EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
SERIES G CONVERTIBLE PREFERRED STOCK
SERIES H CONVERTIBLE PREFERRED STOCK
and
WARRANTS TO PURCHASE COMMON UNITS
OF ▇▇▇▇▇▇▇▇.▇▇▇ L.L.C.
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e4L, INC.
Table of Contents
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Page
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1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE ................................ 1
(a) Subscription ....................................................... 1
(b) Closing ............................................................ 2
(c) Form of Payment .................................................... 2
2. BUYER REPRESENTATIONS, WARRANTIES, ETC ................................. 3
(a) Purchase for Investment ............................................ 3
(b) Accredited Investor ................................................ 3
(c) Reoffers and Resales ............................................... 3
(d) Company Reliance ................................................... 3
(e) Information Provided ............................................... 3
(f) Absence of Approvals ............................................... 4
(g) Subscription Agreement ............................................. 4
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC. .............................. 4
(a) Organization and Authority ......................................... 4
(b) Capitalization ..................................................... 4
(c) Concerning the Shares, the Common Stock and the BuyItNow Interests . 5
(d) Transaction Documents .............................................. 6
(e) Non-contravention .................................................. 6
(f) Approvals .......................................................... 7
(g) Information Provided ............................................... 7
(h) Absence of Certain Changes ......................................... 7
(i) Absence of Certain Proceedings ..................................... 8
(j) Properties ......................................................... 8
(k) Labor Relations .................................................... 9
(l) SEC Filings ........................................................ 9
(m) Absence of Brokers, Finders, Etc ................................... 9
(n) No Solicitation .................................................... 9
(o) Certain Issuances of Securities .................................... 10
(p) Rights Agreement ................................................... 10
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS .................................. 10
(a) Transfer Restrictions .............................................. 10
(b) Restrictive Legend ................................................. 11
(c) Registration Rights Agreement ...................................... 12
(d) Form D ............................................................. 12
(e) Authorization for Trading; Reporting Status ........................ 12
(f) Use of Proceeds .................................................... 12
(g) Blue Sky Laws ...................................................... 13
(h) Certain Expenses ................................................... 13
(i) Certain Issuances of Securities .................................... 13
(j) Certain Trading Restrictions ....................................... 14
(k) Best Efforts ....................................................... 14
5. TRANSFER AGENT AGREEMENT; CONVERSION PROCEDURE ......................... 14
(a) Transfer Agent Agreement ........................................... 14
(b) Conversion Procedure ............................................... 15
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE ............... 16
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7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE ....................... 16
8. MISCELLANEOUS .......................................................... 16
(a) Governing Law ...................................................... 16
(b) Counterparts ....................................................... 16
(c) Headings, etc ...................................................... 17
(d) Severability ....................................................... 17
(e) Amendments ......................................................... 17
(f) Waivers ............................................................ 17
(g) Notices ............................................................ 18
(h) Assignment ......................................................... 18
(i) Survival of Representations and Warranties ......................... 18
(j) Entire Agreement ................................................... 18
(k) Termination ........................................................ 18
(l) Further Assurances ................................................. 19
(m) Public Statements, Press Releases, Etc ............................. 19
(n) Construction ....................................................... 19
SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(b) Antidilution Adjustments; Registration Rights
Schedule 3(c) NYSE Listing Matters
Schedule 3(f) Approvals
Schedule 3(h) Certain Changes
Schedule 3(j) Property Matters
ANNEXES
Annex I Form of Series G Certificate of Designations
Annex II Form of Series H Certificate of Designations
Annex III Form of Common Stock Purchase Warrant
Annex IV Form of BuyItNow Common Unit Purchase Warrant
Annex V Form of Registration Rights Agreement
Annex VI Form of Transfer Agent Agreement
Annex VII Form of Notice of Conversion of Series G Convertible
Preferred Stock
Annex VIII Form of Notice of Conversion of Series H Convertible
Preferred Stock
Annex IX Form of Opinion of Counsel to Be Delivered on Closing Date
Annex X Form of Opinion of United Kingdom Counsel to be
Delivered on Closing Date
Annex XI Form of Opinion of New Zealand Counsel to be Delivered on
Closing Date
Annex XII Form of Opinion of Australian Counsel to be Delivered on
Closing Date
Annex XIII Form of Opinion of Japanese Counsel to be Delivered on
Closing Date
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SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of March 21, 2000, by and
between e4L, INC., a Delaware corporation (the "Company"), with headquarters
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and ADVANTAGE FUND II LED., a British Virgin Islands corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of two series of non-voting,
convertible preferred stock of the Company which will be convertible into shares
of Common Stock, $.01 par value (the "Common Stock"), of the Company and in
connection therewith the Company is to issue to the Buyer warrants to purchase
shares of Common Stock and warrants to purchase limited liability company common
unit interests in an affiliate of the Company as provided in this Agreement; and
WHEREAS, the Company and the Buyer 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 Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(a) Subscription. The Buyer hereby agrees to purchase from the
Company (1) the number of shares (the "Series G Preferred Shares") of Series G
Convertible Preferred Stock, $.01 par value (the "Series G Preferred Stock"), of
the Company set forth on the signature page of this Agreement, having the terms
and conditions as set forth in the form of the Certificate of Designations of
the Series G Convertible Preferred Stock attached hereto as Annex I (the "Series
G Certificate of Designations") at the price per share and for the aggregate
purchase price set forth on the signature page of this Agreement (the "Series G
Purchase Price") and (2) the number of shares (the "Series H Preferred Shares")
of Series H Convertible Preferred Stock, $.01 par value (the "Series H Preferred
Stock"), of the Company set forth on the signature page of this Agreement,
having the terms and conditions as set forth in the form of the Certificate of
Designations of the Series H Convertible Preferred Stock attached hereto as
Annex II (the "Series H Certificate of Designations") at the price per share and
for the aggregate purchase price set forth on the signature page of this
Agreement (the "Series H Purchase Price" and, when added to the Series G
Purchase Price, the "Total Purchase Price"). In connection with the purchase of
the Series G Preferred Shares and the Series H Preferred Shares by the Buyer,
the Company shall issue to the Buyer, at the Closing (as defined herein) on the
Closing Date (as defined herein), (A) Common Stock Purchase Warrants in the form
attached hereto as Annex III (the "Warrants") to purchase a number of shares of
Common Stock (subject to adjustment after issuance of the Warrants as provided
in the Warrants) equal to the amount obtained by multiplying (i) the quotient
obtained by dividing (x) the Total Purchase Price by (y) the average closing
price of the Common Stock on the New York Stock Exchange (the "NYSE") for the
ten consecutive trading days immediately prior to the Closing Date times (ii)
0.15 and (B) Warrants in the form attached hereto as Annex IV (the "BuyItNow
Warrants") to purchase from the Company 150,000 limited liability company common
unit interests (the "BuyItNow Interests") in ▇▇▇▇▇▇▇▇.▇▇▇ L.L.C., a Delaware
limited liability company ("BuyItNow").
