SETTLEMENT AGREEMENT
This settlement agreement ("Agreement") is made as of this 14th day of
August, 2001, by and among (i) Log On America, Inc. ("LOA"), (ii) Credit Suisse
First Boston Corporation ("CSFBC") and (iii) ▇▇▇▇▇▇▇▇ Capital Management, Inc.
("MCM").
WHEREAS, LOA and MCM are parties to (A) a Securities Purchase Agreement,
dated as of February 23, 2000 (the "Series A Purchase Agreement"), pursuant to
which LOA issued and sold to MCM (i) shares of its Series A Convertible
Preferred Stock (the "Series A Stock") in accordance with the terms of a
Certificate of Designations, Preferences and Rights (the "Series A
Certificate"), and (ii) Warrant (the "Series A Warrant") entitling the holder
thereof to purchase shares of the Company's common stock (the "Common Stock")
and (B) a Registration Rights Agreement, dated as of February 23, 2000 (the
"Series A Registration Agreement")(the Series A Purchase Agreement, the Series A
Certificate, the certificate(s) representing shares of Series A Stock held by
MCM, the Series A Warrant, and the Series A Registration Rights Agreement are
collectively referred to herein as the "Series A Transaction Documents");
WHEREAS, LOA sued MCM and others in the action Log On America, Inc. v.
Promethean Asset Management, LLC, ▇▇ ▇▇▇. ▇▇▇▇ (▇▇▇)(▇▇▇ "Initial Action");
WHEREAS, LOA sued CSFBC in the action Log on America v. Credit Suisse
First Boston Corporation, 01 Civ. 0272 (RMB)(MHD) ("Second Action"); and
WHEREAS LOA, CSFBC, and MCM desire to resolve the disputes raised
respectively between LOA and MCM in the Initial Action and between LOA and CSFBC
in the Second Action and in all other respects resolve any and all disputes
between LOA and both CSFBC and MCM;
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt
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and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
1. At or about the time that this Agreement is executed and delivered by
the parties hereto, LOA will execute (a) a stipulation of dismissal with
prejudice of the entire Second Action in the form attached hereto as Exhibit A;
and (b) a notice of dismissal with prejudice of the Initial Action with regard
to MCM in the form attached hereto as Exhibit B, and will deliver such documents
into escrow with counsel for CSFBC and MCM, Solomon, Zauderer, Ellenhom,
▇▇▇▇▇▇▇▇ & Sharp ("Solomon, ▇▇▇▇▇▇▇▇"). Upon payment of the amount described in
paragraph 2 below, Solomon, ▇▇▇▇▇▇▇▇ may release such stipulation and notice to
CSFBC and MCM, and CSFBC and MCM thereafter may file such stipulation and notice
without any further notice to LOA.
2. CSFBC shall pay the amount of $3.25 million to LOA by wire transfer or
check within five (5) business days following the execution and delivery of this
Agreement by the parties.
3. Upon tender by CSFBC of the amount described in paragraph 2 above, and
the delivery by MCM of(i) certificate(s) representing 7,500 shares of Series A
Stock for cancellation and (ii) the Series A Warrant for cancellation, LOA shall
(i) issue and deliver to MCM 7,500 shares of a new series of preferred stock
(the "Series B Stock") pursuant to a Certificate of Designations, Preferences
and Rights in the form attached hereto as Exhibit C (the "Series B Certificate
of Designation"); (ii) execute and deliver to MCM a registration rights
agreement in the form attached hereto as Exhibit D (the "Series B Registration
Rights Agreement"), covering the registration of the resale by MCM of the Common
Stock issuable upon conversion of the Series B Stock; and (iii) execute and
deliver to MCM the exchange agreement in the form attached hereto as Exhibit E
(the "Exchange Agreement") pursuant to which MCM will exchange (a) 7,500 shares
of Series A Stock held by MCM and (b) the Series A Warrant for 7,500 shares of
Series B stock. Prior to the issuance of the Series B Stock to MCM, LOA will
file the Series B Certificate of Designation with the Secretary of State of the
State of Delaware
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and deliver a file-stamped copy thereof to MCM. The Series B Stock, the Exchange
Agreement, the Series B Certificate of Designation and the Series B Registration
Rights Agreement are collectively referred to herein as the "Series B
Transaction Documents".
4. Simultaneously with LOAs actions under paragraph 3 above, MCM shall (i)
execute the Series B Registration Rights Agreement and Exchange Agreement, and
(ii) deliver to LOA (a) the 7,500 shares of Series A Stock held by MCM and (b)
the Series A Warrant.
5. Upon the due issuance and delivery of 7,500 shares of Series B Stock,
and the execution and delivery of the Series B Registration Rights Agreement, to
MCM pursuant to paragraph 3 above, LOA and MCM's rights and obligations under
the Series A Transaction Documents and shares of Series A Stock and Series A
Warrant held by MCM, will be extinguished and of no further force or effect.
