Attached files
| file | filename |
|---|---|
| 8-K - ENER1 INC | v195981_8k.htm |
| EX-1.3 - ENER1 INC | v195981_ex1-3.htm |
| EX-1.2 - ENER1 INC | v195981_ex1-2.htm |
| EX-1.4 - ENER1 INC | v195981_ex1-4.htm |
| EX-99.1 - ENER1 INC | v195981_ex99-1.htm |
SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT, dated as of September 2, 2010 (this “Agreement”),
is by and between Ener1, Inc., a Florida corporation (the “Company”),
and each of the purchasers whose names are set forth on Exhibit A
attached hereto (each, a “Purchaser”
and, collectively, the “Purchasers”).
In
consideration of the mutual covenants made herein, the parties hereto agree as
follows:
ARTICLE
1
PURCHASE
AND SALE OF SECURITIES
1.1 Purchase and Sale of
Securities.
(a) On
the terms and subject to the conditions contained in this Agreement, the Company
agrees to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly with the other Purchasers, agrees to purchase from the Company, (i)
a senior unsecured note in the principal amount set forth opposite such
Purchaser’s name on Exhibit A,
in substantially the form attached hereto as Exhibit B
(each, a “Note” and,
collectively with the other notes issued hereunder, the “Notes”),
(ii) a five-year warrant substantially in the form attached hereto as Exhibit C
exercisable into the number of shares (the “Warrant
Shares”) of common stock, par value $0.01 per share, of the Company (the
“Common
Stock”) set forth opposite such Purchaser’s name on Exhibit A
at an exercise price of $3.82 per Warrant Share (subject to adjustment as
provided therein) (each, a “Warrant”
and, collectively with the other warrants issued hereunder, the “Warrants”)
and (iii) a number of shares of Common Stock equal to (A) five percent (5%) of
the principal amount of the Note purchased by such Purchaser divided by (B) the
Per Share Price (the “Shares”
and together with the Notes and the Warrants, the “Securities”). The
purchase price to be paid by a Purchaser for the Securities (the “Purchase
Price”) shall be equal to the principal amount of the Note being
purchased by such Purchaser.
(b) The
Purchasers and the Company agree that the Notes, the Warrants and the Shares
constitute an “investment unit” for purposes of Section 1273(c)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”). The
Purchasers and the Company agree that the allocation of the issue price of such
investment unit between the Notes and the Warrants in accordance with Section
1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an
aggregate amount of $6,270,000 allocated to the Warrants, $3,025,000 allocated
to the Shares and the balance of the Purchase Price allocated to the Notes, and
neither the Purchasers nor the Company shall take any position inconsistent with
such allocation in any tax return or in any judicial or administrative
proceeding in respect of taxes.
(c) For
purposes of this Agreement, “Per Share
Price” means 91.75% of the arithmetic average of the lowest nine (9)
Daily VWAPs (as defined in the Notes) during the period of twenty (20) Trading
Days (as defined in the Notes) immediately prior to the date hereof (as defined
in Section
3.6 below) (the “Pricing
Period”).
(d) The
offer and sale of the Shares and the Warrants is being made pursuant to a
currently effective shelf registration statement on Form S-3 (File No.
333-156609) (the “Registration
Statement”), on which at least $45,000,000 of securities are registered
and available for sale by the Company as of the date hereof, which registration
statement has been declared effective in accordance with the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities
Act”), by the United States Securities and Exchange Commission (the
“Commission”).
(e) The
offer and sale of the Notes is being made, and in the event that the Company
wishes to exercise its right to deliver shares of Common Stock in satisfaction
of amounts payable under the Notes (the “Stock
Amortization Shares”), such delivery shall be made, in each case in
accordance with and in reliance on the exemption from securities registration
afforded by Section 4(2) of the Securities Act, including Regulation D (“Regulation
D”).
(f) 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 D
(the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to Registrable Securities (as defined in the
Registration Rights Agreement) under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities
laws.
(g) Closing. Subject
to the satisfaction or waiver of the conditions set forth in Article 4,
the Closing of the Purchase of the Notes (the “Closing”)
shall take place on or before September 8, 2010 (the “Closing
Date”) at such place as the parties may agree, provided, that all of the
conditions set forth in Article 4
hereof have been satisfied or waived. On the terms and subject to the
conditions contained in this Agreement, at the Closing (i) the Company shall
issue and deliver or cause to be delivered to each Purchaser, Notes in the
aggregate principal amount set forth opposite the name of such Purchaser on
Exhibit
A hereto, and (ii) each Purchaser shall deliver to the Company, by wire
transfer of immediately available funds, the Purchase Price set forth opposite
such Purchaser’s name on Exhibit A
hereto.