The Series G Preferred Stock and the Series H Preferred Stock are
referred to herein collectively as the "Preferred Stock." The Series G Preferred
Shares and the Series H Preferred Shares are referred to herein collectively as
the "Preferred Shares." The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the "Warrant Shares." The Warrant Shares and
the shares of Common Stock issuable upon conversion of the Preferred Shares, in
each
case together with the related Preferred Share Purchase Rights issued or
issuable pursuant to the Rights Agreement, dated as of January 3, 1994, between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agreement"), (or any similar rights hereafter issued by the Company with
respect to the Common Stock), are referred to herein collectively as the "Common
Shares." The Common Shares and the Preferred Shares are referred to herein
collectively as the "Shares." The Shares, the Warrants and the BuyItNow Warrants
are referred to herein collectively as the "Securities." As used in this
Agreement, the term "Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
(b) Closing. The issuance and sale of the Preferred Shares and the
issuance of the Warrants and the BuyItNow Warrants (the "Closing") shall occur
at 12:00 noon, New York City time on the date (the "Closing Date") on which the
parties' respective conditions set forth in Sections 6 and 7 have been satisfied
or waived, or such other mutually agreed to date and time. The Closing shall
occur on the Closing Date at the offices of ▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇-▇▇▇▇. At the Closing, upon the terms and subject to
the conditions of this Agreement, (1) the Company shall issue and deliver to the
Buyer the Preferred Shares, the Warrants and the BuyItNow Warrants against
payment by the Buyer to the Company of an amount equal to the Total Purchase
Price, and (2) the Buyer shall pay to the Company an amount equal to the Total
Purchase Price against delivery by the Company to the Buyer of the Preferred
Shares, the Warrants and the BuyItNow Warrants. The certificates for the
Preferred Shares, the Warrants and the BuyItNow Warrants shall be registered in
the name of the Buyer or its nominee.
(c) Form of Payment. Payment by the Buyer of the Total Purchase
Price to the Company on the Closing Date shall be made by wire transfer of
immediately available funds to:
Chase Manhattan Bank N.A.
ABA#▇▇▇▇▇▇▇▇▇
For credit to account No. 066296390
For credit to the account of Prudential Securities, Inc.
For further credit to account No. JQS-956476-G4
For further credit to account of National Media/e4L
Reference: Advantage
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
(a) Purchase for Investment. The Buyer is purchasing the Preferred
Shares and acquiring the Warrants and the BuyItNow Warrants, will acquire the
Common Shares upon conversion of the Preferred Shares or exercise of the
Warrants, and will acquire the BuyItNow Interests upon exercise of the BuyItNow
Warrants for its own account for investment only and not with a view towards the
public sale or distribution thereof;
(b) Accredited Investor. The Buyer is an "accredited investor" as
that term is defined in Rule 501 of the General Rules and Regulations under the
1933 Act by reason of Rule 501(a)(3);
(c) Reoffers and Resales. All subsequent offers and sales of the
Securities by the Buyer shall be made pursuant to registration of the Securities
being offered and sold under the 1933 Act or pursuant to an exemption from
registration;
(d) Company Reliance. The Buyer understands that the Preferred
Shares are being offered and sold, the Warrants and the BuyItNow Warrants are
being issued, and the Common Shares and the BuyItNow Interests are being
offered, in each case to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the
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representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Preferred Shares, the
Warrants and the BuyItNow Warrants and to receive an offer of the Common Shares
and the BuyItNow Interests;
(e) Information Provided. The 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
Preferred Shares and the issuance of the Warrants and the BuyItNow Warrants and
the offer of the Common Shares and the BuyItNow Interests which have been
requested by the Buyer; the Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received satisfactory
answers to any such inquiries; without limiting the generality of the foregoing,
the Buyer has had the opportunity to obtain and to review the Company's (1)
Annual Report on Form 10-K for the fiscal year ended March 31, 1999 (the "1999
10-K"), (2) Quarterly Reports on Form 10-Q for the fiscal quarters ended June
30, 1999, September 30, 1999 and December 31, 1999, (3) Current Reports on Form
8-K filed September 9, 1999 and October 1, 1999, and (4) definitive proxy
statement for the Company's Annual Meeting of Stockholders held on January 20,
2000, in each case as filed with the SEC (collectively, the "SEC Reports"); and
the Buyer understands that its investment in the Shares involves a high degree
of risk;
(f) Absence of Approvals. The 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 Shares; and
(g) Subscription Agreement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees
with, the Buyer that:
(a) Organization and Authority. The Company and each of its
subsidiaries listed on Schedule 3(a) to this Agreement (the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and (i) the Company and each Subsidiary
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and (ii) the
Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Preferred Shares, the Series G
Certificate of Designations, the Series H Certificate of Designations, the
Warrants, the BuyItNow Warrants, the Registration Rights Agreement, the form of
which is attached hereto as Annex V (the "Registration Rights Agreement"), the
Transfer Agent Agreement, the form of which is attached hereto as Annex VI (the
"Transfer Agent Agreement"), and the other agreements, instruments and documents
to be executed and delivered by the Company in connection herewith
(collectively, the "Transaction Documents"), and to consummate the transactions
contemplated hereby and thereby. The Company and each Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions wherein such qualification is necessary and where failure so to
qualify could have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company and the Subsidiaries, taken as a whole. The Company has no
subsidiaries or equity investment in any person other than the Subsidiaries and
BuyItNow.