6. Effective upon (i) receipt by LOA of the payment described in paragraph
2 above, (ii) the ordering by the Court (as defined below) of the stipulation of
dismissal and Notice and Order of Dismissal described in paragraph 1; (iii) the
issuance and delivery of Series B Stock described in paragraph 3 to MCM; (iv)
the execution and delivery of the Series B Registration Rights Agreement and
Exchange Agreement by LOA and MCM; (v) delivery of certificates for 7,500 shares
of Series A Stock by MCM to LOA for cancellation; and (vi) delivery of the
Series A Warrant by MCM to LOA for cancellation (clauses (i) -- (vi) being
referred to as the "Release Conditions"), LOA, and its parents, subsidiaries,
affiliates, officers, directors, agents, employees, representatives, record and
beneficial security holders, successors and assigns, ("LOA Parties") hereby
fully release and forever discharge both CSFBC, and its parents, subsidiaries,
affiliates, officers, directors, agents, employees, representatives, record and
beneficial security holders, successors and assigns ("CSFBC Parties") and MCM,
and its parents, subsidiaries, affiliates, officers, directors, agents,
employees, representatives, record and beneficial security holders, successors
and assigns ("MCM Parties") of and from any and all claims, demands, duties,
obligations, liabilities, rights, damages (including exemplary
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or punitive damages) or causes of action, whether known or unknown, at law or in
equity, contingent or matured, in contract or in tort, that the LOA Parties have
ever had, or ever may have, in any way arising out of any event, circumstance,
act or omission from the beginning of the world to the date of this Agreement
including without limitation those arising from, relating to, or concerning (i)
all claims and causes of action asserted in the Complaint filed in both the
Initial Action and the Second Action or (ii) the Series A Transaction Documents
and the Series A Stock and Warrant ("Released Claims"); provided, however, that
such release shall not apply to any obligation that any MCM Party may have at
any time under the Series B Transaction Documents or shares of Series B stock or
herein.
7. Effective upon satisfaction of the Release Conditions, the CSFBC
Parties and the MCM Parties hereby fully release and forever discharge the LOA
Parties of and from any and all claims, demands, duties, obligations,
liabilities, rights, damages (including exemplary or punitive damages) or causes
of action, whether known or unknown, at law or in equity, contingent or matured,
in contract or in tort, that the CSFBC Parties or the MCM Parties have ever had,
or ever may have, in any way arising out of any event, circumstance, act or
omission from the beginning of the world to the date of this Agreement including
without limitation those arising from, relating to, or concerning (i) all claims
and causes of action asserted in the Complaint filed in both the Initial Action
and the Second Action or (ii) the Series A Transaction Documents and the Series
A Stock; provided, however, that such release shall not apply to any obligations
that any LOA Party may have at any time under the Series B Transaction Documents
or shares of Series B stock or herein.
8. Nothing contained herein shall be deemed in anyway to release any
claims asserted against Promethean Asset Management LLC, HFTP Investment LLC,
▇▇▇▇▇▇ Capital Ltd., ▇▇▇▇▇▇▇ Capital Ltd. and Citadel Limited Partnership
(collectively the "Preferred Investors") from any claims that LOA may have
against the Preferred Investors, including but not limited to the claims
asserted by LOA in the Initial Action and, the Preferred Investors shall not be
third-party beneficiaries under this agreement.
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9. The United States District Court for the Southern District of New York
(the "Court") shall retain jurisdiction to enforce the terms of this settlement.
This Agreement is to be governed by the laws of the State of New York without
giving effect to any provision thereof that would allow or require the
application of the laws of any other jurisdiction.
10. It is the intention of the parties to this Agreement to relieve the
CSFBC Parties and the MCM Parties, and each of them, from any claims for
contribution or indemnity to any other person or entity arising out of the
Released Claims. Therefore, the LOA Parties agree that they will reduce or
credit, against any judgment or settlement that they may obtain against any
person or entity, an amount equal to the full amount of any judgment that such
person may at any time obtain or have obtained against the CSFBC Parties and the
MCM Parties, or any of them, on any claim, for contribution or indemnification,
that relates to or arises out of any Released Claims. LOA shall take such action
as may be reasonably required to assure the effectuation of the reduction of
judgment as provided for herein.
11. Each party hereto, and each person signing this Agreement or any
Series B Transaction Document and any other documents related thereto on behalf
of such party, represents and warrants that it, he or she, as the case may be,
has full authority to do so. By signing this Agreement, each party represents
and warrants that no other person, partnership, creditor, or entity, affiliated
with or acting at the direction of, in concert with or on behalf of such party,
has or has had any interest in the claims, demands, obligations or causes of
action referred to in the Agreement and such party has the sole right and
exclusive authority to execute this Agreement and the Series B Transaction
Documents and has not transferred, conveyed or otherwise disposed of any of the
claims, demands, obligations, or causes of action referred to herein.
12. This Agreement and the Series B Transaction Documents represent the
entire agreement between the parties concerning the subject matter hereof and
supersedes
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all prior agreements and understandings (whether written or oral) between the
parties on any and all such issues. This Agreement is intended to be a binding
agreement between the parties and shall not be changed, modified, amended,
extended, terminated, waived or discharged except by an agreement in writing
signed by all parties hereto. This Agreement may be signed in counterparts.