2
(h) Post-Closing; Control
Agreement. The Company covenants and agrees that 26.38% of the
Purchase Price (the “Purchase Price
Holdback Amount”) payable
by each Purchaser is to be deposited into a blocked account (the “Account”)
subject to a blocked account control agreement (as
described below) to secure the first two installment payments under the
Notes. The parties hereto shall use their reasonable best efforts to
cause and facilitate the execution and delivery of an account control agreement
(the “Control
Agreement”) by the Company, Liberty Harbor Special Investments, LLC
("Account
Agent") and Citibank (or such other bank mutually acceptable to the
Company and the Account Agent) (the "Account
Bank") that is reasonably satisfactory in form and substance to the
parties hereto as soon as practicable after the date hereof but in no event
later than 10 Business Days after the Closing Date. Without limiting
the generality of the foregoing, it is understood and agreed that the Control
Agreement shall provide that (i) the Account Bank will comply with all
instructions originated by the Account Agent without further consent by the
Company, (ii) during the Account Period, the Account Bank will not permit the
withdrawal or other disposition of any funds in the Account by the Company
without the Account Agent's prior written consent, (iii) the Account Bank waives
any offset rights it may have against the funds in the Account and (iv) a grant
by the Company to the Account Agent for the benefit of the Purchasers of a
security interest in the Account and all assets and other property therein with
respect to the first two installment payments under the Notes. The
Company shall deposit the Purchase Price Holdback Amount in immediately
available cash into the Account no later than one Business Day after the
execution and delivery of the Control Agreement and no funds shall be released
from the Account other than for the installment payments under the Notes until
such date that the registration statement covering the resale of all of the
Amortization Shares as contemplated under the Registration Rights Agreement has
gone effective (the "Account
Period"). If the Control Agreement has not been executed and
delivered prior to the end of business on the 10th
Business Day after the Closing Date, the Company shall, at the request of the
Purchasers, return the Purchase Price Holdback Amount to the Purchasers until
such time that the Control Agreement has been executed and delivered, provided
that upon the execution and delivery of the Control Agreement, the Purchasers
shall deposit the Purchase Price Holdback Amount into the Account no later than
three Business Days from the date of such execution and
delivery. During the Account Period, if the Company does not timely
make payment of any Installment Amount (as defined in the Notes) or any other
amount of cash required to be made pursuant to the Notes, Account Agent may
direct the Account Bank to pay such amount in accordance with the terms and time
periods set forth in the Notes. The Company shall not make any
payments or withdrawals of funds from the Account, and shall take all actions to
keep the funds in the Account available for the payment of all obligations under
the Notes at all times during the Account Period. From and after the
Account Period, the Company shall have no further obligation to keep any funds
in the Account and the Control Agreement shall terminate upon the expiration of
the Account Period.
1.2 Issuance of
Shares . On
the Closing Date, the Company shall issue and deliver or cause to be delivered
to each Purchaser the number of Shares set forth opposite such Purchaser’s name
on Exhibit
A hereto.
3
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES
2.1 Representations and
Warranties of the Company . The
Company hereby represents and warrants to each Purchaser, as of the date of this
Agreement as follows:
(a) Organization, Good Standing
and Power. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Florida and
has the requisite corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted. The
Company and each Subsidiary (as defined below) is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have or result in a Material Adverse Effect (as defined below). For
the purposes of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, prospects, or condition (financial or otherwise) of the Company and
its Subsidiaries on a consolidated basis and/or any condition, circumstance, or
situation that would prohibit or otherwise interfere with the ability of the
Company to perform any of its obligations under this Agreement or any of the
Transaction Documents (as defined below) in any material respect.
(b) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the Notes, the Warrants, the Registration Rights Agreement and the Control
Agreement (collectively, the “Transaction
Documents”), to issue and deliver the Securities in accordance with the
terms hereof, to deliver the Stock Amortization Shares in accordance with the
terms hereof and of the Notes and to deliver the Warrant Shares upon exercise of
the Warrants. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its board of directors or shareholders is
required. When executed and delivered by the Company, each of the
Transaction Documents shall constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by general principles of equity.
