Exhibit 10.41
CONVERTIBLE DEBENTURE AND WARRANT PURCHASE AGREEMENT
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT ("AGREEMENT") dated as of
June 29, 1999 between Cygnus, Inc., a Delaware corporation (the "COMPANY"),
and each person or entity listed as an investor on SCHEDULE I to this
Agreement (each individually an "INVESTOR" and collectively the "INVESTORS").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Investors, and
the Investors wish to purchase from the Company, 8.5% Convertible Debentures
Due June 29, 2004, in the aggregate principal amount of $14,000,000 at an
aggregate price of $14,000,000 and up to an additional $6,000,000 in
aggregate principal amount of such convertible debentures, having the rights
and privileges set forth in the form of EXHIBIT 1.1A attached hereto (the
"DEBENTURES"), on the terms and conditions set forth herein;
WHEREAS, the Debentures will be convertible into shares ("COMMON
SHARES") of common stock, $0.001 par value per share, of the Company ("COMMON
STOCK"), pursuant to the terms thereof, and the Investors will have
registration rights with respect to such Common Shares and the Warrant Shares
(as defined herein) pursuant to the terms of that certain Registration Rights
Agreement to be entered into between the Company and the Investors
substantially in the form of EXHIBIT 4.2(f) hereto ("REGISTRATION RIGHTS
AGREEMENT"); and
WHEREAS, to induce the Investors to purchase the Debentures, the
Company has agreed to issue to the Investors certain warrants exercisable for
shares of Common Stock and may issue certain additional warrants exercisable
for shares of Common Stock, in the form attached as EXHIBIT 1.1B (the
"WARRANTS");
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
PURCHASE AND SALE OF DEBENTURES AND WARRANTS
Section 1.1 ISSUANCE OF DEBENTURES AND WARRANTS. (a) ISSUANCE. Upon
the following terms and conditions, the Company shall issue and sell
$14,000,000 aggregate principal amount of Debentures, and each Investor
severally shall purchase from the Company, the principal amount of Debentures
and Warrants to purchase the number of shares of Common Stock indicated next
to such Investor's name on SCHEDULE I attached hereto, against payment by the
Investors of an aggregate of $14,000,000 (the "Purchase Price") as set forth
below.
(b) THE CLOSING.
(i) The closing of the purchase and sale
of the Debentures and the Warrants (the "CLOSING"), shall take place
at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("INVESTORS' COUNSEL"), at 10:00
a.m., local time on the later of the following: (x) the date on
which the last of the conditions set forth in Article IV hereof
(other than those conditions that by their nature can only be
fulfilled at the Closing, but subject to the fulfillment of such
conditions) shall be fulfilled or waived in accordance herewith, or
(y) such other time and place and/or on such other date as the
Investors and the Company may agree. The date and time at which the
Closing occurs is referred to herein as the "CLOSING DATE".
(ii) On the Closing Date, the Company
shall deliver to each Investor (x) a certificate or certificates
(with the number of and outstanding principal amount of such
certificates requested by such Investor) representing the Debentures
purchased hereunder by such Investor at the Closing registered in
the name of the Investor or its nominee and (y) the Warrants
registered in the name of such Investor or its nominee in such
denominations as reasonably requested by such Investor, and such
Investor shall deliver to the Company the Purchase Price for the
Debentures and Warrants purchased by such Investor hereunder at
Closing by wire transfer in immediately available funds to an
account designated in writing by the Company. The delivery of
payment by such Investor of the Purchase Price applicable to it as
set forth in this paragraph shall constitute a payment delivered to
the Company in satisfaction of such Investor's obligation to pay the
Purchase Price hereunder. In addition, each of the Company and each
Investor shall deliver all documents, instruments and writings
required to be delivered by such party pursuant to this Agreement at
or prior to this Closing.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby makes the following representations and warranties to each of
the Investors as of the date hereof and on the Closing Date:
(a) ORGANIZATION AND QUALIFICATION; MATERIAL
ADVERSE EFFECT. The Company is a corporation duly incorporated and existing
in good standing under the laws of the State of Delaware and has the
requisite corporate power to own its properties and to carry on its business
as now being conducted. The Company does not have any direct or indirect
subsidiaries other than the subsidiaries listed on SCHEDULE 2.1(a) attached
hereto. Except where specifically indicated to the contrary, all references
in this Agreement to subsidiaries shall be deemed to refer to all direct and
indirect subsidiaries of the Company. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary other than those in which the
failure so to qualify would not have a Material Adverse Effect. "MATERIAL
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ADVERSE EFFECT" means (i) any adverse effect on the business, operations,
properties, or financial condition of the entity with respect to which such
term is used and its subsidiaries, or other entities controlled by such
entity, taken as a whole, and which is material to such entity and its
subsidiaries or other entities controlled by such entity, taken as a whole,
and (ii) any condition or situation, whether or not a material adverse
effect, which would reasonably be expected to prohibit or otherwise
materially interfere with or prevent such entity from entering into or
performing its obligations under, or from consummating the transactions
contemplated by, this Agreement, the Registration Rights Agreement, the
Debentures or the Warrants or any other agreement or document contemplated
hereby or thereby.
(b) AUTHORIZATION; ENFORCEMENT. (i) The
Company has all requisite corporate power and authority to enter into and
perform this Agreement, the Warrants, and the Registration Rights Agreement
and to issue the Debentures, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement, the Warrants, and the
Registration Rights Agreement by the Company, and the consummation by the
Company of the transactions contemplated hereby and thereby, including the
issuance of the Debentures, the Warrants, the Common Shares and the issuance
of shares of Common Stock upon exercise of the Warrants (the "Warrant
Shares"), have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Company, or its Board of Directors
(or any committee or subcommittee thereof) or stockholders is required, (iii)
this Agreement has been, and on the Closing Date the Warrants, the
Debentures, and the Registration Rights Agreement will be, duly executed and
delivered by the Company, and (iv) this Agreement constitutes, and upon
execution, issuance and delivery thereof the Warrants, the Debentures, and
the Registration Rights Agreement shall constitute, valid and binding
obligations of the Company, enforceable against the Company, in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of creditors' rights
and remedies or by other equitable principles of general application.
(c) CAPITALIZATION; INDEBTEDNESS. (i) The
authorized capital stock of the Company consists of 55,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock, par value $0.001 per
share (the "PREFERRED STOCK"). As of the date hereof, there are 22,646,345
shares of Common Stock and no shares of Preferred Stock issued and
outstanding. All of the outstanding shares of the Company's Common Stock have
been validly authorized and issued and are fully paid and nonassessable. No
shares of capital stock are entitled to preemptive rights; and there are, as
of June 23, 1999, outstanding options to purchase 3,768,271 shares of Common
Stock and no outstanding warrants to purchase shares of Common Stock
(excluding the Warrants). Except as set forth in SCHEDULE 2.1(c)(i), there
are no other scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights exchangeable for or
convertible into, any shares of capital stock of the Company, or contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options,
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warrants, scrip, rights to subscribe to, or commitments to purchase
or acquire, any shares, or securities or rights convertible or exchangeable
into shares, of capital stock of the Company. Attached hereto as EXHIBIT
2.1(c)(i) is a true and correct copy of the Company's Certificate of
Incorporation (the "CHARTER"), as in effect on the date hereof and a true and
correct copy of the Company's By-Laws (the "BY-LAWS"), as in effect on the
date hereof.
(ii) Set forth on SCHEDULE 2.1(c)(ii) is a
complete and accurate listing of (i) all of the outstanding indebtedness of
the Company, except for trade payables incurred in the ordinary course of
business (the "COMPANY DEBT"), (ii) all of the principal documents that
evidence the Company Debt and (iii) any collateral which has been pledged by
the Company to secure any of the Company Debt. The Company has provided to
Investors a correct and complete copy of, or given Investors access to, each
of the documents representing such Company Debt and all amendments thereto.