(b) Capitalization. The authorized capital stock of the Company
consists of (1) 150,000,000 shares of Common Stock of which 41,202,656 are
outstanding on March 20, 2000, all of which are fully paid and nonassessable;
and (2) 10,000,000 shares of Preferred Stock, $.01 par value, of which (A)
400,000 shares are designated as Series B Convertible Preferred Stock, of which
5,000 shares are issued and outstanding, (B) 20,000 shares are designated as
Series D Convertible Preferred Stock, of which 16,863 shares are issued and
outstanding, (C) 22,000 shares are designated
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as Series E Convertible Preferred Stock, of which 9,960 shares are issued and
outstanding, (D) 20,000 shares are designated as Series F Convertible Preferred
Stock, of which 5,000 shares are issued and outstanding, (E) 5,000 shares will
be designated as Series G Convertible Preferred Stock and will be issued
pursuant to this Agreement and the other subscription agreement for the purchase
of shares of Preferred Stock and the acquisition of common stock purchase
warrants and warrants to acquire BuyItNow Interests being entered into in
connection herewith (the "Other Subscription Agreement") and (F) 5,000 shares
will be designated as Series H Preferred Stock and will be issued pursuant to
this Agreement and the Other Subscription Agreement; and on the Closing Date
there will be (x) no material increase from March 20, 2000 in the number of
shares of Common Stock outstanding and (y) no issuances of preferred stock
except as issued pursuant to this Agreement and the Other Subscription
Agreement. As of March 20, 2000, the Company had outstanding preferred stock,
options, warrants and similar rights entitling the holders to purchase an
aggregate of 81,691,267 shares of Common Stock. Other than as set forth in the
preceding sentence, the Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares of
Common Stock, except as disclosed in the SEC Reports. The Company has duly
reserved from its authorized and unissued shares of Common Stock the full number
of shares required for (a) all options, warrants, convertible securities and
other rights to acquire shares of Common Stock which are outstanding and (b) all
shares of Common Stock and options and other rights to acquire shares of Common
Stock which may be issued or granted under the stock option and similar plans
which have been adopted by the Company or any Subsidiary. Each outstanding class
or series of securities of the Company or any Subsidiary for which any
antidilution or similar adjustment arising by reason of the issuance or
conversion of the Preferred Shares or the issuance or exercise of the Warrants
or the issuance or conversion of the shares of Preferred Stock and the issuance
or exercise of the warrants to be issued pursuant to the Other Subscription
Agreement will occur is identified on Schedule 3(b) to this Agreement. The
outstanding shares of Common Stock and preferred stock and outstanding options,
warrants and other securities convertible into, exchangeable for or otherwise
entitling the holder thereof to acquire shares of Common Stock have been duly
authorized and validly issued. None of such outstanding shares of Common Stock,
preferred stock, options, warrants and other securities has been issued in
violation of the preemptive rights of any securityholder of the Company. The
offers and sales of the outstanding shares of Common Stock, preferred stock, and
such options, warrants and other securities were at all relevant times either
registered under the 1933 Act and applicable state securities laws or exempt
from such requirements. Except as set forth on Schedule 3(b) to this Agreement,
no holder of any of the Company's securities has any rights, "demand,"
"piggy-back" or otherwise, to have such securities registered by reason of the
intention to file, filing or effectiveness of the Registration Statement (as
defined in the Registration Rights Agreement).
(c) Concerning the Shares, the Common Stock and the BuyItNow
Interests. The Shares and the BuyItNow Interests have been duly authorized. The
Preferred Shares, when issued and paid for in accordance with this Agreement,
the Common Shares, when issued upon conversion of the Preferred Shares or upon
exercise of the Warrants, and the BuyItNow Interests, when issued upon exercise
of the BuyItNow Warrants, as the case may be, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder. There are no preemptive or
similar rights of any stockholder of the Company or any other person to acquire
any of the Shares. The Company has duly reserved 8,240,500 shares of Common
Stock for conversion of the shares of Preferred Stock and exercise of the
Warrants and the warrants issuable in connection with the Other Subscription
Agreement, and such shares shall remain so reserved (subject to pro rata
reduction from time to time for shares of Common Stock issued upon conversion of
shares of Preferred Stock or redemption or other permitted retirement of shares
of Preferred Stock), and the Company shall from time to time reserve such
additional shares of Common Stock as shall be required to be reserved pursuant
to the Series G Certificate of Designations and the Series H Certificate of
Designations, as long as the Preferred Stock is convertible, and pursuant to the
Warrants, as long as the Warrants are exercisable. The Common Stock is listed
for trading on NYSE and (1) the Company and the Common Stock meet the criteria
for continued listing and trading on NYSE; (2) the Company has not been notified
since January 1, 1998 by the NYSE of any failure or, except as set forth on
Schedule 3(c) to this Agreement, potential failure to meet the criteria for
continued listing and trading on the NYSE and
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(3) no suspension of trading in the Common Stock is in effect. The Company knows
of no reason that the Common Shares will not be eligible for listing on the
NYSE.
(d) Transaction Documents. The Transaction Documents have been duly
and validly authorized by the Company, this Agreement has been duly executed and
delivered by the Company and this Agreement is, and the Registration Rights
Agreement, the Warrants, the BuyItNow Warrants and the Transfer Agent Agreement
and the other Transaction Documents, when executed and delivered by the Company,
will be, valid and binding obligations of the Company enforceable in accordance
with their respective terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.