13. Each of the parties has participated in the drafting of this Agreement
after consulting with counsel. Accordingly, no party shall maintain that the
language of this Agreement should be construed in any way by reason of the other
party's putative role as the drafter of the agreement.
14. Except as expressly set forth herein, neither party has relied on any
representations made by the other party in reaching this Agreement.
15. This Agreement shall be binding on, and shall inure to the benefit of,
the parties and their respective legal representatives, successor and assigns.
16. The parties hereto agree to sign such other and further documents as
may be necessary to give effect to this Agreement.
17. All actions provided for herein shall be deemed to have been effected
simultaneously.
18. Nothing contained herein constitutes an admission of liability by any
party, and each party expressly denies any such liability.
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19. The parties agree to cause any and all direct or indirect parents,
divisions, subsidiaries, affiliates, employees, agents, representatives, and
attorneys to abide by the terms of this Agreement.
Dated: August 14, 2001
▇▇▇▇▇▇ & SHORE, LLP SOLOMON, ZAUDERER, ELLENIIORN
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ By:
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Fax) (▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
Attorneys for Attorneys for Credit Suisse First Boston
Log On America, Inc. Corporation and ▇▇▇▇▇▇▇▇ Capital
Management, Inc.
Exhibit C
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES B CONVERTIBLE PREFERRED STOCK
OF
LOG ON AMERICA, INC.
Log On America, Inc. (the "Company"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify,
that, pursuant to authority conferred upon the Board of Directors of the Company
by the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Company at a meeting duly held, adopted resolutions (i)
authorizing a series of the Company's previously authorized preferred stock, par
value $0.01 per share, and (ii) providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of Seven Thousand Five Hundred (7,500)
shares of Series B Convertible Preferred Stock of the Company, as follows:
RESOLVED, that the Company is authorized to issue 7,500 shares of Series B
Convertible Preferred Stock (the "Series B Shares"), par value $0.01 per share,
which shall have the following powers, designations, preferences and other
special rights:
(1) Dividends. The Series B Shares shall not bear any dividends.
(2) Distribution of Assets Upon Liquidation.
(a) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, commenced by the Company or by its
creditors, as such, or relating to its assets or (y) the dissolution or other
winding up of the Company whether total or partial, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy proceedings,
or (z) any assignment for the benefit of creditors or any marshaling of the
material assets or material liabilities of the Company (each, a "Liquidation
Event"), no distribution shall be made to the holders of any shares of Junior
Securities unless, following the payment of preferential amounts on all Senior
Securities, each holder of a Series B Share shall have received the Stated Value
with respect to each Series B Share then held by such holder. In the event that
upon the occurrence of a Liquidation Event, and following the payment of
preferential amounts on all Senior Securities, the assets available for
distribution to the holders of the Series B Shares and the holders of Pari Passu
Securities are insufficient to pay the aggregate Stated Value payable with
respect to the Preferred Shares and the aggregate preferential amount payable
with respect to such Pari Passu Securities, the remaining assets of the Company
shall be distributed ratably among the Series B Shares and the shares of Pari
Passu Securities in proportion to the ratio that the preferential amount payable
on each such share (which shall be the Stated Value
in the case of a Series B Share) bears to the aggregate preferential amount
payable on all such shares.
(b) After the payment of any preferential amounts on all Senior
Securities and payment of the full Stated Value with respect to each Series B
Share and the preferential amounts payable on any Pari Passu Securities, the
remaining assets of the Company legally available for distribution, if any,
shall be distributed ratably to the holders of the Junior Securities of the
Company.
(c) For purposes hereof, the following terms shall have the meanings
indicated:
(i) "Junior Securities" means the Common Stock and all
securities of the Company or any of it s subsidiaries that are not Pari Passu
Securities or Senior Securities as defined below.
(ii) "Pari Passu Securities" means those securities of the
Company or any of its subsidiaries outstanding on the Closing Date that by their
terms are pari passu with the Series B Shares; and
(iii) "Senior Securities" means any indebtedness incurred by
the Company and the Company's Series A Convertible Preferred Stock, par value
$0.01 per share.
(3) Voting Rights. The holders of record of Series B Shares shall not be
entitled to any voting rights except as required by law.
(4) Conversion of Preferred Shares. The Series B Shares shall be
convertible on the terms and conditions set forth in this Section 4.
(a) Certain Defined Terms. For purposes of this Certificate of
Designations, the following terms shall have the following meanings:
(i) "Issuance Date" means, with respect to each Series B
Share, the date of issuance of the applicable Series B Share pursuant to the
Exchange Agreement.
(ii) "Exchange Agreement" means that certain exchange
agreement between the Company and ▇▇▇▇▇▇▇▇ Capital Management, Inc., pursuant to
the terms of which the Series B Shares are originally issued.
(iii) "Stated Value" means $1,000.
(iv) "Business Day" means any day other than Saturday, Sunday
or other day on which commercial banks in the city of New York are authorized or
required by law to remain closed.
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(b) Holder's Conversion Rights. Each Series B Share shall be
convertible, at the option of the holder thereof, at any time and from time to
time, and without the payment of additional consideration by the holder thereof,
into such number of shares of Common Stock equal to the Stated Value divided by
the Conversion Price (as defined below) in effect at the time of conversion.