All of the documents representing any Company Debt are in full force and
effect in accordance with their terms. There exists no material default on
the part of the Company under any document evidencing any Company Debt or any
event or condition which after notice or passage of time or both would
constitute such a default. Except as set forth on SCHEDULE 2.1(c)(ii), the
documents evidencing the Company Debt do not require the consent of any party
thereto to the consummation of the transactions contemplated by this
Agreement.
(d) ISSUANCE OF COMMON SHARES. The Common Shares
and the Warrant Shares are duly authorized and reserved for issuance and,
upon such conversion in accordance with the Debentures and/or exercise in
accordance with the Warrants, such Common Shares and Warrant Shares will be
validly issued, fully paid and non-assessable, free and clear of any and all
liens, claims and encumbrances, and the holders of such Common Shares and
Warrant Shares shall be entitled to all rights and preferences accorded to a
holder of Common Stock. The outstanding shares of Common Stock are currently
listed, and are entitled to be traded, on the Nasdaq National Market System
("NASDAQ NMS," and collectively with the American Stock Exchange and the New
York Stock Exchange, the "APPROVED MARKETS") and the Company has not received
any notice (written or oral) from the Nasdaq NMS (or any other Approved
Market where the Common Stock is currently listed) to which the Company has
not made a satisfactory response indicating that delisting of the Common
Stock is under consideration.
(e) NO CONFLICTS. The execution, delivery and
performance by the Company of this Agreement, the Registration Rights
Agreement, the Warrants, and the Debentures, including the issuance of the
Debentures, and the Warrants, the conversion of the Debentures into the
Common Shares the exercise of the Warrants, and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will
not (i) result in a violation of the Company's Charter or By-Laws or (ii)
conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the
Company, or any of its subsidiaries is a party, or (iii) result in a
violation of any federal, state, local or foreign law, rule, regulation,
order,
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judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company, or any of its subsidiaries or by
which any property or asset of the Company, or any of its subsidiaries is
bound or affected, except where any such violation would not reasonably be
expected to have a Material Adverse Effect on the Company. The business of
the Company and its direct and indirect subsidiaries is not being conducted
in violation of, and is in compliance in all material respects with, all
applicable material laws, ordinances and regulations of any governmental
entity except where any such violation would not reasonably be expected to
have a Material Adverse Effect on the Company. Except for filings, consents
and approvals required under applicable state and Federal securities laws,
the Company is not required under Federal, state, local or foreign law, rule
or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it
(x) to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement, the Debentures, or the
Warrants, (y) to issue and sell the Debentures or the Warrants in accordance
with the terms hereof, to issue the Common Shares upon conversion of the
Debentures or to issue the Warrant Shares on exercise of the Warrants or (z)
to comply with the registration provisions provided in the Registration
Rights Agreement.
(f) SEC DOCUMENTS; NO NON-PUBLIC INFORMATION;
FINANCIAL STATEMENTS. The Common Stock of the Company is registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") and the Company is in compliance in all material respects
with and has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange
Commission ("SEC") pursuant to the Exchange Act, in addition to one or more
registration statements and amendments thereto heretofore filed by the
Company with the SEC (all of the foregoing including filings incorporated by
reference therein being referred to herein as the "SEC DOCUMENTS"). The
Company has delivered or made available to the Investors true and complete
copies of all SEC Documents (including, without limitation, proxy information
and solicitation materials and registration statements) filed with the SEC
since December 31, 1998, and all annual SEC Documents filed with the SEC
since December 31, 1997. The Company has not provided to the Investors any
material non-public information or any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by
the Company but which has not been so disclosed. As of their respective
dates, the SEC Documents complied (and as of its effective date, the
Registration Statement (as defined in the Registration Rights Agreement) will
comply) in all material respects with the requirements of the Exchange Act
(or, in the case of such Registration Statement, the Securities Act of 1933,
as amended (the "ACT")) and the rules and regulations of the SEC promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents contained
(and, as of its effective date, such Registration Statement, as amended, will
not contain) any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The SEC Documents contain (and, as of its effective date,
such Registration Statement, as amended, will contain) all material
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information concerning the Company, and no event or circumstance has occurred
which would require the Company to disclose such event or circumstance in
order to make the statements in the SEC Documents not misleading on the date
hereof or on the Closing Date but which has not been so disclosed. The
financial statements of the Company included (or to be included) in the SEC
Documents (or such Registration Statement) comply (or will comply) as to form
and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial
statements have been (or will be) prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present (or will fairly present)
in all material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) PRINCIPAL EXCHANGE/MARKET. The principal
market on which the Common Stock is currently traded is the Nasdaq NMS.
(h) NO MATERIAL ADVERSE CHANGE. Since March 31,
1999, no Material Adverse Effect has occurred or exists with respect to the
Company and no event or circumstance has occurred that with notice or the
passage of time or both is reasonably likely to result in a Material Adverse
Effect with respect to the Company or any of its subsidiaries.
(i) NO UNDISCLOSED LIABILITIES. The Company has
no liabilities or obligations not disclosed in the SEC Documents, other than
those liabilities incurred in the ordinary course of the Company's businesses
since March 31, 1999, which liabilities, individually or in the aggregate, do
not or would have not had a Material Adverse Effect on the Company.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No
event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced
or disclosed.
(k) NO GENERAL SOLICITATION. Neither the
Company, nor any of its affiliates, or, to the Knowledge of the Company, any
person acting on its or their behalf, has engaged in or conducted any form of
general solicitation or general advertising (within the meaning of Regulation
D under the Act) with respect to or in connection with the offer or sale of
the Debentures, the Warrants, the Common Shares or the Warrant Shares. For
purposes of this Agreement, "KNOWLEDGE OF THE COMPANY" shall mean the actual
knowledge, without independent inquiry, of any of the executive officers of
the Company.
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(l) NO INTEGRATED OFFERING. Neither the Company,
nor any of its affiliates, nor, to the Knowledge of the Company, any person
acting on its or their behalf, has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the Debentures, the
Warrants, the Common Shares or Warrant Shares under the Act.
The issuance of the Debentures, the Warrants, the
Common Shares or the Warrant Shares to the Investors will not be integrated
with any other issuance of the Company's securities which requires
stockholder approval under the rules of the Nasdaq NMS.
(m) FORM S-3. The Company is eligible to file
the Registration Statement (as defined in the Registration Rights Agreement)
on Form S-3 under the Act and the rules promulgated thereunder, and Form S-3
is permitted to be used for the transactions contemplated by the Registration
Rights Agreement under the Act and the rules promulgated thereunder.
(n) INTELLECTUAL PROPERTY. Except as set forth
in Schedule 2.1(n), the Company owns or possesses adequate patent rights or
licenses or other rights to use patent rights, inventions, trademarks,
service marks, trade names and copyrights the Company reasonably believes are
necessary to conduct the general business now operated by the Company, and
the Company has not received any notice of infringement or conflict with
asserted rights of others with respect to any patent, patent rights,
inventions, trademarks, service marks, trade names or copyrights which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(o) NO LITIGATION. Except as set forth on
SCHEDULE 2.1(o) or in the SEC Documents, no litigation, arbitration,
proceeding or claim (including those for unpaid taxes) against the Company is
pending or, to the Company's knowledge, threatened, and no other event has
occurred, which if determined adversely would singly or in the aggregate
reasonably be expected to have a Material Adverse Effect on the Company.
(p) BROKERS. Except for the Company's agreement
with Reedland Capital Partners (which agreement has been fully disclosed to
the Investors), the Company has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar
payments by the Company or any Investor relating to this Agreement or the
transactions contemplated hereby.
(q) OTHER INVESTORS. Except as set forth on
SCHEDULE 2.1(q), there are no outstanding securities issued by the Company
that are entitled to registration rights under the Act. Except as set forth
in SCHEDULE 2.1(q), there are no outstanding securities issued by the Company
that are directly or indirectly convertible into, exercisable, or
exchangeable for, shares of Common Stock of the Company, that have
anti-dilution, preemptive or similar rights that would be affected or
triggered by the issuance of the Debentures, the Common Shares, the Warrant
Shares, or the Warrants.