(e) Non-contravention. The execution and delivery by the Company of
this Agreement and the other Transaction Documents and the consummation by the
Company of the issuance of the Preferred Shares, the Warrants and the BuyItNow
Warrants as contemplated by this Agreement and the other transactions
contemplated by the Transaction Documents do not and will not, with or without
the giving of notice or the lapse of time, or both (i) result in any violation
of any terms of the Certificate of Incorporation, By-laws or other
organizational documents of the Company or BuyItNow, (ii) conflict with or
result in a breach by the Company or any Subsidiary or BuyItNow of any of the
terms or provisions of, or constitute a default under, or result in the
modification, amendment, termination or cancellation of, result in the
acceleration of any obligation of the Company or any Subsidiary or BuyItNow
under, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
Subsidiary or BuyItNow pursuant to, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any Subsidiary or BuyItNow
is a party or by which the Company, any Subsidiary or BuyItNow or any of their
respective properties or assets is bound or affected, (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any Subsidiary or BuyItNow or any of their respective properties or
assets or (iv) have any material adverse effect on any permit, certification,
registration, approval, consent, license or franchise necessary for the Company
or any Subsidiary or BuyItNow to own or lease and operate any of their
respective properties or to conduct any of their respective businesses or the
ability of the Company or any Subsidiary or BuyItNow to make use thereof.
(f) Approvals. No authorization, approval or consent of, or filing
with, any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders or members of the
Company or BuyItNow is required to be obtained or made by the Company or
BuyItNow for (1) the execution, delivery and performance by the Company of the
Transaction Documents, (2) the execution, filing and performance by the Company
of the Series G Certificate of Designations and the Series H Certificate of
Designations, (3) the issuance and sale of the Preferred Shares and the issuance
of the Warrants and the BuyItNow Warrants as contemplated by this Agreement, (4)
the issuance of Common Shares on conversion of the Preferred Shares or upon the
exercise of the Warrants and (5) the transfer of the BuyItNow Interests upon
exercise of the BuyItNow Warrants, other than (u) the approvals listed on
Schedule 3(f) to this Agreement, each of which has been obtained, (v) the filing
of the notification for listing of additional shares with the NYSE pursuant to
Section 4(e), (w) the filing of the Series G Certificate of Designations and the
Series H Certificate of Designations with the Secretary of State of the State of
Delaware, (x) registration of the resale of the Common Shares under the 1933 Act
as contemplated by the Registration Rights Agreement, (y) as may be required
under applicable state securities or "blue sky" laws and (z) filing of one or
more Forms D with respect to the Securities as required under Regulation D.
(g) Information Provided. The information provided by or on behalf
of the Company to the Buyer in connection with the transactions contemplated by
this Agreement, including, without limitation, the information referred to in
Section 2(e) of this Agreement, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, it being understood that, for purposes of this Section 3(g), any
statement contained in
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such information shall be deemed to be modified or superseded for purposes of
this Section 3(g) to the extent that a statement in any document included in
such information which was prepared or filed with the SEC on a later date
modifies or replaces such statement, whether or not such later prepared or filed
statement so states. The Company has not filed any reports with the SEC under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), since March
31, 1999 other than the SEC Reports.
(h) Absence of Certain Changes. Since March 31, 1999, there has been
no material adverse change and no material adverse development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company and the Subsidiaries, taken as a whole, except as
disclosed in the SEC Reports and as set forth on Schedule 3(h) to this
Agreement. Except as and to the extent disclosed, reflected or reserved against
in the financial statements of the Company and the notes thereto included in the
SEC Reports, neither the Company nor any Subsidiary has any material
(individually or in the aggregate) liabilities, debts or obligations whether
accrued, absolute, contingent or otherwise, and whether due or to become due.
Subsequent to March 31, 1999, neither the Company nor any Subsidiary has
incurred any liabilities, debts or obligations of any nature whatsoever which
are individually or in the aggregate material to the Company and the
Subsidiaries, taken as a whole, other than those incurred in the ordinary course
of its business or disclosed in the SEC Reports.
(i) Absence of Certain Proceedings. Except as disclosed in the SEC
Reports, there is no action, suit, proceeding, inquiry or investigation before
or by any court, arbitrator, public board or body or governmental agency
(collectively, an "Action") pending or, to the knowledge of the Company and the
Subsidiaries, threatened against the Company or any Subsidiary, in any such case
wherein an unfavorable decision, ruling or finding would have a material adverse
effect on business, properties, operations, condition (financial or other),
results of operations or prospects of the Company and the Subsidiaries, taken as
a whole, or the transactions contemplated by the Transaction Documents or which
would adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under the Transaction
Documents; neither the Company, any Subsidiary nor any director or officer
thereof is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty; the Company does not have pending before the SEC any request for
confidential treatment of information and to the best of the Company's knowledge
no such request will be made by the Company prior to the time the Registration
Statement relating to the Common Shares which is contemplated by the
Registration Rights Agreement is first ordered effective by the SEC; and there
has not been, and to the best of the Company's knowledge there is not pending or
contemplated, any investigation by the SEC involving the Company or any current
or former director or officer of the Company.