Such Conversion Price shall be subject to adjustment as provided below.
(c) Holder's Delivery Requirements. Before any holder of Series B
Shares shall be entitled to convert such shares into share of Common Stock
pursuant to this Section 4, the holder of such Series B Shares shall surrender
the certificate or certificates representing such Series B Shares, duly
endorsed, at the principal executive office of the Company or of any transfer
agent for the Series B Shares, and shall give written notice to the Company at
its principal executive office of the election to convert such shares of Series
B Shares and the names or names in which the certificate or certificates for
shares of Common Stock are to be issued. The Company shall, on or before the
third Business Day following delivery of such notice and the certificate or
certificates representing such Series B Shares, issue and deliver to such holder
of Series B Shares, or to the nominee or nominees thereof, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled. Conversion under this Section 4 shall be deemed to have been made
and the person or persons entitled to receive shares of Common Stock issuable
upon the conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock immediately prior to the close of
business on the date of such surrender of the Series B Shares to be converted.
In the event the number of Series B Shares represented by the certificate or
certificates surrendered pursuant to this Section 4(c) exceeds the number of
shares converted, the Company shall, upon such conversion, execute and deliver
to the holder a new certificate or certificates for the number of Series B
Shares represented by the certificate or certificates surrendered which are not
converted.
(d) No Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Series B Shares; instead, the Company shall round
such fraction of a share of Common Stock up or down to the nearest whole number.
(e) Conversion Price. Each Series B Share shall be convertible in
accordance with Section 4(b) above, into the number of shares of Common Stock as
is determined by dividing the Stated Value by the Conversion Price (as described
below). The "Conversion Price" shall be $4.50, subject to Section 4(f) below.
(f) Adjustments for Stock Dividends, Subdivisions, Combinations or
Consolidation of Common Stock. In the event the outstanding shares of Common
Stock shall be subdivided (by stock dividend, stock split or otherwise) into a
greater number of shares of Common Stock, the Conversion Price then in effect
shall, concurrently with the effectiveness of such subdivision, be
proportionately decreased. In the event the outstanding shares of Common Stock
shall be combined or consolidated (by reclassification or otherwise) into a
lesser number of shares of Common Stock, the Conversion Price then in effect
shall, concurrently with the effectiveness of such combination, or
consolidation, be proportionately increased.
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(g) In the event any Series B Shares shall be converted pursuant to
this Section 4 or otherwise reacquired by the Company, the shares so converted
or reacquired shall be canceled, may not be reissued as Series B Shares and
shall revert back to authorized but undesignated shares of Preferred Stock.
(5) Reservation of Shares. The Company shall, so long as any of Series B
Shares are outstanding, reserve and keep available out of its authorized but
unissued shares of Common Stock, for the purpose of effecting the conversion of
Series B Shares, such number of its authorized shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series B Shares.
(6) Vote to Change Terms of Preferred Shares. The affirmative vote of the
holders of at least two-thirds (2/3) of the Series B Shares then outstanding
shall be required in order to amend, alter, change or repeal any of the
provisions of this Certificate of Designation.
(7) Lost or Stolen Certificates. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing the Series B Shares, and, in the case
of loss, theft or destruction, of any indemnification undertaking by the holder
to the Company in customary form and, in the case of mutilation, upon surrender
and cancellation of the certificate, the Company shall execute and deliver a new
preferred stock certificate of like tenor and date; provided, however, the
Company shall not be obligated to re-issue preferred stock certificates if the
holder contemporaneously requests the Company to convert such Series B Shares
into Common Stock.
(8) Specific Shall Not Limit General: Construction. No specific provision
contained in this Certificate of Designations shall limit or modify any more
general provision contained herein. This Certificate of Designations shall be
deemed to be jointly drafted by the Company and all the initial holders of the
Series B Shares and shall not be construed against any person as the drafter
hereof.
(9) Notice. Whenever notice is required to be given pursuant to this
Certificate of Designations, unless otherwise provided herein, such notice shall
be given in accordance with Section 7(f) of the Exchange Agreement.
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IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed by ▇▇▇▇▇ Paolo, its President, as of the ___ day of
August 2001.
LOG ON AMERICA, INC.
By: _______________________
Name: ▇▇▇▇▇ Paolo
President
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Exhibit D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August __,
2001, by and between LOG ON AMERICA, INC., a Delaware corporation, with
headquarters located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and ▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT, INC., a Delaware corporation, with
offices at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
WHEREAS:
A. In connection with the Settlement Agreement by and among the Company,
▇▇▇▇▇▇▇▇ and Credit Suisse First Boston Corporation dated as of August 14, 2001
(the "Settlement Agreement") and the Exchange Agreement by and among the parties
hereto of even date herewith (the "Exchange Agreement"), the Company has agreed,
upon the terms and subject to the conditions of the Exchange Agreement, to issue
to ▇▇▇▇▇▇▇▇ 7,500 shares of the Company's Series B Convertible Preferred Stock,
par value $0.01 per share (the "Preferred Shares"), which will be convertible
into shares (as converted, the "Conversion Shares") of the Company's common
stock, par value $0.01 per share (the "Common Stock"), in accordance with the
terms of the Company's Certificate of Designations, Preferences and Rights of
the Series B Convertible Preferred Stock (the "Certificate of Designations").