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(r) CERTAIN TRANSACTIONS. Except as disclosed in
the SEC Documents, or as set forth on SCHEDULE 2.1(r) attached hereto, none
of the officers, directors, or employees of the Company is presently a party
to any transaction with the Company or any of its subsidiaries (other than
for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any such officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any such officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(s) PERMITS; COMPLIANCE. The Company and each of
its subsidiaries is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted (collectively, the "COMPANY PERMITS") except where failure to
possess such Company Permits would not have a Material Adverse Effect on the
Company. There is no action or proceeding pending or, to the Knowledge of the
Company, threatened regarding suspension or cancellation of any of the
Company Permits, except with respect to such Company Permits the failure of
which to possess, or the cancellation or suspension of which, would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company is not in material conflict with, or in material default
or material violation of, any of the Company Permits. Since December 31,
1998, the Company has not received any notification with respect to possible
material conflicts, material defaults or material violations of applicable
laws.
(t) INSURANCE. The Company is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company is engaged. The Company has
no 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.
(u) INTERNAL ACCOUNTING CONTROLS. The Company
maintains a system of internal accounting controls sufficient, in the
judgment of the Company's board of directors, to provide reasonable assurance
that (i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(v) ENVIRONMENTAL MATTERS. Except as otherwise
disclosed in the SEC Documents, each of the Company and each of its
subsidiaries is in compliance in all material respects with all applicable
state and federal environmental laws, except
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where any such non-compliance would not reasonably be expected to have a
Material Adverse Effect on the Company, and no event or condition has
occurred that may interfere with the compliance by the Company or any of its
subsidiaries with any environmental law or that may give rise to any
liability under any environmental law that, individually or in the aggregate,
would have a Material Adverse Effect.
(w) SOLVENCY.
(i) The Company's fair saleable value of
its assets as of the date hereof exceeds the amount that is required
to be paid as of the date hereof on or in respect of the Company's
existing debts and other liabilities (including contingent
liabilities) as they mature.
(ii) The Company's assets do not
constitute unreasonably small capital to carry out its business as
now conducted and as proposed to be conducted including the
Company's capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected
capital requirements and capital availability thereof.
(iii) The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in
respect of its debt).
(iv) The Company does not believe that
final judgments against the Company in pending actions for money
damages will be rendered at a time when, or in an amount such that,
the Company will be unable to satisfy any such judgments promptly in
accordance with their terms. The Company believes that its cash
flow, after taking into account all other anticipated uses of the
cash (including the payments on or in respect of debt referred to in
paragraph (iii) above), will be sufficient to pay all such judgments
promptly in accordance with their terms.
(v) Neither the Company nor any of its
subsidiaries is subject to any bankruptcy, insolvency or similar
proceeding.
(x) TAXES. All federal, state, and other tax
returns, reports and declarations required to be filed by the Company have
been filed and such returns are complete and correct and all taxes (whether
based upon income, operations, purchases, sales, payroll, licenses,
compensation, business, capital, properties or assets or otherwise) shown
thereon (other than set forth on SCHEDULE 2.1(x)) have been paid, except
where any failure to file or to be complete or correct would not have a
Material Adverse Effect on the Company.
(y) TITLE TO PROPERTIES; ENCUMBRANCES. SCHEDULE
2.1(y) contains a complete and accurate list of all material real property,
leaseholds, or other interests in real property owned by the Company. The
Company owns (with good and marketable title in the case of real property)
all the properties and assets (whether real,
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personal, or mixed and whether tangible or intangible) that it purports to
own. All material properties and assets listed on SCHEDULE 2.1(y) are free
and clear of all encumbrances (other than as set forth on SCHEDULE 2.1(y) and
except any encumbrances that would not reasonably be expected to have a
Material Adverse Effect on the Company) and are not, in the case of real
property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations or limitations of any nature, except with
respect to all such properties and assets, (a) mortgages or security
interests shown on SCHEDULE 2.1(y) as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) liens for
current taxes not yet due, and (c) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value, or impairs the use, of the property
subject thereto, or impairs the operations the Company, and (ii) zoning laws
and other land use restrictions that do not impair the present or anticipated
use of the property subject thereto. All buildings, plans, and structures
owned by the Company lie wholly within the boundaries of the real property
owned by the Company, and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other person.
(z) EFFECTIVENESS OF SEC FILINGS. There is not
in effect any stop order or other order of the SEC suspending the
effectiveness of any registration involving the Company.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each of the Investors, severally (as to itself) and not jointly, hereby makes
the following representations and warranties to the Company as of the date
hereof and on the Closing Date:
(a) ORGANIZATION AND STANDING. Each of the
Investors is duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its organization and is duly qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect.
(b) AUTHORIZATION; ENFORCEMENT. (i) Such
Investor has the requisite power and authority to enter into and perform this
Agreement and the Registration Rights Agreement and to purchase the
Debentures and Warrants being sold hereunder, (ii) the execution and delivery
of this Agreement and the Registration Rights Agreement by such Investor and
the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate or partnership action,
and (iii) this Agreement constitutes, and upon execution, issuance and
delivery thereof, the Registration Rights Agreement will constitute, a valid
and binding obligation of such Investor enforceable against such Investor in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of
creditors' rights and remedies or by other equitable principles of general
application.
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(c) NO CONFLICTS. The execution, delivery and
performance by such Investor of this Agreement, and the Registration Rights
Agreement, the performance by such Investor under the Debentures and Warrants
and the consummation by such Investor of the transactions contemplated hereby
and thereby do not and will not (i) result in a violation of such Investor's
organizational documents, (ii) materially conflict with any agreement,
indenture or instrument to which such Investor is a party, or (iii) result in
a material violation of any law, rule, or regulation, or any order, judgment
or decree of any court or governmental agency applicable to such Investor.
Such Investor is not required to obtain any consent or authorization of any
governmental agency in order for it to perform its obligations under this
Agreement, the Registration Rights Agreement, the Warrants and the Debentures.
(d) INVESTMENT REPRESENTATION. Such Investor is
purchasing the Debentures and Warrants for its own account and not with a
view to distribution thereof in violation of any securities laws. Such
Investor has no present intention to sell the Debentures, Warrants, Common
Shares or Warrant Shares in violation of Federal or state securities laws and
such Investor has no present arrangement (whether or not legally binding) to
sell the Debentures, Warrants, Common Shares or Warrant Shares to or through
any person or entity; PROVIDED, however, that by making the representations
herein, such Investor does not agree to hold the Debentures, Warrants, Common
Shares or Warrant Shares for any minimum or other specific term and reserves
the right to dispose of the Debentures, Warrants, Common Shares or Warrant
Shares at any time in accordance with Federal and state securities laws
applicable to such disposition.
(e) ACCREDITED INVESTOR. Such Investor is an
"accredited investor" as defined in Rule 501(a)(3) of Regulation D
promulgated under the Act. Such Investor has such knowledge and experience in
financial and business matters in general and investments in particular that
it is able to evaluate the merits and risks of an investment in the
Debentures and Warrants and to protect its own interests in connection with
such investment. In addition (but without limiting the effect of the
Company's representations and warranties contained herein), such Investor has
received such information as it considers necessary or appropriate for
deciding whether to purchase the Debentures and Warrants pursuant hereto.
Such Investor has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the purchase of the
Debentures and Warrants, and the business, properties, prospects, and
financial condition of the Company.
(f) RULE 144. Such Investor understands that
there is no public trading market for the Debentures, or Warrants, that none
is expected to develop, and that the Debentures, and Warrants must be held
indefinitely unless such Debentures or Warrants are converted or exercised,
as the case may be, and the Common Shares or Warrant Shares, as the case may
be, are registered under the Act or an exemption from registration is
available. Such Investor has been advised or is aware of the provisions of
Rule 144 promulgated under the Act.