(j) Properties. The Company and each Subsidiary has good title to or
leasehold interests in all property real and personal (tangible and intangible)
and other assets owned by it, free and clear of all security interests, charges,
mortgages, liens or other encumbrances, except with respect to capital lease
obligations and protective filings by lessors and except such as are described
in the SEC Reports and on Schedule 3(j) to this Agreement or such as do not
materially interfere with the use of such property made, or proposed to be made,
by the Company or any Subsidiary. The leases, licenses or other contracts or
instruments under which the Company and each Subsidiary leases, holds or is
entitled to use any property, real or personal, are valid, subsisting and
enforceable with only such exceptions as do not materially interfere with the
use of such property made, or proposed to be made, by the Company or any
Subsidiary. Neither the Company nor any Subsidiary has received notice of any
material violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties. The Company does not
have any knowledge of, and the Company has not given or received any notice of,
any pending conflicts with or infringement of the rights of others with respect
to any Company Proprietary Rights (as defined herein) or with respect to any
license of Company Proprietary Rights. No action, suit, arbitration, or legal,
administrative or other proceeding or investigation is pending, or, to the best
knowledge of the Company, threatened, which involves any Company Proprietary
Rights. Neither the Company nor any Subsidiary is subject to any judgment,
order, writ, injunction or decree of any court or any federal, state, local,
foreign or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitrator, or has entered into or
is a party to any
-6-
contract which restricts or impairs the use of any such Company Proprietary
Rights in a manner which would have a material adverse effect on the use by the
Company or any Subsidiary of any of the Company Proprietary Rights. To the best
knowledge of the Company, no Company Proprietary Rights and no services or
products sold by the Company conflict with or infringe upon any proprietary
rights available to any third party. Neither the Company nor any Subsidiary has
received written notice of any pending conflict with or infringement upon such
third-party proprietary rights. Neither the Company nor any Subsidiary has
entered into any consent, indemnification, forbearance to ▇▇▇ or settlement
agreement with respect to Company Proprietary Rights other than in the ordinary
course of business. No claims have been asserted by any person with respect to
the validity of the Company's or any Subsidiary's ownership or right to use the
Company Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful. To the best knowledge
of the Company, except as set forth on Schedule 3(j) to this Agreement, the
Company Proprietary Rights are valid and enforceable. No material registration
relating to the Company Proprietary Rights has lapsed, expired or been abandoned
or canceled or is the subject of cancellation or other adversarial proceedings,
and all applications therefor are pending and are in good standing, except for
such lapses, expirations, abandonments, cancellations, adversarial proceedings
or failures to be in good standing which would not, singly or in the aggregate,
have a material adverse effect on the business, properties, operations,
condition (financial or other), results of operations or prospects of the
Company and the Subsidiaries, taken as a whole. The Company and each Subsidiary
has complied, in all material respects, with its respective material contractual
obligations relating to the protection of the Company Proprietary Rights used
pursuant to licenses. To the best knowledge of the Company, no person is
infringing on or violating the Company Proprietary Rights. As used herein, the
term "Company Proprietary Rights" means all patents, patent applications,
inventions, trademarks, trade names, applications for registration of
trademarks, service marks, service ▇▇▇▇ applications, domain names, copyrights,
know-how, manufacturing processes, formulae, trade secrets, licenses and rights
in any thereof and any other intangible property and assets which are material
to the business of the Company and the Subsidiaries as now conducted, as
proposed to be conducted or as described in this Agreement.
(k) Labor Relations. Except as disclosed in the SEC Reports, no
material labor problem exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company or any Subsidiary.
(l) SEC Filings. The Company has timely filed all required forms,
reports and other documents required to be filed by the Company with the SEC
under the 1934 Act. All of such forms, reports and other documents complied,
when filed, in all material respects, with all applicable requirements of the
1933 Act and the 1934 Act.
(m) Absence of Brokers, Finders, Etc. No broker, finder or similar
person is entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement other than Reedland Capital Partners
and the Company shall pay, and indemnify and hold harmless the Buyer from, any
claim made against the Buyer by such entity and any other person for any such
commission, fee or other compensation.
(n) No Solicitation. No form of general solicitation or general
advertising was used by the Company or, to the best of its knowledge, any other
person acting on behalf of the Company, in respect of or in connection with the
offer and sale of the Securities. Neither the Company nor, to its knowledge, any
person acting on behalf of the Company has, either directly or indirectly, sold
or offered for sale to any person any of the Preferred Shares, the Warrants or
the BuyItNow Warrants or, within the six months prior to the date hereof, any
other similar security of the Company except as contemplated by this Agreement
and the Other Subscription Agreement; and neither the Company nor any person
authorized to act on its behalf will sell or offer for sale any shares of
Preferred Stock, shares of Common Stock, Warrants or BuyItNow Warrants, or
solicit any offers to buy any shares of Preferred Stock, shares of Common Stock,
Warrants or BuyItNow Warrants, so as thereby to cause the issuance or sale of
any of the Shares or the issuance of the Warrants or the BuyItNow Warrants to be
in violation of Section 5 of the ▇▇▇▇ ▇▇▇.
(o) Certain Issuances of Securities. The Company has not issued any
shares of Common Stock or shares of any series of preferred stock or other
securities convertible into,
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exchangeable for or otherwise entitling the holder to acquire shares of Common
Stock which are subject to Paragraph 312.03(c) of the NYSE Listed Company Manual
as in effect from time to time or any successor, replacement or similar
provision thereof or of any other market on which the Common Stock is listed for
trading (the "Stockholder Approval Rule") and which would be integrated with the
sale of the Preferred Shares to the Buyer or the issuance of Common Shares upon
conversion thereof or upon exercise of the Warrants for purposes of the
Stockholder Approval Rule.
(p) Rights Agreement. Assuming that the Buyer does not hold any
shares of Common Stock other than as acquired upon conversion of the Preferred
Shares and exercise of the Warrants, the execution and delivery of this
Agreement by the Company, the issuance of the Securities as contemplated by the
Transaction Documents and the other transactions contemplated by the Transaction
Documents will not result in the Buyer becoming an "Acquiring Person," as
defined in the Rights Agreement; and the holders of the Preferred Shares and the
Warrants will be entitled, with respect to the Common Shares, and the holders of
the Common Shares will be entitled, in each case to the benefits available to
the holders of Common Stock under the Rights Agreement.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
(a) Transfer Restrictions. The Company and the Buyer acknowledge and
agree that (1) the Preferred Shares, the Warrants and the BuyItNow Warrants have
not been and are not being registered under the provisions of the 1933 Act and,
except as provided in the Registration Rights Agreement with respect to the
resale of the Common Shares, the Common Shares have not been and are not being
registered for resale under the 1933 Act, and the Securities may not be
transferred unless (A) subsequently registered for resale thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any resale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any such resale of 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 used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder (other than pursuant to Section 4(d) hereof and
pursuant to the Registration Rights Agreement).
(b) Restrictive Legend. (1) The Buyer acknowledges and agrees that
the Preferred Shares shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Preferred Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
The number of shares constituting the portion of the Maximum Share Amount,
as defined in the Certificate of Designations of the Series __ Convertible
Preferred Stock (the "Certificate of Designations"), allocated to the
shares represented by this certificate for purposes of conversion thereof
is ___________________.
Section 10(b)(3)(a) of the Certificate of Designations permits a holder of
the securities represented by this certificate to convert such securities
in accordance with the Certificate of Designations without being required
to surrender this certificate to the Company unless all of the securities
represented hereby are so converted. Consequently, following conversion of
any of the securities represented by this certificate, the number of
shares represented by this certificate may be less than the number of
shares stated hereon. Upon
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request of any proposed transferee of this certificate, the Company will
provide confirmation of the number of shares evidenced by this
certificate.