B. To induce ▇▇▇▇▇▇▇▇ to execute and deliver the Settlement Agreement and
the Exchange Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws.
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 Company and ▇▇▇▇▇▇▇▇ hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
a. "Investor" means ▇▇▇▇▇▇▇▇ and any transferee or assignee thereof
to whom ▇▇▇▇▇▇▇▇ assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 9.
b. "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
c. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
d. "Registrable Securities" means (i) the Conversion Shares issued
or issuable upon conversion of the Preferred Shares, and (ii) any shares of
capital stock issued or issuable with respect to the Conversion Shares or the
Preferred Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise.
e. "Registration Statement" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
Registrable Securities.
2. REGISTRATION.
a. Registration. The Company shall prepare, and, as soon as
practicable but in no event later than 60 days following the Closing Date, as
such term is defined in the Exchange Agreement (the "Filing Deadline"), file
with the SEC a Registration Statement or Registration Statements (as necessary)
on Form S-3 covering the resale of all of the Registrable Securities. In the
event that Form S-3 is unavailable for such a registration, the Company shall
use such other form as is available for such a registration. The Company shall
use its best efforts to cause the Registration Statement to be declared
effective by the SEC as soon as practicable.
b. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Person's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement.
c. Sufficient Number of Shares Registered. In the event the number
of shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities which such
Registration Statement is required to cover or an Investor's allocated portion
of the Registrable Securities pursuant to Section 2(b), the Company shall amend
the Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover at least 100%
of such Registrable Securities, in each case, as soon as practicable. The
Company shall use it best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof.
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3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Sections 2(a) or 2(c), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:
a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the applicable Registrable Securities (as
soon as practicable but in no event later than the applicable Filing Deadline)
and use its best efforts to cause such Registration Statement relating to the
Registrable Securities to become effective as soon as practicable after such
filing. The Company shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earlier of (i) the date as of which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144, Rule 145 or any
other available exemption, each promulgated under the 1933 Act (or successor
thereto) or any other available exemption or (ii) the date on which the
Investors shall have sold all the Registrable Securities covered by such
Registration Statement (the "Registration Period"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein), to the knowledge of the Company, shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Company shall have incorporated such report by reference into
the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement the
Registration Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of any
such Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may
3
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.
d. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by a Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as any Investor reasonably requests and as required, (ii) prepare and
file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (w) make any change to its certificate of incorporation or by-laws,
(x) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify each
Investor who holds Registrable Securities of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
e. As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Investor in writing of the happening
of any event as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Investor (or
such other number of copies as such Investor may reasonably request). The
Company shall also promptly notify each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective, (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
f. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction within the United States of
America and, if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
4
g. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement, or (v) consented to by such Investor. The Company agrees that it
shall, upon learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
h. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.
i. The Company shall otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC in connection with any
registration hereunder.
j. Within two (2) business days after a Registration Statement which
covers applicable Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.
k. Notwithstanding anything to the contrary in Section 3(e), at any
time after the applicable Registration Statement has been declared effective by
the SEC, the Company may delay the disclosure of material non-public information
concerning the Company, the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a "Grace Period"); provided, however, that no Grace Period
shall exceed 15 consecutive days and during any 365 day period such Grace
Periods shall not exceed an aggregate of 30 days.
4. OBLIGATIONS OF THE INVESTORS.
a. At least seven (7) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor in
writing of the information the Company reasonably requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to
5
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(f) or the
first sentence of 3(e). Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which an Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(f) or the first sentence of 3(e) and for which
the Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts,
commissions and transfer taxes incurred in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees shall be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a
Registration Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or 1934 Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
6
based upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering under the
securities or other "blue sky" laws of any jurisdiction in which Registrable
Securities are offered ("Blue Sky Filing"), or the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). The Company shall reimburse the Investors and each such
underwriter or controlling person, promptly as such expenses are incurred and
are due and payable, for any legal fees or disbursements or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply to
a Claim by an Indemnified Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c); and (iii) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent will not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Investor within the meaning of the 1933 Act or the 1934 Act (each
an "Indemnified Party"), against any Claim or Indemnified Damages to which any
of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(d), such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent will not be unreasonably
7
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the prospectus was corrected and such new prospectus
was delivered to each Investor prior to such Investor's use of the prospectus to
which the Claim relates.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
8
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144; and
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act
9
and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investors who hold at least a majority of the Registrable Securities
(assuming full conversion of the Preferred Shares). Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
b. Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be to the address es and facsimile numbers set forth in the
Securities Purchase Agreement. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. 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,
shall not operate as a waiver thereof.
d. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and the Investors as its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each
10
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. In the event that there
should be federal jurisdiction, the parties agree that they shall refer the
matter to the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ of the Southern District of New York
as a "relater matter." Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. This Agreement, the Settlement Agreement, the Exchange Agreement
and the Certificate of Designations constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement, the Settlement
Agreement, the Exchange Agreement and the Certificate of Designations supersede
all prior agreements and understandings among the parties hereto with respect to
the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding
11
a majority of the Registrable Securities, determined as if all of the Preferred
Shares then outstanding have been converted into or exercised for Registrable
Securities.
k. This Agreement shall be deemed to be jointly drafted by the
Company and ▇▇▇▇▇▇▇▇ and shall not be construed against any person as the
drafter hereof.
l. 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.