(c) Capitalization. The
authorized capital stock and the issued and outstanding shares of capital stock
of the Company as of the date of this Agreement are set forth on Schedule
2.1(c) hereto. All of the outstanding shares of Common Stock
have been duly and validly authorized and are fully paid and
non-assessable. Except as set forth on Schedule
2.1(c), no
shares of Common Stock or any other security of the Company are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Except as set forth on Schedule
2.1(c),
there are no equity plans, contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except for
customary transfer restrictions contained in agreements entered into by the
Company in order to sell securities, and except as set forth on Schedule
2.1(c),
the Company is not a party to, and it has no knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company.
4
(d) Issuance of
Securities. The issuance of the Securities, the Warrant Shares
and the Stock Amortization Shares has been duly authorized by all necessary
corporate action. The Notes and the Warrants, when issued in
accordance with the terms of this Agreement, will be validly issued, free and
clear of any Liens (as defined below). As of the Closing, a number of
shares of Common Stock shall have been duly authorized and reserved for issuance
which equals or exceeds the sum of (i) 100% of the maximum number of shares of
Common Stock issuable as Stock Amortization Shares (assuming a Stock Payment
Price of $2.29375 as of the Trading Day immediately preceding the Closing Date)
and (ii) 100% of the number of shares of Common Stock issuable upon exercise of
the Warrants in their entirety at the Exercise Price in effect on the Closing
Date (without taking into account any limitations on the exercise of the
Warrants). Upon the issuance and delivery of the Notes in accordance
with this Agreement, the offer and sale of the Notes and, if any Stock
Amortization Shares are delivered in accordance with the Notes, the issuance and
delivery of such Stock Amortization Shares, will constitute transactions exempt
from the registration requirements of the Securities Act. The Shares, when
issued in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, free and clear of any Liens. The Stock
Amortization Shares, when issued in accordance with the terms of the Notes, will
be validly issued, fully paid and nonassessable, free and clear of any
Liens. The Warrant Shares, when issued in accordance with the terms
of the Warrants, will be validly issued, fully paid and nonassessable, free and
clear of any Liens. The offer and sale by the Company of the Shares and the
Warrants have been registered under the Securities Act; the Shares, the Warrants
and the Warrant Shares (assuming that the Registration Statement is available at
the time of any sale of the Warrant Shares or if not, that the Warrants are
exercised pursuant to a “cashless exercise”) are being validly issued pursuant
to the Registration Statement; and all of the Shares, Warrant Shares and the
Warrants, when issued in accordance with the terms of this Agreement, are freely
transferable and freely tradable by the Purchasers without
restriction.
(e) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, and the performance by the Company of its
obligations under the Transaction Documents (including, without limitation, the
issuance of the Securities, the Warrant Shares and the Stock Amortization
Shares), do not and will not (i) violate or conflict with any provision of the
Company’s Articles of Incorporation (the “Articles”)
or By-laws (the “By-laws”),
each as amended to date, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries’ respective properties or assets are bound, (iii) result in a
violation of any foreign, federal, state or local statute, law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, or (iv) create or impose a lien, mortgage, security interest,
charge or encumbrance of any nature (each, a “Lien”) on
any property or asset of the Company or its Subsidiaries under any agreement or
any commitment to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or by which any of their
respective properties or assets are bound, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
violations, acceleration, cancellations, creations and impositions as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect.