(2) The Buyer further acknowledges and agrees that the Warrants and
the BuyItNow Warrants shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Warrants):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned in
the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
(3) The Buyer further acknowledges and agrees that until such time
as the Common Shares have been registered for resale under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the
Common Shares may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for the Common Shares):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be resold, transferred or assigned in
the absence of an effective registration statement for the securities
under the Securities Act of 1933, as amended, or an opinion of counsel
that registration is not required under said Act.
(4) Once the Registration Statement required to be filed by the
Company pursuant to Section 2 of the Registration Rights Agreement has been
declared effective, thereafter (1) upon request of the Buyer the Company will
substitute certificates without restrictive legend for certificates for any
Common Shares issued prior to the date such Registration Statement is declared
effective by the SEC which bear such restrictive legend and remove any
stop-transfer restriction relating thereto promptly, but in no event later than
three Trading Days (as defined in the Series G Certificate of Designations and
the Series H Certificate of Designations) after surrender of such certificates
by the Buyer and (2) so long as the Registration Statement remains effective,
the Company shall not place any restrictive legend on certificates for Common
Shares issued on conversion of the Preferred Shares or upon exercise of the
Warrants or impose any stop-transfer restriction thereon.
(c) Registration Rights Agreement. The parties hereto agree to enter
into the Registration Rights Agreement in the form attached hereto as Annex V on
or before the Closing Date.
(d) 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 the
Buyer promptly after such filing. The Buyer agrees to cooperate with the Company
in connection with such filing and, upon request of the Company, to provide all
information relating to the Buyer reasonably required for such filing.
(e) Authorization for Trading; Reporting Status. Within three
Business Days after the Closing Date, the Company shall file a notification for
listing of additional shares with the NYSE relating to the Common Shares and
shall provide evidence of such filing to the Buyer. So long as the Buyer
beneficially owns any of the Preferred Shares, the Warrants or the Common
Shares, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of 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 permit such
termination.
(f) Use of Proceeds. The Company does not own or have any present
intention of acquiring any "margin stock" as defined in Regulation G (12 CFR
Part 207) of the Board of Governors of the Federal Reserve System ("margin
stock"). The proceeds of sale of the Preferred Shares will be used for general
working capital purposes and in the operation of the Company's
-9-
business. None of such proceeds will be used, directly or indirectly (1) to make
any loan to or investment in any other person (other than financing the
Company's subsidiaries and affiliates in the ordinary course of business or in
connection with an acquisition of another corporation or business or assets of
another corporation or business) or (2) for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any stock that is currently a margin
stock or for any other purpose which might constitute the transactions
contemplated by this Agreement a "purpose credit" within the meaning of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might cause this Agreement or the transactions
contemplated hereby to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the 1934 Act, in each case as in effect now or as the same may hereafter be in
effect.
(g) Blue Sky Laws. On or before the Closing Date, the Company shall
take such action as shall be necessary to qualify, or to obtain an exemption
for, the Preferred Shares for sale to the Buyer and the Warrants and the
BuyItNow Warrants for issuance to the Buyer pursuant to this Agreement, the
Common Shares for issuance to the Buyer on conversion of the Preferred Shares
and exercise of the Warrants, and the BuyItNow Interests on exercise of the
BuyItNow Warrants under such of the securities or "blue sky" laws of
jurisdictions as shall be applicable to the sale of the Preferred Shares and the
issuance of the Warrants and the BuyItNow Warrants pursuant to this Agreement
and the issuance to the Buyer of Common Shares on conversion of the Preferred
Shares and exercise of the Warrants, and the BuyItNow Interests on exercise of
the BuyItNow Warrants. The Company shall furnish copies of all filings,
applications, orders and grants or confirmations of exemptions relating to such
securities or "blue sky" laws on or prior to the Closing Date.
(h) Certain Expenses. Upon the Closing, the Company shall pay or
reimburse the Buyer for all reasonable expenses (including, without limitation,
legal fees and expenses of counsel to the Buyer and the Buyer's due diligence
expenses) not in excess of $40,000 incurred by the Buyer in connection with this
Agreement and the transactions contemplated hereby. In addition, the Company
shall pay on demand all expenses incurred by the Buyer, including reasonable
attorneys' fees and expenses, as a consequence of, or in connection with (1) the
negotiation, preparation or execution of any amendment, modification or waiver
of any of the Transaction Documents requested by the Company, (2) any default or
breach of any of the Company's obligations set forth in any of the Transaction
Documents and (3) the enforcement or restructuring of any right of, including
the collection of any payments due, the Buyer under any of the Transaction
Documents, including any action or proceeding relating to such enforcement, or
any order, injunction or other process seeking to restrain the Company from
paying any amount due the Buyer, in which the Buyer prevails.
Certain Issuances of Securities. (1) Unless the Company obtains the
Stockholder Approval (as defined in the Series G Certificate of Designations and
the Series H Certificate of Designations) or a waiver thereof from the NYSE, the
Company will not issue any shares of Common Stock or shares of any other series
of preferred stock or other securities convertible into, exchangeable for, or
otherwise entitling the holder to acquire, shares of Common Stock which would be
subject to the requirements of the Stockholder Approval Rule and which would be
integrated with the sale of the Preferred Shares and issuance of the Warrants to
the Buyer or the issuance of Common Shares upon conversion of the Preferred
Shares or upon exercise of the Warrants for purposes of the Stockholder Approval
Rule.