[signature page follows]
12
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: ▇▇▇▇▇▇▇▇:
-------- ---------
LOG ON AMERICA, INC. ▇▇▇▇▇▇▇▇ CAPITAL
MANAGEMENT, INC.
By: ___________________ By: ___________________
Name: ▇▇▇▇▇ Paolo Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President Title: President
13
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn: ___________________________________________
Re: Log On America, Inc.
Ladies and Gentlemen:
We are counsel to Log On America, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Exchange Agreement (the "Exchange Agreement") entered into by and between the
Company and ▇▇▇▇▇▇▇▇ Capital Management, Inc. (the "Holder") pursuant to which
the Company issued to the Holder shares of its Series B Convertible Preferred
Stock, par value $0.01 per share (the "Preferred Shares"), convertible into
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"). Pursuant to the Exchange Agreement, the Company also has entered into a
Registration Rights Agreement with the Holder (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon conversion of the
Preferred Shares, under the Securities Act of 1933, as amended (the "1933 Act").
In connection with the Company's obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement on
Form S-3 (File No. 333-_____________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities which names the Holder as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
By: ____________________
cc: ▇▇▇▇▇▇▇▇ Capital Management, Inc.
Exhibit E
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of August __, 2001, by and
between Log On America, Inc., a Delaware corporation, with headquarters at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇▇▇
Capital Management, Inc., a Delaware corporation, with offices at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇").
WHEREAS:
A. The Company and ▇▇▇▇▇▇▇▇ are executing, delivering and performing this
Agreement in reliance upon the exemption from securities registration afforded
by Section 3(a)(9) of the Securities Act of 1933, as amended (the "1933 Act");
B. The Company has authorized the following new series of its preferred
stock, par value $0.01 per share: the Company's Series B Convertible Preferred
Stock (the "Preferred Stock"), which shall be convertible into shares of the
Company's common stock, par value $0.01 per share (the "Common Stock") (as
converted, the "Conversion Shares"), in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Preferred
Stock, substantially in the form attached hereto as Exhibit A (the "Certificate
of Designations");
C. The Company and ▇▇▇▇▇▇▇▇ are parties to that certain Settlement
Agreement, dated August 14, 2001 (the "Settlement Agreement"), pursuant to the
terms of which, inter alia, (a) the Company is required to issue to ▇▇▇▇▇▇▇▇
7,500 shares of the Preferred Stock (the "Preferred Shares"), in exchange for
(b) 7,500 shares of the Company's Series A Convertible Preferred Stock (the
"Series A Stock") held by ▇▇▇▇▇▇▇▇ and the warrant to acquire 297,102 shares of
Common Stock (the "Warrant") held by ▇▇▇▇▇▇▇▇, which, upon such exchange, will
be cancelled; and
D. Pursuant to the terms of the Settlement Agreement, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement substantially in the
form attached hereto as Exhibit B (the "Registration Rights Agreement") pursuant
to which the Company has agreed to provide certain registration rights under the
1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities law.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and ▇▇▇▇▇▇▇▇ agree as
follows:
1. EXCHANGE OF PREFERRED SHARES.
a. Issuance of Preferred Shares. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below, the Company shall
issue and deliver to ▇▇▇▇▇▇▇▇ in exchange for 7,500 shares of the Series A Stock
and the Warrant, and ▇▇▇▇▇▇▇▇ shall accept from the Company 7,500 Preferred
Shares at the closing (the "Closing").
b. Closing Date. The date and time of the closing of the
transactions contemplated hereby (the "Closing Date") shall be at 10:00 a.m.,
Eastern Time, on or before August 21, 2001, subject to the satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 below (or such other
date as is mutually agreed to by the Company and ▇▇▇▇▇▇▇▇). The Closing shall
occur on the Closing Date at the offices to be mutually agreed upon by the
parties.
2. ▇▇▇▇▇▇▇▇'▇ REPRESENTATIONS AND WARRANTIES.
▇▇▇▇▇▇▇▇ represents and warrants that:
a. Investment Purpose. ▇▇▇▇▇▇▇▇ (i) is acquiring the Preferred
Shares and (ii) upon conversion of the Preferred Shares, will acquire the
Conversion Shares issuable upon conversion thereof (the Preferred Shares and the
Conversion Shares collectively are referred to herein as the "Securities"), for
its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however, subject to
Section 4(d) below, that by making the representations herein ▇▇▇▇▇▇▇▇ does not
agree to hold the Securities for any minimum or specific term.
b. Accredited Investor Status. ▇▇▇▇▇▇▇▇ is an "accredited investor"
as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. ▇▇▇▇▇▇▇▇ understands that the Securities
are being issued to it in reliance on specific exemptions from the registration
requirements of the United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and ▇▇▇▇▇▇▇▇'▇
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of ▇▇▇▇▇▇▇▇ set forth herein in order to determine the
availability of such exemptions and the eligibility of ▇▇▇▇▇▇▇▇ to acquire the
Securities.
d. Information. ▇▇▇▇▇▇▇▇ and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. ▇▇▇▇▇▇▇▇
understands that its investment in the Securities involves a high degree of
risk. ▇▇▇▇▇▇▇▇ has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.