5
(f) Consents. No
consent, authorization or order of, or any filing or registration with, any
court, governmental agency or any regulatory or self-regulatory agency, or any
court or to our knowledge, any third party, is required to be obtained by the
Company in order for the Company to execute and deliver or perform any of its
obligations under the Transaction Documents or to issue the Securities, the
Warrant Shares or the Stock Amortization Shares, in each case in accordance with
the terms hereof or the Warrant, as the case may be, other than (i) the filing
with the Commission of a prospectus supplement pursuant to Rule 424(b) under the
Securities Act (the “Prospectus
Supplement”) supplementing the base prospectus forming part of the
Registration Statement (the “Prospectus”) and (ii) the
application(s) to the Principal Market for the listing of the Shares, the
Warrant Shares and the Stock Amortization Shares for trading thereon in the time
and manner required thereby. The Company and its Subsidiaries are
unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any registration, application or filing described in the
preceding sentence. The Company is not in violation of the listing
requirements of the Principal Market and has no knowledge of any facts which
would reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future. For purposes of this Agreement, “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(g) Commission Documents,
Financial Statements. The Common Stock is registered pursuant
to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Commission
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
including information incorporated by reference therein being referred to herein
as the “Commission
Documents”). During the two years prior to the date hereof,
the Company has timely filed all Commission Documents (all Commission Documents
filed prior to the date hereof or prior to the date of the Closing, and all
exhibits included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to as
the “Public
Filings”) complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such documents. The Public Filings, the Registration
Statement, and the Prospectus did not, as of their respective dates (and at the
time of filing of any applicable Prospectus Supplement will not), contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. As
of their respective dates, the financial statements of the Company included in
the Public Filings complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles (“GAAP”)
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial position of the Company and its Subsidiaries as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
6
(h) Subsidiaries. Schedule
2.1(h) hereto sets forth each active Subsidiary of the Company, showing
the jurisdiction of its incorporation or organization and showing the percentage
of each person’s or entity’s ownership of the outstanding stock or other
interests of such Subsidiary. NanoEner, Inc. and EnerFuel, Inc. are
not, individually or in the aggregate, "significant subsidiaries" (as such term
is defined in Regulation S-X of the Securities Act) of the Company and the
assets and the operations of such Subsidiaries are not, individually or in the
aggregate, material to the business of the Company. For the purposes
of this Agreement, “Subsidiary”
shall mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares
of capital stock of each active Subsidiary have been duly authorized and validly
issued, and are fully paid and nonassessable. Except as would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect, there are no outstanding preemptive, conversion or
other rights, options, warrants or agreements granted or issued by or binding
upon any Subsidiary for the purchase or acquisition of any shares of capital
stock of any Subsidiary or any other securities convertible into, exchangeable
for or evidencing the rights to subscribe for any shares of such capital
stock. Neither the Company nor any active Subsidiary is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence, except as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect. Neither the
Company nor any active Subsidiary is party to, nor has any knowledge of, any
agreement restricting the voting, transfer or receipt of distributions on any
shares of the capital stock of any Subsidiary.
(i) No Material Adverse
Change. Since December 31, 2009, the Company has not
experienced or suffered any event or series of events that, individually or in
the aggregate, has had or reasonably would be expected to have a Material
Adverse Effect.
(j) No Undisclosed
Liabilities. Neither the Company nor any Subsidiary has any
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) which are not properly reflected or reserved against in the Company’s
financial statements included in the Reports to the extent required to be so
reflected or reserved against in accordance with GAAP, except for (i)
liabilities that have arisen in the ordinary course of business consistent with
past practice and that have not had a Material Adverse Effect, and (ii)
liabilities that, individually or in the aggregate, have not had and would not
reasonably be expected to have or result in a Material Adverse
Effect.
7
(k) No Undisclosed Events or
Circumstances. Since December 31, 2009, no event or
circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, prospects, operations
or financial condition, that, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
(l) Indebtedness. Schedule
2.1(l) hereto sets forth all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. The Indebtedness of the Company and its
Subsidiaries set forth in Schedule
6.14 of the Note is a true, correct and
accurate description of such Indebtedness as of the date hereof. For the purposes of
this Agreement, “Indebtedness”
shall include (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, current swap agreements, interest rate hedging agreements, interest
rate swaps, or other financial products, (c) all capital lease obligations, (d)
all obligations or liabilities secured by a Lien on any asset of the Company,
irrespective of whether such obligation or liability is assumed, (e) any
obligation guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse) any of the
foregoing obligations of any other person or entity and (f) endorsements for
collection or deposit.
(m) Title to
Assets. Each of the Company and its Subsidiaries has good and
valid title to all of its real and personal property, free and clear of any
Liens, except Liens that do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. All material leases to which
the Company or any of its Subsidiaries is a party are valid and subsisting and
in full force and effect.
(n) Actions
Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding before
or by the Principal Market, any court, public board, government agency,
self-regulatory organization or body (collectively, “Proceedings”)
pending or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any Subsidiary that questions the validity of this
Agreement or any of the other Transaction Documents or any of the transactions
contemplated hereby or thereby or any action taken or to be taken pursuant
hereto or thereto. There are no material Proceedings pending or, to
the knowledge of the Company, threatened against or involving the Company, any
Subsidiary or any of their respective properties or assets. No
Proceeding described in the Reports would, individually or in the aggregate,
reasonably be expected, if adversely determined, to have a Material Adverse
Effect. There are no outstanding orders, judgments, injunctions,
awards, decrees or investigations of any court, arbitrator or governmental,
regulatory body, self-regulatory agency or stock exchange against the Company or
any Subsidiary or any officers or directors of the Company or any Subsidiary in
their capacities as such, except for those that would not, individually or in
the aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
8
(o) Compliance with
Law. Except as would not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect, the
Company and its Subsidiaries have been and are presently conducting their
respective businesses in accordance with all applicable foreign, federal, state
and local governmental laws, rules, regulations and ordinances. The
Company and each of its Subsidiaries have all material franchises, permits,
licenses, consents and other material governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it. The Company has complied with all applicable federal and state
securities laws in connection with the transactions contemplated by the
Transaction Documents.