(g) BROKERS. Such Investor has taken no action which
would give rise to any claim by any person for brokerage commissions,
finder's fees or similar
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payments by the Company relating to this Agreement or the transactions
contemplated hereby.
(h) NOT AN AFFILIATE. Such Investor is not an
officer, director or "affiliate" (as that term in defined in Rule 405 of the
Act) of the Company.
(i) RELIANCE BY THE COMPANY. Such Investor
understands that the Debentures and Warrants are being offered and sold in
reliance on a transactional exemption from the registration requirements of
Federal and state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Investor set forth herein in order
to determine the applicability of such exemptions and the suitability of such
Investor to acquire the Debentures and the, Warrants.
(j) FINANCIAL CONDITION. Such Investor has, or
has available to it, sufficient funds to satisfy all of its financial
obligations under this Agreement, including, but not limited to, the purchase
of additional Debentures as set forth in Article V. Such Investor will
promptly notify the Company of any event or circumstance with could
reasonably be expected to hinder such Investor's ability to perform its
obligations hereunder.
(k) NO HEDGING OR SHORT SELLING. (a) During the
period sixty (60) days prior to the date of this Agreement such Investor has
not engaged in any short sales or hedging of any kind in anticipation of this
Agreement, and (b) during the term of this Agreement such Investor may not
make any sales with the intention of reducing the price of the Common Stock
to such Investor's benefit.
(l) WITHHOLDING. (i) (A) Such Investor (x) is
not, and during the term of this Agreement, shall not become, licensed to do
business as a bank or trust company in any jurisdiction or (y) is not, and
during the term of this Agreement, shall not become, required to be licensed
as a bank or trust company or do any act which will render itself subject to
supervision or examination as a bank or trust company by any governmental
authority and (B) such Investor is not controlled by, and is not acting as a
conduit on behalf of, any person which is a bank or trust company or any
person which is required to be licensed or registered as a bank or trust
company and (C) such Investor did not derive funds required to fund its
participation in the transaction contemplated under this Agreement through a
back-to-back loan or other similar arrangement with a bank or trust company;
(ii) such Investor does not own, and during the term of the Debentures, will
not own, directly or indirectly, ten percent (10%) or more of the total
combined voting power of all classes of stock of the Company entitled to vote.
ARTICLE III.
COVENANTS
Section 3.1 REGISTRATION AND LISTING; EFFECTIVE REGISTRATION.
Until such time as no Debentures or Warrants are outstanding, the Company
will cause the Common Stock
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to continue at all times to be registered under Section 12(g) of the Exchange
Act, the Company will comply in all material respects with its reporting and
filing obligations under the Exchange Act, and the Company will not take any
action or file any document (whether or not permitted by the Exchange Act or
the rules thereunder) to terminate or suspend such reporting and filing so
long as it is so obligated. Until such time as no Debentures or Warrants or
Additional Warrants (as defined in Section 5.2) are outstanding, the Company
shall continue the listing or trading of the Common Stock on the Nasdaq NMS
or one of the other Approved Markets and shall comply in all respects with
the Company's reporting, filing and other obligations under the bylaws or
rules of the Nasdaq NMS or such other Approved Market on which the Common
Stock is traded or listed and the National Association of Securities Dealers
("NASD"). The Company shall cause the Common Shares and the Warrant Shares to
be listed on the Nasdaq NMS (or, if the Common Stock is listed on another of
the Approved Markets, on such other Approved Market) no later than the
registration of the Common Shares or the Warrant Shares under the Act, and at
all times shall continue such listing(s) on one of the Approved Markets on
which the Common Stock is traded or listed. As used herein and in the
Registration Rights Agreement and the Warrants, the term "EFFECTIVE
REGISTRATION" shall mean that (a) all registration obligations of the Company
pursuant to the Registration Rights Agreement and this Agreement have been
satisfied, (b) such registration is not subject to any suspension or stop
order, (c) the prospectus for each of the Common Shares issuable upon
conversion of the Debentures then outstanding, and the Warrant Shares
issuable upon exercise of the Warrants then outstanding is current, (d) such
Common Shares and Warrant Shares are listed for trading on one of the
Approved Markets and such trading has not been suspended for any reason, (e)
none of the Company or any direct or indirect subsidiary of the Company is
subject to any bankruptcy, insolvency or similar proceeding, and (f) no
Interfering Event (as defined in Section 2(b) of the Registration Rights
Agreement) exists. For purposes of this Section 3.1, "Common Stock" means the
Company's currently outstanding Common Stock or any securities into which the
Common Stock is changed or converted by merger, consolidation,
recapitalization, reclassification, or otherwise, so long as such Common
Stock or securities are publicly held.
Section 3.2 DEBENTURES ON CONVERSION AND WARRANTS ON EXERCISE.
(a) Upon any conversion by an Investor (or then
holder of Debentures) of the Debentures pursuant to the terms thereof, the
Company shall issue and deliver to such Investor (or holder) within three (3)
Trading Days of the HOLDER CONVERSION DATE (as defined in the Debenture) a
new certificate or certificates for the principal amount of Debentures which
such Investor (or holder) has not yet elected to convert but which are
evidenced in part by the certificate(s) submitted to the Company in
connection with such conversion (with the principal amount of and
denomination of such new certificate(s) designated by such Investor or
holder).
(b) Upon any partial exercise by an Investor (or
then holder of the Warrants) of the Warrants, the Company shall issue and
deliver to such Investor (or holder) within three (3) days of the date on
which such Warrants are exercised, a new
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Warrant or Warrants representing the number of adjusted Warrant Shares, in
accordance with the terms of Section 2 of the Warrants.
Section 3.3 REPLACEMENT DEBENTURES AND WARRANTS.
(a) The certificate(s) representing the
Debentures held by any Investor (or then holder) may be exchanged by such
Investor (or such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate principal amount
of Debentures, as requested by such Investor (or such holder) upon
surrendering the same. No service charge will be made for such registration
or transfer or exchange.
(b) The Warrants will be exchangeable at the
option of any Investor (or then holder of the Warrants) at the office of the
Company for other Warrants of different denominations entitling such Investor
(or the holder thereof) to purchase in the aggregate the same number of
Warrant Shares as are purchasable under such Warrants. No service charge will
be made for such transfer or exchange.
Section 3.4 EXPENSES. The Company shall pay in immediately
available funds, at the Closing and promptly upon receipt of any further
invoices relating to same, all reasonable due diligence fees and expenses and
attorneys' fees and expenses of the Investors' Counsel, not to exceed
$35,000, incurred by the Investors in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Registration
Rights Agreement, the Debentures, the Warrants, and the related agreements
and documents and the transactions contemplated hereunder and thereunder.
Prior to Closing, the Investor shall provide the Company copies of invoices
relating to such fees and expenses. At Closing, the Company shall pay the
amount due for such fees and expenses (which may include fees and expenses
estimated to be incurred for completion of the transaction including
post-closing matters). In the event such amount is ultimately less than the
actual fees and expenses, the Company shall promptly pay such deficiency upon
receipt of an invoice regarding same. In the event the amount is ultimately
more than actual fees and expenses, the Investor shall promptly pay to the
Company such difference in the amount actually provided by the Company and
the amount actually invoiced by the Investor.
Section 3.5 SECURITIES COMPLIANCE. The Company shall notify the
SEC and the Nasdaq NMS, in accordance with their respective requirements, of
the transactions contemplated by this Agreement, and the Debentures, the
Registration Rights Agreement, and the Warrants, and shall take all other
necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation for the legal and valid issuance of the
Debentures hereunder, the Common Shares issuable upon conversion thereof, the
Warrants, and the Warrant Shares issuable upon exercise thereof.
