section 4.4. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will engage in any Short Sales in the securities of the
Company during the period commencing at the Discussion Time and ending on the
Effective Date (“Black-out Termination Date”). Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, such Purchaser will
maintain the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any
other
Purchaser, that the Commission currently takes the position that coverage of
short sales of shares of the Common Stock “against the box” prior to the
Effective Date of the Registration Statement with the Subscription Shares is
a
violation of Section 5 of the Securities Act, as set forth in Item 65, Section
A, of the Manual of Publicly Available Telephone Interpretations, dated July
1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding
the foregoing, no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in Short Sales in the securities of the Company
after the Black-out Termination Date. Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser's assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions
of
such Purchaser's assets, the covenant set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made
the
investment decision to purchase the Subscription Shares covered by this
Agreement.
4.8 Delivery
of Subscription Shares After Closing. The Company shall deliver, or cause to
be delivered, the respective Subscription Shares purchased by each Purchaser
to
such Purchaser within 3 Trading Days of the Closing Date.
4.9 Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect
to the Subscription Shares as required under Regulation D and to provide a
copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Subscription Shares for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.
20
ARTICLE
V.
MISCELLANEOUS
5.1 Fees
and Expenses.
Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to
the
negotiation, preparation, execution, delivery and performance of this Agreement;
provided that the Company shall, following each Closing, reimburse the
reasonable legal fees and expenses of counsel for the Purchasers not to exceed
$25,000 for all transactions contemplated by this Agreement. The Company shall
pay all transfer agent fees, stamp taxes and other taxes and duties levied
in
connection with the delivery of any Subscription Shares to the
Purchasers.
5.2 Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
5.3 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto prior to 5:30 p.m. (New York City time)
on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
set
forth on the signature pages attached hereto on a day that is not a Trading
Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
2nd
Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and communications
shall be as follows:
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Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
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Attn:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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Chief
Executive Officer
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If
to the Purchasers:
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c/o
Bricoleur Capital Management, LLC
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▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
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Attn:
▇▇▇▇▇▇ ▇▇▇▇▇
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21
or
such
other address as either party may provide to the other in writing.
5.4 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers representing not less than 51% of the Subscription Commitment Amount
then remaining or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor
shall any delay or omission of any party to exercise any right hereunder in
any
manner impair the exercise of any such right.
5.5 Headings.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and permitted assigns. Neither the Company
nor any Purchasers may assign this Agreement or any rights or obligations
hereunder without the prior written consent of each the other party (other
than
by merger), except that any Purchaser may assign its rights and obligations
hereunder to a Permitted Transferee in accordance with Section 4.1(d).
5.7 No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is
not
for the benefit of, nor may any provision hereof be enforced by, any other
Person.
5.8 Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of California,
without regard to the principles of conflicts of law thereof. Each party agrees
that all legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the San Diego,
California. The parties hereby waive all rights to a trial by jury. If either
party shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.9 Survival.
The representations and warranties contained herein shall survive the Closing
and the delivery of the Subscription Shares.
5.10 Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together 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, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
22
5.11 Severability.
If any term, provision, covenant or restriction of this Agreement is held by
a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
5.12 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to
the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
5.13 Replacement
of Subscription Shares. If any certificate or instrument evidencing any
Subscription Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction.
The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Subscription
Shares.
5.14 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in
any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation, the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the
Purchasers.
5.15 Construction.
The parties agree that each of them and/or their respective counsel has reviewed
and had an opportunity to revise the Transaction Documents and, therefore,
the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.
(SIGNATURE
PAGES FOLLOW)
23
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
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VENDINGDATA
CORPORATION
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||
| |
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|
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, |
||
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President
and Chief Executive Officer
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||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASERS FOLLOWS]
24
|
BRICOLEUR
PARTNERS, L.P.
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||
| |
By:
|
Bricoleur
Capital Management, LLC, Its General Partner |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇▇, Member of
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||
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Management
Board
Subscription
Commitment Amount: $715,000
|
||
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BRICOLEUR
ENHANCED, L.P.
|
||
| |
By:
|
Bricoleur
Capital Management, LLC, Its General Partner |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇▇, Member of
|
||
|
Management
Board
Subscription
Commitment Amount:
$1,785,000
|
||
|
BRIC
6, L.P.
|
||
| |
By:
|
Bricoleur
Capital Management, LLC, Its General Partner |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇▇, Member of
|
||
|
Management
Board
Subscription
Commitment Amount:
$715,000
|
||
|
BRICOLEUR
OFFSHORE LTD.
|
||
| |
By:
|
Bricoleur
Capital Management, LLC, Its General Partner |
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | |
|
▇▇▇▇▇▇
▇▇▇▇▇, Member of
|
||
|
Management
Board
Subscription
Commitment Amount: $1,785,000
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25