2
e. No Governmental Review. ▇▇▇▇▇▇▇▇ understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. ▇▇▇▇▇▇▇▇ understands that except as provided
in the Registration Rights Agreement: (i) the Securities have not been and are
not being registered under the 1933 Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder or (B) ▇▇▇▇▇▇▇▇ shall have delivered to the Company an
opinion of counsel, in a form acceptable to the Company's counsel, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration; or (C) ▇▇▇▇▇▇▇▇
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act, as
amended, (or a successor rule thereto) ("Rule 144"); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the ▇▇▇▇ ▇▇▇) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the Securities Exchange Commission (the
"SEC") thereunder; and (iii) neither the Company nor any other person is under
any obligation to register the Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder. Notwithstanding the foregoing, the Securities may be pledged in
connection with a bona fide margin account or other loan secured by the
securities.
g. Legends. ▇▇▇▇▇▇▇▇ understands that the certificates or other
instruments representing the Preferred Shares and until such time as the sale of
the Conversion Shares have been registered under the 1933 Act as contemplated by
the Registration Rights Agreement, the stock certificates representing the
Conversion Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF
COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY'S COUNSEL, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II)
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING,
3
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of counsel,
in a form acceptable to the Company's counsel, to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the 1933 Act, or (iii) such holder provides the Company with reasonable
assurances that the Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold. ▇▇▇▇▇▇▇▇ acknowledges, covenants and agrees to
sell Securities represented by a certificate(s) from which the legend has been
removed only pursuant to (i) a registration statement effective under the 1933
Act or (ii) advice of counsel to ▇▇▇▇▇▇▇▇ that such sale is exempt from the
registration requirements of Section 5 of the 1933 Act.
h. Authorization; Enforcement; Validity. This Agreement, the
Settlement Agreement and the Registration Rights Agreement have been duly and
validly authorized, executed and delivered on behalf of ▇▇▇▇▇▇▇▇ and are valid
and binding agreements of ▇▇▇▇▇▇▇▇ enforceable against ▇▇▇▇▇▇▇▇ in accordance
with their terms, subject as to enforceability to general principles of equity
and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
i. Series A Stock; Warrant. ▇▇▇▇▇▇▇▇ owns in the aggregate,
beneficially and of record, 7,500 shares of Series A Stock and the Warrant, free
and clear of all liens, claims and rights, and has not sold, assigned,
transferred, pledged or hypothecated any such shares of Series A Stock, the
Warrant or any of its rights thereunder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to ▇▇▇▇▇▇▇▇ that:
a. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or the assets
and properties owned or leased by it require such qualification, except to the
extent that the failure to qualify would not reasonably be expected to result in
a material adverse effect on the financial condition, operations, assets,
business, prospects or properties of the Company, taken as a whole.
b. Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into this Agreement, the
Settlement Agreement, the Registration Rights
4
Agreement and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "Transaction Documents"), and to issue the Securities in accordance with the
terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents and the execution and filing of the Certificate of Designations by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the issuance of the Preferred Shares and
the reservation for issuance and the issuance of the Conversion Shares issuable
upon conversion thereof, have been duly authorized and unanimously approved by
the Company's Board of Directors, (iii) this Agreement, the Settlement Agreement
and the Registration Rights Agreement have been duly executed and delivered by
the Company, (iv) the Transaction Documents, upon execution and delivery
thereof, will constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies, and (v) prior to the Closing Date, the Certificate of Designations
will have been filed with the Secretary of State of the State of Delaware and
will be in full force and effect, enforceable against the Company in accordance
with its terms and shall not have been amended unless in compliance with its
terms.
c. Issuance of Securities. The Preferred Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be (i) validly
issued, fully paid and non-assessable, (ii) free from all taxes, liens and
charges with respect to the issue thereof and (iii) entitled to the rights and
preferences set forth in the Certificate of Designations. 1,666,667 shares of
Common Stock (subject to adjustment pursuant to the Company's covenant set forth
in Section 4(b) below) have been duly authorized and reserved for issuance upon
conversion of the Preferred Shares. Upon conversion in accordance with the
Certificate of Designations, the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, with the holders being entitled to all rights accorded to
a holder of Common Stock. The issuance by the Company of the Securities is
exempt from registration under the 1933 Act, assuming that the representations
and warranties of ▇▇▇▇▇▇▇▇ contained in Section 2 are true and correct as to
factual matters.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 5
and 6 of this Agreement.
b. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Preferred Shares (without regard to any limitations on conversions).
c. Restriction on Short Sales. ▇▇▇▇▇▇▇▇ agrees that during the
period beginning on the Closing Date and ending on but excluding the earlier of
the first date on which ▇▇▇▇▇▇▇▇ no
5
longer holds any Preferred Shares, neither ▇▇▇▇▇▇▇▇ nor any of its affiliates
acting under ▇▇▇▇▇▇▇▇'▇ direction or control shall engage in any transaction
constituting a "short sale" (as defined in Rule 3b-3 of the Securities Exchange
Act of 1934, as amended) of the Common Stock.