Section 3.6 DIVIDENDS OR DISTRIBUTIONS. So long as any Debentures
or Warrants remain outstanding, the Company agrees that it shall not (a)
declare or pay any dividends or make any distributions (other than stock
dividends) to any holder or holders
- 14 -
of Common Stock, or (b) purchase or otherwise acquire for value, directly or
indirectly, any Common Stock or other equity security of the Company.
Section 3.7 NOTICES. The Company agrees to provide all holders of
Debentures and Warrants with copies of all notices and information, including
without limitation notices and proxy statements in connection with any
meetings, that are provided to the holders of shares of Common Stock,
contemporaneously with the delivery of such notices or information to such
Common Stock holders.
Section 3.8 USE OF PROCEEDS. The Company agrees that the proceeds
received by the Company from the sale of the Debentures hereunder shall be
used to redeem $12.5 million principal amount, plus accrued interest, of the
Company's 4% senior subordinated convertible notes due 2005.
Section 3.9 PRIVATE PLACEMENT OF COMPANY SECURITIES.
(a) (i) If, within twelve (12) months of the
Closing Date or Additional Closing Date (as defined in Section 5.3(b)), as
the case may be, the Company determines that it wishes to sell any Common
Stock or securities convertible into or exchangeable for Common Stock
(excluding (A) the issuance of options to purchase Common Stock, the Common
Stock underlying such options or other equity securities granted to officers,
directors, consultants or other employees pursuant to any stock incentive
plan approved by the Board of Directors of the Company; (B) the issuance of
Common Stock or other equity securities in connection with any employee stock
purchase plan approved by the Board of Directors of the Company, (C) the
issuance of Common Stock or securities convertible or exchangeable for Common
Stock in connection with the formation of a joint venture, or as part of a
strategic relationship with another person or entity or in connection with a
merger or other acquisition transaction; (D) the issuance of Common Stock or
warrants as contemplated by the Company's letter agreement, dated May 20,
1999, with Reedland Capital Partners; or (E) Common Stock or warrants to
purchase Common Stock issued in connection with the contemplated Structured
Equity Line Flexible Financing Agreement), other than pursuant to a
registration statement under the Act, the Company shall first provide to all
Investors still holding Debentures, a written notice (a "First Offer Notice")
as follows:
(ii) The First Offer Notice shall state the
price at which it would like to sell such securities, the maximum number of
securities it would like to sell and the other material terms of such
securities. The First Offer Notice may be delivered with or without prior
consultation with the Investors, at the election of the Company.
(iii) Each of the Investors receiving a First
Offer Notice shall have 10 Trading Days to indicate in writing (a "Purchase
Notice") to the Company whether any of them wishes to accept such offer as to
all or any portion of such securities. In the event that the Investors
deliver Purchase Notices with respect to a total amount of securities in
excess of the amount described in the First Offer Notice, the amount of
securities that each Investor who delivered a Purchase Notice shall purchase
shall be proportionately reduced in accordance with its holdings of
Debentures at such time. In
- 15 -
the event that the Investors deliver Purchase Notices with respect to less
than all of the amount of securities described in the First Offer Notice, (x)
the aggregate amount of securities purchased by all Investors shall be
reduced to fifty percent (50%) of the amount set forth in the First Offer
Notice if Purchase Notices are delivered with respect to 50% or more of such
amount, unless the Company otherwise elects by written notice to the
Investors, or (y) each Investor shall purchase the amount of securities set
forth in such Investor's Purchase Notice if the Purchase Notices delivered by
all Investors are delivered with respect to less than fifty percent (50%) of
the amount of securities set forth in the First Offer Notice. In the event of
a reduction in the aggregate amount of securities to be purchased in
accordance with clause (x) of the preceding sentence, the amount of
securities to be purchased by each Investor who delivered a Purchase Notice
shall be proportionately reduced in accordance with such Investor's holdings
of Debentures at such time.
(iv) If any of the Investors sends a Purchase
Notice to the Company, the Investor shall be committed to purchase the amount
of securities specified (subject to any proportionate reduction contemplated
by paragraph (iii) above) on the terms and conditions specified, and the
closing for the sale of the securities to be purchased pursuant to a Purchase
Notice shall occur at the offices of the Company within 30 days of the date
of the Purchase Notice. The purchase price to be paid at such closing shall
be made in immediately available funds (if the purchase price is for cash),
and such payment shall be made against delivery of the securities. The
Company and the Investor shall make such representations, warranties and
other agreements customary for similar transactions at the Closing as each
party shall reasonably request, that in no event shall be more onerous than
those proposed in the transaction described in the First Offer Notice.
(v) If any or all of the Investors do not
timely send the Company one or more Purchase Notices, the Company shall have
60 days after the expiration of the 10 day period described in Section
3.9(a)(iii) in which enter into a binding agreement to sell to third parties
such securities, in amounts, at prices and on terms not more favorable to the
investor than were contained in the First Offer Notice. Promptly after any
such sale, the Company shall provide to the Investors such evidence of such
sale as the Investors shall reasonably request. If at the end of such 60 day
period the Company has not entered into a binding agreement with respect to
the sale of such securities, it shall no longer be permitted to sell such
securities pursuant to this Section 3.9(a) without again fully complying with
the provisions of this Section 3.9(a).
(b) (i) Within twelve (12) months of the Closing
Date, the Company shall not sell or issue Common Stock (or other equity
securities or rights exercisable or exchangeable for, or convertible into,
Common Stock or such other equity securities) in a private placement at a
conversion price which varies as a result of the fluctuation in the price of
the Common Stock, or with an adjustment feature based on a future price of
the Common Stock (a "Floating Conversion Price").
(ii) If at any time after twelve (12) months
from the Closing Date, the Company sells or issues Common Stock (or other
equity securities or rights exercisable or exchangeable for, or convertible
into, Common Stock or such other
- 16 -
equity securities) in a private placement, excluding the issuance of any
Common Stock pursuant to the contemplated Structured Equity Line Flexible
Financing Agreement, at a Floating Conversion Price, the Conversion Price of
the Debentures held by the Investors shall be adjusted to become the lesser
of the Conversion Price or the Floating Conversion Price (at such Investor's
option upon each conversion).
Section 3.10 RESERVATION OF STOCK ISSUABLE UPON CONVERSION OF
DEBENTURES AND UPON EXERCISE OF THE WARRANTS. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
Debentures, and the exercise of the Warrants, free of preemptive rights, such
number of its shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all outstanding Debentures and the full exercise
of the Warrants, and, if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
all the then outstanding Debentures and the full exercise of the Warrants,
the Company will take such corporate action as may be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares
as shall be sufficient for such purposes, including without limitation
engaging in reasonable efforts to obtain the requisite stockholder approval.
If at any time the number of authorized but unissued shares of Common Stock
is not sufficient to effect the conversion of all the then outstanding
Debentures or the full exercise of the Warrants, the Investors shall be
entitled to, INTER ALIA, the premium price redemption rights provided in the
Registration Rights Agreement.
Section 3.11 REASONABLE EFFORTS. The parties shall use their
reasonable efforts to satisfy timely each of the conditions described in
Article IV and Article V of this Agreement.
Section 3.12 FORM D; BLUE SKY LAWS; NO INTEGRATED OFFERING. The
Company agrees to file a Form D with respect to the transactions contemplated
by this Agreement, as required under Regulation D, and to provide a copy
thereof to each Investor promptly after such filing. The Company shall, on or
before each Closing Date or Additional Closing Date, take such action as the
Company shall have reasonably determined is necessary to qualify the
Debentures, Warrants, Common Shares and Warrant Shares for sale to the
Investors at the applicable Closing pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to each Investor on or prior to the
Closing Date. The Company will not undertake any offering of securities that
would reasonably be expected to be integrated with the offering of the
Debentures, Warrants, Common Shares and Warrant Shares.
Section 3.13 NO SENIOR INDEBTEDNESS; LIMITATION ON ISSUANCE OF
EQUITY.