During the period from the date of this Agreement to the later of
(i) the date which is one year after the Closing Date and (ii) the date on which
the Registration Statement shall have been effective with the SEC for 270
consecutive days, the Company shall not offer, sell, contract to sell or issue
(or engage any person to assist the Company in taking any such action) (A) any
security (whether debt or equity) with conversion or exchange terms similar in
nature to the conversion rights of the Preferred Stock or (B) any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock on the date of such issuance or the date of
conversion, exchange or other exercise thereof (or below an average market price
for a reasonable period prior to such issuance, conversion, exchange or other
exercise); provided, however, that nothing in this Section 4(i)(2) shall
-10-
prohibit the Company from issuing securities (u) if the conditions set forth in
clause (A) of the proviso to the definition of the term "Conversion Price" in
the Series H Certificate of Designations are met, and this Section 4(i)(2) shall
thereupon terminate and have no further force and effect, (v) for aggregate
gross proceeds to the Company of up to $7,500,000 in one or more transactions if
the conditions set forth in clause (A) of the proviso to the definition of
"Conversion Price" in the Series G Certificate of Designations are met prior to
the first of such transactions, (w) pursuant to compensation plans for
employees, directors, officers, advisers or consultants of the Company and in
accordance with the terms of such plans as in effect as of the date of this
Agreement, (x) upon exercise of conversion, exchange, purchase or similar rights
issued, granted or given by the Company and outstanding as of the date of this
Agreement and disclosed in the SEC Reports or this Agreement, (y) pursuant to a
public offering underwritten on a firm commitment basis registered under the
1933 Act or (z) as part of a transaction involving a strategic alliance,
acquisition of stock or assets, merger, collaboration, joint venture,
partnership or other similar arrangement of the Company with another
corporation, partnership or other business entity which is engaged in a business
similar to, related to, or complementary to the business of the Company, so long
as in the case of this clause (z) the Board of Directors by resolution duly
adopted (and a copy of which shall be furnished to the Buyer promptly after
adoption) determines that such issuance is fair to the holders of each class and
series of capital stock of the Company and to the Buyer in respect of its equity
interest in the Company that is represented by the Preferred Shares and the
Warrants.
(j) Certain Trading Restrictions. So long as the Company is in
compliance in all material respects with its obligations to the Buyer under the
Transaction Documents, the Buyer agrees that from the date of this Agreement
until the date the Registration Statement is declared effective by the SEC, it
will not engage in any short sales or other hedging transactions relating to the
Common Stock.
(k) BuyItNow Interests. Within 15 Business Days after the Closing
Date, the Company shall obtain, and thereafter the Company shall maintain, sole
possession of certificates representing the full amount of BuyItNow Interests
issuable from time to time upon exercise of the BuyItNow Warrants. The BuyItNow
Interests and the certificates therefor shall at all times be free and clear of
any lien, encumbrance or restrictive legend other than applicable legends
restricting transfer under the 1933 Act.
(l) Best Efforts. Each of the parties shall use its best efforts
timely to satisfy each of the conditions to the other party's obligations to
sell and purchase the Preferred Shares set forth in Section 6 or 7, as the case
may be, of this Agreement on or before the Closing Date.
5. TRANSFER AGENT AGREEMENT; CONVERSION PROCEDURE.
(a) Transfer Agent Agreement. Prior to the Closing Date, the Company
will (1) execute and deliver the Transfer Agent Agreement in the form attached
hereto as Annex VI and thereby irrevocably instruct, ChaseMellon Shareholder
Services, L.L.C., as Transfer Agent and Registrar (the "Transfer Agent"), to
issue certificates for the Common Shares from time to time upon conversion of
the Preferred Shares and exercise of the Warrants in such amounts as specified
from time to time to the Transfer Agent in the Notices of Conversion surrendered
in connection with such conversions and referred to in Section 5(b) of this
Agreement and the Form of Subscription in the form attached to the Warrants and
(2) appoint the Transfer Agent the conversion agent for the Preferred Stock and
the exercise agent for the Warrants. The certificates for the Common Shares may
bear the restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the resale of the Common Shares under the 1933 Act. The
certificates for the Common Shares shall be registered in the name of the Buyer
or its designee and in such denominations to be specified by the Buyer in
connection with each conversion of Preferred Shares or exercise of the Warrants.
The Company warrants that no instruction other than (x) such instructions
referred to in this Section 5, (y) stop transfer instructions to give effect to
Section 4(a) prior to registration of the resale of the Common Shares under the
1933 Act and (z) the instructions required by Section 3(n) of the Registration
Rights Agreement will be given by the Company to the Transfer Agent and that the
Common Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement. Nothing in this
Section 5(a) shall limit in any way the
-11-
Buyer's obligations and agreement to comply with the registration requirements
of the 1933 Act upon resale of the Common Shares. If the Buyer provides the
Company with an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company and its legal counsel, that registration of a resale by
the Buyer of any of the Securities is not required under the 1933 Act, the
Company shall permit the transfer of such Securities and, in the case of the
Common Shares, in accordance with clause (1)(B) of Section 4(a) of this
Agreement, promptly instruct the Transfer Agent to issue upon transfer one or
more share certificates in such name and in such denominations as specified by
the Buyer within three Business Days after receipt of such opinion. Nothing in
this Section 5(a) shall limit the obligations of the Company under Section 3(n)
of the Registration Rights Agreement.
(b) Conversion Procedure. In connection with the exercise of
conversion rights relating to the Preferred Shares, the Buyer or any subsequent
holder of the Preferred Shares shall complete, sign and furnish to the Transfer
Agent, and on the same day furnish to the Company a copy of, (1) in the case of
conversion of Series G Preferred Shares, a Notice of Conversion of Series G
Convertible Preferred Stock in the form attached hereto as Annex VII, which
actions shall be deemed to satisfy all requirements of the Series G Certificate
of Designations and (2) in the case of conversion of the Series H Preferred
Shares, a Notice of Conversion of Series H Convertible Preferred Stock in the
form attached hereto as Annex VIII, which actions shall be deemed to satisfy all
requirements of the Series H Certificate of Designations.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell the
Preferred Shares and issue the Warrants and the BuyItNow Warrants to the Buyer
pursuant to this Agreement is conditioned upon the satisfaction of the following
conditions precedent on or before the Closing Date (any or all of which may be
waived by the Company in its sole discretion):
(a) The receipt and acceptance by the Company of this Agreement as
evidenced by execution of this Agreement by the Company and delivery of an
executed counterpart of this Agreement to the Buyer or its legal counsel; and
(b) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before the
Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Shares and acquire the Warrants and the BuyItNow Warrants on the
Closing Date is conditioned upon the satisfaction of the following conditions
precedent on or before the Closing Date (any or all of which may be waived by
the Buyer in its sole discretion):
(a) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date, and receipt by the Buyer of a certificate, dated the Closing
Date, of the Chief Financial Officer of the Company confirming such matters and
such other matters as the Buyer may reasonably request;
(b) The receipt by the Buyer of confirmation of the filing with the
Secretary of State of the State of Delaware of each of the Series G Certificate
of Designations and the Series H Certificate of Designations;
(c) The receipt by the Buyer of a certificate, dated the Closing
Date, of the Secretary of the Company certifying (1) the Certificate of
Incorporation and By-Laws of the Company as in effect on the Closing Date and
(2) all resolutions of the Board of Directors (and
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committees thereof) of the Company relating to this Agreement and the
transactions contemplated hereby;
(d) The Transfer Agent shall have executed and delivered the
Transfer Agent Agreement in the form attached hereto as Annex VI;
(e) Receipt by the Buyer on the Closing Date of an opinion of Klehr,
Harrison, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company, dated the
Closing Date, in form, scope and substance reasonably satisfactory to the Buyer,
to the effect set forth in Annex IX attached hereto; and
Receipt by the Buyer on the Closing Date of opinions with respect to
(1) Quantum International Limited, a United Kingdom corporation, (2) Quantum
Prestige Pty. LED., a New Zealand corporation, (3) ▇▇▇▇▇▇▇ ▇▇▇▇ Pty. "Holdings"
LED., an Australian corporation, and (4) Quantum International Japan Company
LED., a Japanese corporation, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in Annexes X, XI, XII AND
XIII, respectively, attached hereto.
8. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
(b) Counterparts. This Agreement may be executed in counterparts and
by the parties hereto on separate counterparts, all of which together shall
constitute one and the same instrument. A facsimile transmission of this
Agreement bearing a signature on behalf of a party hereto shall be legal and
binding on such party. Although this Agreement is dated as of the date first set
forth above, the actual date of execution and delivery of this Agreement by each
party is the date set forth below such party's signature on the signature page
hereof. Any reference in this Agreement or in any of the documents executed and
delivered by the parties hereto in connection herewith to (1) the date of
execution and delivery of this Agreement by the Buyer shall be deemed a
reference to the date set forth below the Buyer's signature on the signature
page hereof, (2) the date of execution and delivery of this Agreement by the
Company shall be deemed a reference to the date set forth below the Company's
signature on the signature page hereof and (3) the date of execution and
delivery of this Agreement or the date of execution and delivery of this
Agreement by the Buyer and the Company shall be deemed a reference to the later
of the dates set forth below the signatures of the parties on the signature page
hereof.
(c) Headings, etc. The headings, captions and footers 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 or the validity or enforceability of this Agreement
in any other jurisdiction.
(e) Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by
the Buyer or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given. No course of dealing between the parties hereto shall operate
as an amendment of this Agreement.
(f) Waivers. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, or any course of dealings between the parties, shall not operate as a
waiver thereof or an amendment hereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
exercise of any other right or power.
-13-
(g) Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be delivered personally (which shall include
telephone line facsimile transmission with answer back confirmation) or by
courier and shall be effective upon receipt, in the case of the Company
addressed to the Company at its address shown in the introductory paragraph of
this Agreement, Attention: Chief Financial Officer (telephone line facsimile
transmission number (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Klehr, Harrison, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III,
Esq. (telephone line facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇) or, in the
case of the Buyer, at its address or telephone line facsimile transmission
number shown on the signature page of this Agreement, with a copy to Genesee
International, Inc., ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (telephone line facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇) or such
other address or telephone line facsimile transmission number as a party shall
have provided by notice to the other party in accordance with this provision.
The Buyer hereby designates as its address for any notice required or permitted
to be given to the Buyer pursuant to the Series G Certificate of Designations
and the Series H Certificate of Designations the address shown on the signature
page of this Agreement, with a copy to: Advantage Fund II LED., ▇/▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇., ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (telephone line facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇), until
the Buyer shall designate another address for such purpose.
(h) Assignment. Prior to the Closing Date, the Buyer may not assign
its rights and obligations under this Agreement. Any transfer of the Preferred
Shares, the Warrants or the BuyItNow Warrants by the Buyer after the Closing
Date shall be made only to "accredited investors" as defined in Regulation D and
in accordance with Section 4(a). After the Closing Date, the Buyer shall have
the right to assign its rights and obligations under this Agreement in
connection with any transfer of the Buyer's rights under the Registration Rights
Agreement by compliance with the provisions of Section 9 of the Registration
Rights Agreement.
(i) Survival of Representations and Warranties. The respective
representations, warranties, covenants and agreements of the Buyer and the
Company contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall survive the delivery of and
payment for the Preferred Shares and shall remain in full force and effect
regardless of any investigation made by or on behalf of them or any person
controlling or advising any of them.
(j) Entire Agreement. This Agreement and its Schedules and Annexes
set forth the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
whether written or oral, with respect thereto.
(k) Termination. The Buyer shall have the right to terminate this
Agreement by giving notice to the Company at any time at or prior to the Closing
Date if:
(1) the Company shall have failed, refused, or been unable at or
prior to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the Closing shall not have occurred on a Closing Date on or
before March 22, 2000, other than solely by reason of a breach of this
Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
(l) Further Assurances. Each party to this Agreement will perform
any and all acts and execute any and all documents as may be necessary and
proper under the circumstances in order to accomplish the intents and purposes
of this Agreement and to carry out its provisions.
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(m) Public Statements, Press Releases, Etc. The Company and the
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 the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law or NYSE regulation
(although the 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).
(n) 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.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer and the Company by their respective officers or other representatives
thereunto duly authorized on the respective dates set forth below.
NUMBER OF SERIES G SHARES: 3,000 NUMBER OF SERIES H SHARES: 3,000
PRICE PER SHARE: $1,000.00 PRICE PER SHARE: $1,000.00
PURCHASE PRICE: $3,000,000.00 PURCHASE PRICE: $3,000,000.00
TOTAL PURCHASE PRICE: $6,000,000.00
ADVANTAGE FUND II LTD.
By: Genesee International, Inc.,
as General Manager
By:_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Date:_____________________________________
Address: ▇/▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
Facsimile No.: 011-599-9732-2008
e4L, INC.
By:_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Date:_____________________________________
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Exhibit A
BuyItNow Registration Rights
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