d. Volume Limitations. ▇▇▇▇▇▇▇▇ agrees that during the period
beginning on the Closing Date and ending on the first anniversary date of the
Closing Date, neither ▇▇▇▇▇▇▇▇ nor any of its affiliates acting under ▇▇▇▇▇▇▇▇'▇
direction or control shall sell more than 140,000 shares of Common Stock during
any thirty day period. In the event the outstanding shares of Common Stock shall
be subdivided (by stock dividend, stock split or otherwise) into a greater
number of shares of Common Stock or shall be combined or consolidated (by
reclassification or otherwise) into a lesser number of shares of Common Stock,
the number of shares of Common Stock allowed to be sold by ▇▇▇▇▇▇▇▇ and its
affiliates pursuant to this Section 4(d) shall be proportionately increased or
decreased, as the case may be.
e. The parties acknowledge and agree that for purposes of Rule 144,
the holding period for the Preferred Shares and, upon conversion of the
Preferred Shares, the Conversion Shares shall be deemed to have commenced on the
date on which the shares of Series A Stock were issued to ▇▇▇▇▇▇▇▇.
▇. ▇▇▇▇▇▇▇▇'▇ Deliveries at Closing. Subject to the satisfaction of
the conditions set forth in Section 6, ▇▇▇▇▇▇▇▇ will on or before the Closing
(i) surrender (A) the certificate or certificates representing the 7,500 shares
of the Series A Stock, and (B) the Warrant, each to the Company for
cancellation; and (ii) execute and deliver the Settlement Agreement.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO EXCHANGE.
The obligation of the Company to issue the Preferred Shares to
▇▇▇▇▇▇▇▇ at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing ▇▇▇▇▇▇▇▇ with prior written notice thereof:
(a) ▇▇▇▇▇▇▇▇ shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the Company.
(b) ▇▇▇▇▇▇▇▇ shall have delivered to the Company (A) the certificate
or certificates representing 7,500 shares of Series A Stock and (B) the Warrant
for cancellation.
(c) The representations and warranties of ▇▇▇▇▇▇▇▇ shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date), and ▇▇▇▇▇▇▇▇ shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by ▇▇▇▇▇▇▇▇ at
or prior to the Closing Date.
6
(e) Credit Suisse First Boston shall have delivered to the Company
the sum of $3,250,000 via wire transfer to such account as designated by the
Company.
6. CONDITIONS TO ▇▇▇▇▇▇▇▇'▇ OBLIGATION TO EXCHANGE.
The obligation of ▇▇▇▇▇▇▇▇ to exchange the shares of Series A
Preferred Stock and the Warrant for the Preferred Shares at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for ▇▇▇▇▇▇▇▇'▇ sole
benefit and may be waived by ▇▇▇▇▇▇▇▇ at any time in its sole discretion by
providing the Company with prior written notice thereof:
(a) The Company shall have executed each of the Transaction
Documents and delivered the same to ▇▇▇▇▇▇▇▇.
(b) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware, and a copy thereof certified by
such Secretary of State shall have been delivered to ▇▇▇▇▇▇▇▇.
(c) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
(d) The Company shall have executed and delivered to ▇▇▇▇▇▇▇▇ the
stock certificate for the Preferred Shares (in such denominations as such Buyer
shall request) being acquired by ▇▇▇▇▇▇▇▇ at the Closing.
(e) The Board of Directors of the Company shall have adopted the
resolutions consistent with Section 3(b)(ii) above and the Company shall have
provided ▇▇▇▇▇▇▇▇ with reasonable evidence thereof.
(f) As of the Closing Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Preferred Shares, 1,666,667 shares of Common Stock.
7. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. The corporate laws of the State of
Delaware shall govern all issues concerning the relative rights of the Company
and its stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice
7
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, borough of Manhattan (including the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ of the Southern District of New York), for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement, together with the
Settlement Agreement and the Registration Rights Agreement, supersedes all other
prior oral or written agreements between ▇▇▇▇▇▇▇▇, the Company, their affiliates
and persons acting on their behalf with respect to the matters discussed herein,
and this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought.
f. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by
8
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Log On America, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Paolo
With a copy to:
Silverman, Chernis, Shin & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Ganfer & Shore, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to ▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇ Capital Management, Inc.
c/o Credit Suisse First Boston
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
9
Solomon, Zauderer, Ellenhorn, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares.
h. No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. No Strict Construction. This Agreement shall be deemed to be
jointly drafted by the Company and ▇▇▇▇▇▇▇▇ and shall not be construed against
any person as the drafter hereof.
[signature page follows]
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: ▇▇▇▇▇▇▇▇:
-------- ---------
LOG ON AMERICA, INC. ▇▇▇▇▇▇▇▇ CAPITAL
MANAGEMENT, INC.
By: ____________________ By: ____________________
Name: ▇▇▇▇▇ Paolo Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President Title: President
11