The Debentures shall rank PARI PASSU with all current and
future unsecured indebtedness of the Company; PROVIDED, HOWEVER, that prior
to issuing a private placement of any convertible debentures to any person or
entity, excluding for this purpose any convertible debenture issued (i)
pursuant to this Agreement, (ii) to any strategic partner of the Company or
(iii) in connection with any acquisition of a business
- 17 -
or assets (other than cash) by the Company, the Company will obtain
subordination agreements in form reasonably satisfactory to the Investors
subordinating such convertible debentures to the Debentures.
Section 3.14 SUBORDINATION AGREEMENT. Until the Debentures are
redeemed or converted pursuant to this Agreement, in the event that the
Company refinances the secured debt it owes to Silicon Valley Bank, or enters
into a new agreement with a bank for debt secured by the Company's property,
the Investors will enter into a subordination agreement substantially similar
to that certain Subordination and Consent Agreement by and between Investors
and Silicon Valley Bank dated June 29, 1999, subordinating the Debentures to
the same extent as under such agreement under such refinancing or new
agreement; provided, however, the Company covenants and agrees that,
commencing on the date hereof and until twenty-four (24) months from the date
hereof, it will not incur or permit to exist any senior indebtedness in
excess of $40,000,000. If, after twenty-four (24) months from the date
hereof, the Company incurs senior indebtedness in excess of $40,000,000, the
Investors each shall have the right to require the Company to redeem any then
outstanding Debentures held by such Investor in cash, in an amount equal to
the Outstanding Principal Amount (as such term is defined in the Debenture)
of such Debenture plus accrued interest and default payments, if any, to the
redemption date. Any Investor electing to exercise the right to have such
Investor's Debentures redeemed in accordance with the preceding sentence must
give the Company written notice of such election within thirty (30) days
after the date the Company gives such Investor written notice that it has
incurred senior indebtedness in excess of $40,000,000. The redemption date
with respect to any such redemption shall be the thirtieth (30th) day after
the Company's receipt of such written notice of election from such Investor
or, if such day is not a business day, the next succeeding business day. In
order to receive the payment due upon redemption on the redemption date, the
Investor must surrender the Debentures due to be redeemed to the Company at
its principal executive office on the redemption date.
Section 3.15 REGISTRATION RIGHTS. The Company shall file and use
its best efforts to cause to become effective, as promptly as possible, a
registration statement on Form S-3 under the Act (or in the event that the
Company becomes ineligible to use such form, such other form as the Company
is eligible to use under the Act) covering the resale of the Common Shares
and the Warrant Shares issuable upon the conversion of the Debentures and the
exercise of the Warrants, respectively, and shall take all action necessary
to qualify the Common Shares and the Warrant Shares under all applicable
state securities laws, all in accordance with the Registration Rights
Agreement to be entered into by the Company and the Investors at the Closing.
Section 3.16 LEGENDS. Upon effectiveness of the Registration
Statement (as defined in the Registration Rights Agreement), the Common
Shares and the Warrant Shares and certificates evidencing the same shall at
all times be free of legends (except as otherwise provided herein or in the
Debentures, Warrants, or Registration Rights Agreement), "stop transfers",
"stock transfer restrictions" or other restrictions.
Section 3.17 WITHHOLDING. It is the intent of the Company that
the Debentures be treated as "registered obligations" under Section
871(h)(2)(B) of the Internal Revenue
- 18 -
Code of 1986, as amended (the "CODE") and that the interest payments thereon
be treated as "portfolio interest" within the meaning of Section 871(h) of
the Code. Assuming no changes in the current law applicable hereto, so long
as the Investor (or any transferee thereof who is a "Holder" under the
Debenture) complies with the requirements for exemption from taxation under
the Code (including any compliance with any documentation requirements
required by the U.S. Internal Revenue Service or otherwise, reasonably
requested by the Company to establish and support such exemption) and the
interest on the Debentures is not determined to be other than "portfolio
interest", the Company agrees that it shall not withhold federal income taxes
in respect of interest payments on the Debentures.
Section 3.18 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence and solvency of
the Company; PROVIDED, HOWEVER, that nothing herein shall be construed to
limit the ability of the Company to partake in any merger, asset sale, or
acquisition transaction involving the Company, subject to the Company's
complying with the terms of the Debentures.
ARTICLE IV.
CONDITIONS TO CLOSING
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY
TO SELL THE DEBENTURES. The obligation hereunder of the Company to issue
and/or sell the Debentures to the Investors at the Closing (unless otherwise
specified) is subject to the satisfaction, at or before the Closing, of each
of the applicable conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at any time in its
sole discretion.
(a) ACCURACY OF THE INVESTORS' REPRESENTATIONS
AND WARRANTIES. The representations and warranties of each Investor will be
true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties made as of a specific date, which will be true and correct in all
material respects as of such date).
(b) PERFORMANCE BY THE INVESTORS. Each Investor
shall have performed in all material respects all agreements and covenants
and satisfied all conditions required to be performed or satisfied by it at
or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement or the Debentures or the Warrants.
(d) RECEIPT OF PURCHASE PRICE. The Company shall
have received payment of the Purchase Price pursuant to Section 1.1.
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Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
INVESTORS TO PURCHASE THE DEBENTURES. The obligation hereunder of each
Investor to acquire and pay for the Debentures at the Closing (unless
otherwise specified) is subject to the satisfaction, at or before the
Closing, of each of the applicable conditions set forth below. These
conditions are for each Investor's benefit and may be waived by each Investor
at any time in its sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties made as of a specific date, which shall be true and correct in all
material respects as of such date).
(b) PERFORMANCE BY THE COMPANY. The Company shall
have performed in all material respects all agreements and covenants and
satisfied all conditions required to be performed or satisfied by the Company
at or prior to the Closing.
(c) NASDAQ NMS. Trading in the Company's Common
Stock shall not have been suspended by the SEC or the Nasdaq NMS (or other
Approved Market), and trading in securities generally as reported by the
Nasdaq NMS (or other Approved Market) shall not have been suspended or
limited or minimum prices shall not have been established on securities whose
trades are reported by the Nasdaq NMS, and the Common Stock shall not have
been delisted from the Nasdaq NMS (or any other Approved Market where they
are currently listed), and the Company shall not have received any notice
(written or oral) from the Nasdaq NMS (or any other Approved Market where
they are currently listed) indicating that delisting of the Common Stock is
under consideration.
(d) NO INJUNCTION. No statute, rule, regulation,
executive, judicial or administrative order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement, the
Registration Rights Agreement or the Debentures or the Warrants.
(e) OPINION OF COUNSEL. At the Closing, the
Investors shall have received an opinion of counsel to the Company addressing
such matters as the Investors may reasonably request and such other opinions,
certificates and documents as the Investors or their counsel shall reasonably
require incident to the Closing.
(f) REGISTRATION RIGHTS AGREEMENT. The Company
and the Investors shall have executed and delivered the Registration Rights
Agreement in the form and substance of EXHIBIT 4.2(f) attached hereto.
(g) OFFICER'S CERTIFICATE. The Company shall have
delivered to the Investors a certificate in form and substance satisfactory
to the Investors and the Investors' Counsel, executed by an officer of the
Company, certifying as to satisfaction of
- 20 -
closing conditions, incumbency of signing officers, and the true, correct and
complete nature of the Charter, By-Laws, good standing of and authorizing
resolutions of the Company.
(h) DEBENTURES AND WARRANTS. The Investors shall
have received certificates representing the Debentures and the Warrants to be
purchased at Closing in the form and substance of EXHIBIT 1.1A and EXHIBIT
1.1B hereto.
(i) CONSENTS. The Company shall have received and
delivered to the Investors (i) except as set forth on Schedule 4.2(i), the
consent of all applicable lenders to the issuance of the Debentures, and (ii)
the waiver of any and all pending events of default (or pending events which
with the lapse of time or notice or both would constitute an event of
default) thereunder.
ARTICLE V.
ADDITIONAL PURCHASES
Section 5.1 ADDITIONAL PURCHASES OF DEBENTURES. At any time
prior to twelve (12) months after the Closing Date upon receipt of written
notice (the "Additional Tranche Notice Date"), the Investors shall have the
right, and the Company shall have the right to require the Investors, to
purchase up to $6,000,000 in additional aggregate principal amount of
Debentures in two separate tranches of $3,000,000 each (each an "Additional
Tranche"), and each Investor severally shall purchase from the Company, an
additional principal amount of Debentures, in proportion to such Investor's
then holdings in exchange for a cash payment equal to the principal amount of
the Debentures to be acquired; provided, however, that the second Additional
Tranche Notice Date may occur no earlier than 60 days after the first
Additional Tranche Notice Date. The purchase of the Debentures shall be made
on substantially the same terms and conditions as the purchase of the
Debentures at the initial Closing and in accordance with the terms and
conditions of this Article V.
Section 5.2 ADDITIONAL WARRANTS. If the Investors purchase or
are required to purchase Debentures pursuant to Section 5.1, then
concurrently with the closing of the purchase and sale of such Debentures,
the Company shall issue to the Investors, in proportion to the principal
amount of Debentures being purchased, additional Warrants (the "Additional
Warrants") to purchase that number of shares of Common Stock equal to the
quotient of $1,500,000 divided by the Closing Price (as defined in the form
of Debenture attached as EXHIBIT 1.1A) at such Additional Closing Date.
Additional Warrants shall have a term of five (5) years from the Additional
Closing Date (as defined below) and shall be substantially in the form
attached as EXHIBIT 1.1B, except that the exercise price for such Warrants
shall equal 150% of the Closing Price (as defined in the form of Debenture
attached as Exhibit 1.1A) at such Additional Closing Date.
Section 5.3 ADDITIONAL TRANCHE CLOSING DATES.
- 21 -
(a) The closing of the purchase and sale of the
Debentures and the Additional Warrants pursuant to this Article V shall take
place at the offices of Investors' Counsel at 10:00 a.m., local time (the
"Additional Closing") on the earlier of the following: (x) the date on which
the last of the conditions set forth in this Article V hereof and applicable
to such Additional Closing (other than those conditions that by their nature
can only be fulfilled at the Additional Closing, but subject to the
fulfillment of such conditions) shall be fulfilled or waived in accordance
herewith, or (y) such other time and place and/or on such other date as the
Investors and the Company may agree. The date and time at which the
Additional Closing occurs is referred to herein as the "Additional Closing
Date".
(b) On each Additional Closing Date, the Company
shall deliver to each Investor (x) a certificate or certificates (with the
number of and outstanding principal amount of such certificates requested by
such Investor) representing the Debentures purchased at the Additional
Closing by such Investor at the Additional Closing registered in the name of
the Investor or its nominee and (y) the Warrants registered in the name of
such Investor or its nominee in such denominations as reasonably requested by
such Investor, and such Investor shall deliver to the Company an amount in
cash equal to the principal amount of the Debentures purchased by such
Investor at the Additional Closing (the "Additional Purchase Price") by wire
transfer in immediately available funds to an account designated in writing
by the Company. The delivery of payment by such Investor of the Purchase
Price applicable to it as set forth in this paragraph shall constitute a
payment delivered to the Company in satisfaction of such Investor's
obligation to pay the Additional Purchase Price hereunder. In addition, each
of the Company and each Investor shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at
or prior to the applicable Additional Closing.
Section 5.4 CONDITIONS OF THE COMPANY TO EACH ADDITIONAL CLOSING.
The obligation of the Company to issue and/or sell the Debentures and
Additional Warrants to the Investors at each Additional Closing is subject to
the satisfaction, at the Additional Closing Date, of the conditions set forth
in Section 4.1 as of such Additional Closing Date as if made as of such
Additional Closing Date. The obligation of the Company to issue and sell
Debentures and Additional Warrants is subject to the additional condition
that there shall have been no conversion of the Common Stock into securities
of another entity, which securities are not then publicly traded.
Section 5.5 CONDITIONS OF EACH INVESTOR TO EACH ADDITIONAL
CLOSING. The obligations of each Investor with respect to each Additional
Closing to acquire and pay for the Debentures and Additional Warrants are
subject to the satisfaction, at the Additional Closing Date, of each of the
conditions set forth in Section 4.2 (other than Section 4.2(a)) as of such
Additional Closing Date as if made as of such Additional Closing Date and the
additional conditions set forth below. Except for the condition set forth in
Section 5.5(b), which may not be waived, the conditions set forth in Section
4.2 and below are for each Investor's benefit and may be waived by each
Investor at any time in its sole discretion.
- 22 -
(a) The representations and warranties of the
Company set forth in Section 2.1 shall be true and correct in all material
respects as of such Additional Closing Date as though made at that time,
except as disclosed in any documents filed by the Company with the Securities
and Exchange Commission or in an update to a Disclosure Schedule delivered by
the Company to the Investors prior to such Additional Closing Date or where
the matter not disclosed would not have a Material Adverse Effect.
(b) The daily dollar volume of the Company's
Common Stock, as reported on an Approved Market, for 25 of 30 Trading Days
prior to the Additional Tranche Notice Date is at least $1.0 million;
(c) The average of the closing bid prices for the
Company's Common Stock on the ten (10) consecutive Trading Days ending on the
Additional Tranche Notice Date and for ten (10) additional consecutive
Trading Days thereafter exceeds the Conversion Price as defined in the
Debentures;
(d) The Company shall have, and shall have
maintained for each of the preceding 30 Trading Days, an Effective
Registration;
(e) There are not, and have not been in any of
the preceding 30 Trading Days, any Interfering Events (as such term is
defined in the Registration Rights Agreement);
(f) No Event of Default (as defined in the
Debentures) shall have occurred and no event shall have occurred that,
following notice or the passage of time, would constitute an Event of
Default, and
(g) The Company is not then in material breach of
any of this Agreement, the Registration Rights Agreement, the Debentures or
the Warrants.
Section 5.6 ADDITIONAL PURCHASES. The Company and each Investor
mutually may agree upon the terms for sale and purchase of a fourth tranche
of additional debentures in an aggregate principal amount of $6 million.
ARTICLE VI.
LEGEND AND STOCK
The Company will issue one or more certificates representing the
Debentures, Warrants and Additional Warrants in the name of the applicable
Investor and in such denominations to be specified by such Investor prior to
(or from time to time subsequent to) the Closing or Additional Closing. Each
certificate representing such securities and any shares of Common Stock
issued upon conversion or exercise thereof initially shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
THEY MAY NOT
- 23 -
BE SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
The Company agrees to reissue the Debentures, Warrants and
Additional Warrants without the legend set forth above at such time as (i)
the holder thereof is permitted to dispose of such securities and Common
Stock issuable upon conversion or exercise thereof pursuant to Rule 144(k)
under the Act, or (ii) such securities are sold to a purchaser or purchasers
who (in the opinion of counsel to the seller or such purchaser(s), in form
and substance reasonably satisfactory to the Company and its counsel) are
able to dispose of such shares publicly without registration under the Act.
Prior to an applicable Registration Statement with respect to Common
Shares, Warrant Shares or Additional Warrant Shares (as defined in the
Registration Rights Agreement) being declared effective, such Common Shares,
Warrant Shares and Additional Warrant Shares shall bear a legend in the same
form as the legend indicated above. Upon such Registration Statement becoming
effective, the Company agrees to promptly, but no later than three (3)
business days thereafter, issue new certificates representing such Common
Shares, Warrant Shares and Additional Warrant Shares without such legend. Any
Common Shares, Warrant Shares or Additional Warrant Shares issued after such
Registration Statement has become effective shall be free and clear of any
legends, transfer restrictions and stop orders. Notwithstanding the removal
of such legend, each Investor agrees to sell the Common Shares, Warrant
Shares and Additional Warrant Shares represented by the new certificates in
accordance with the applicable prospectus delivery requirements (if copies of
a current prospectus are provided to such Investor by the Company) or in
accordance with an exception from the registration requirements of the Act.
Nothing herein shall limit the right of any holder to pledge these
securities pursuant to a bona fide margin account or lending arrangement.
ARTICLE VII.
TERMINATION
Section 7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing by the unanimous written consent
of the Company and each of the Investors.
Section 7.2 OTHER TERMINATION. This Agreement may be terminated
by the Company or by any of the Investors at any time if the Closing shall
not have been consummated by the tenth business day following the date of
this Agreement; provided, however, that the party (or parties) prepared to
close shall retain its (or their) right to ▇▇▇ for any breach by the other
party (or parties) occurring prior to such termination.
- 24 -
ARTICLE VIII.
MISCELLANEOUS
Section 8.1 STAMP TAXES. The Company shall pay all stamp and
other taxes and duties levied in connection with the issuance of the
Debentures and the Warrants, and the Common Shares and the Warrant Shares
issued.
Section 8.2 SPECIFIC PERFORMANCE; CONSENT TO JURISDICTION; JURY
TRIAL.
(a) The Company and the Investors acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity.
(b) The Company and each of the Investors (i)
hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court, the California State Courts and other courts of the United
States sitting in San Francisco County, California for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement and
(ii) hereby waives, and agrees not to assert in any such suit action or
proceeding, any claim that it is not personally subject to the jurisdiction
of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. To the extent permitted by applicable law, the Company and each of
the Investors consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
in this paragraph shall affect or limit any right to serve process in any
other manner permitted by applicable law.
(c) The Company and each of the Investors hereby
waive all rights to a trial by jury.
Section 8.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement,
together with the Registration Rights Agreement, the Warrants, the
Debentures, and the agreements and documents executed in connection herewith
and therewith, contains the entire understanding of the parties with respect
to the matters covered hereby and thereby and, except as specifically set
forth herein or therein, neither the Company nor any Investor makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than
by a written instrument signed by the party against whom enforcement of any
such amendment or waiver is sought.
Section 8.4 NOTICES. Any notice or other communication required
or permitted to be given hereunder shall be in writing by mail, facsimile or
personal delivery and shall
- 25 -
be effective upon actual receipt of such notice. The addresses for such
communications shall be:
to the Company:
Cygnus, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Cygnus, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
to the Investors:
To each Investor at the address and/or fax number
set forth on Schedule I of this Agreement.
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may from time to time change its address for notices by
giving at least 10 days' written notice of such changed address to the other
parties hereto.
Section 8.5 INDEMNITY. Each party shall indemnify each other
party against any loss, cost or damages (including reasonable attorney's
fees) incurred as a result of such parties' breach of any representation,
warranty, covenant or agreement in this Agreement.
Section 8.6 WAIVERS. No waiver by any party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
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 accruing to it thereafter.
- 26 -
Section 8.7 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.
Section 8.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may
not amend this Agreement without notice to or the consent of any third party.
The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of all Investors (which consent
may be withheld for any reason in their sole discretion), except that the
Company may assign this Agreement in connection with the sale of all or
substantially all of its assets provided that the Company is not released
from any of its obligations hereunder, such assignee assumes all obligations
of the Company hereunder, and appropriate adjustment of the provisions
contained in this Agreement, the Registration Rights Agreement, the
Debentures, and the Warrants is made, in form and substance satisfactory to
the Investors, to place the Investors in the same position as they would have
been but for such assignment, in accordance with the terms of the Debentures,
and the Warrants. Any Investor may assign this Agreement (in whole or in
part) or any rights or obligations hereunder without the consent of the
Company in connection with the sale or transfer of all or any portion of the
Debentures held by such Investor to an affiliate or client of the Palladin
Group, L.P. In the event that any Investor wishes to assign this Agreement in
connection with the sale or transfer of all or any portion of the Debentures
held by such Investor to any person or entity other than an affiliate or
client of the Palladin Group, L.P.: (i) such Investor shall first provide to
the Company a notice stating the price at which it is willing to sell such
Debenture and the other material terms of the proposed sale, (ii) the Company
shall have ten (10) business days to provide notice to such Investor if it
wishes to accept such offer, (iii) if the Company accepts such offer, the
Company shall purchase such Debentures on the terms proposed within thirty
(30) days after such acceptance and (iv) in the event the Company elects not
to purchase such Debenture, such Investor may offer such Debenture to any
third party on terms no more favorable to such third party than those offered
to the Company, PROVIDED, HOWEVER, that no Investor may sell such Debentures
if after giving effect to such sale all Debentures would be held by more than
seven (7) separate persons or entities other than affiliates or clients of
the Palladin Group, L.P. and that no Investor may sell such Debentures in
increments of less than $500,000.
Section 8.9 NO THIRD PARTY BENEFICIARIES. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 8.10 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New
York applicable to Agreements executed and to be performed entirely within
such State.
Section 8.11 SURVIVAL. The representations and warranties and the
agreements and covenants of the Company and each Investor contained herein
shall survive the Closing or any Additional Closing, as the case may be, so
long as any of the Debentures
- 27 -
and Warrants remain outstanding. If any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, provided that no such severability shall be effective
if it were to materially change the economic benefit of this Agreement to any
party.
Section 8.12 EXECUTION. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
Section 8.13 PUBLICITY. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of any
Investor without its consent, unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such
requirement. The Company agrees that it will deliver a copy of any public
announcement regarding the matters covered by this Agreement, or any
agreement and document executed herewith to each Investor and any public
announcement including the name of an Investor to such Investor, reasonably
in advance of the release of such announcements.
Section 8.14 SEVERABILITY. The parties acknowledge and agree that
the Investors are not agents, employees affiliates or partners of each other,
that all representations, warranties, covenants and agreements of the
Investors hereunder are several and not joint, that no Investor shall have
any responsibility or liability for the representations, warranties,
agreements, acts or omissions of any other Investor, and that any rights
granted to "Investors" hereunder shall be enforceable by each Investor
hereunder.
Section 8.15 LIKE TREATMENT OF HOLDERS; REDEMPTION. Neither the
Company nor any of its affiliates shall, directly or indirectly, pay or cause
to be paid any consideration (immediate or contingent), whether by way of
interest, fee, payment for the redemption or conversion of the Debentures or
exercise of the Warrants, or otherwise, to any holder of Debentures or the
Warrants for or as an inducement to, or in connection with the solicitation
of, any consent, waiver or amendment of any terms or provisions hereof or
thereof unless such consideration is required to be paid to all holders bound
by such consent, waiver or amendment whether or not such holders so consent,
waive or agree to amend and whether or not such holders tender their
Debentures or Warrants for redemption, conversion or exercise. The Company
shall not, directly or indirectly, force a conversion of any portion of the
Debentures unless such conversion is made applicable to all holders of
Debentures.
Section 8.16 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.
[SIGNATURE PAGE FOLLOWS]
- 28 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
CYGNUS, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Title: SR. VP, Finance, CFO
-----------------------
INVESTORS:
CONESCO DIRECT LIFE INSURANCE COMPANY
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THE GLENEAGLES FUND COMPANY
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LANCER SECURITIES (CAYMAN) LIMITED
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
- 29 -
PALLADIN PARTNERS I, L.P.
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PALLADIN OVERSEAS FUND LIMITED
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PGEP III, L.L.C.
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HALIFAX FUND, L.P.
BY: THE PALLADIN GROUP
ATTORNEY-IN-FACT AND INVESTMENT
ADVISOR
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
- 30 -
SCHEDULE I
1. Conseco Direct Life Insurance Company
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
2. The Gleneagles Fund Company
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
3. Lancer Securities (Cayman) Limited
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
4. Palladin Partners I, L.P.
c/o Palladin Administrative Services LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
5. Palladin Overseas Fund Limited
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
6. PGEP III, L.L.C.
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
- 31 -
7. Halifax Fund, L.P.
c/o The Palladin Group, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
- 32 -