(p) Taxes. The
Company and each Subsidiary has timely filed all material federal, state, local
and foreign income, franchise and other tax returns, reports and declarations
required by any governmental authority (whether foreign, federal, state or
local) with jurisdiction over the Company or any Subsidiary and has paid or
accrued all taxes shown as due thereon except for any taxes which are being
contested in good faith (by appropriate proceedings and in respect of which
adequate reserves with respect thereto are maintained in accordance with GAAP)
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. All such returns were complete and correct in
all material respects and the Company has no knowledge of a material tax
deficiency which has been asserted or threatened against the Company or any
Subsidiary. The Company is not under audit by any taxing
authority. The Company has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods to which those
returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by any taxing authority. For
purposes of this Section
2.1(p), taxes shall include any and all interest and
penalties.
(q) No General Solicitation;
Certain Fees. Neither the Company, nor any of its Subsidiaries
or affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Notes or the Stock
Amortization Shares. The Company shall be responsible for the payment
of any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for persons engaged by any Purchaser or its investment advisor)
relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. Except as set forth on Schedule
2.1(q),
the Company has not employed any broker or finder or incurred any liability for
any brokerage or investment banking fees, commissions, finders’ structuring
fees, financial advisory fees or other similar fees in connection with the
Transaction Documents.
(r) Disclosure. Except
for the information concerning the transactions contemplated by this Agreement,
the Company confirms that neither it nor any other person or entity acting on
its behalf has provided any of the Purchasers or their agents or counsel with
any information that constitutes or might constitute material, nonpublic
information. Neither this Agreement nor the Schedules hereto nor any
other documents, certificates or instruments furnished to the Purchasers by or
on behalf of the Company or any Subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.
9
(s) Intellectual
Property. Except as would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse
Effect, the Company and each of the Subsidiaries owns or possesses the rights to
all patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted without any conflict, to the Company’s knowledge,
with the rights of others.
(t) Environmental
Compliance. The Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities (whether foreign, federal, state or local), or from any other person
or entity, that are required under any Environmental Laws. “Environmental
Laws” shall mean all applicable foreign, federal, state and local laws
relating to the protection of the environment including, without limitation, all
requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. The Company and each of its Subsidiaries are also
in compliance with all requirements, limitations, restrictions, conditions,
standards, schedules and timetables required or imposed under all Environmental
Laws, except as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect. Except as
would not, individually or in the aggregate, reasonably be expected to have or
result in a Material Adverse Effect, there are no past or present events,
conditions, circumstances, incidents, actions or omissions relating to or in any
way affecting the Company or its Subsidiaries that violate or may violate any
Environmental Law or that may give rise to any environmental liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation under any Environmental Law, or based on or
related to the manufacture, processing, distribution, use, treatment, storage
(including without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any
hazardous substance.
10
(u) Books and Records; Internal
Accounting Controls. The books and records of the Company and
its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any
Subsidiary. The Company is in material compliance with all provisions
of the Sarbanes-Oxley Act of 2002 which are applicable to it. The
Company and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the Company’s internal control over
financial reporting (as such term is defined in the Exchange Act).
(v) Material
Agreements. True, complete and correct copies of each material
contract of the Company or any of its Subsidiaries required to be filed as an
exhibit on a Current Report on Form 8-K, a Quarterly Report on Form 10-Q, or an
Annual Report on Form 10-K, in each case pursuant to Item 601(a) and Item
601(b)(10) of Regulation S-K under the Exchange Act (the “Company Material
Agreements”), are attached or incorporated as exhibits to the
Reports. Each Company Material Agreement is valid and binding on the
Company and the Subsidiaries, as applicable, and in full force and effect
(except those which have expired or been terminated in accordance with their
terms). The Company and each of its Subsidiaries, as applicable, are
in all material respects in compliance with and have in all material respects
performed all obligations required to be performed by them to date under each
Company Material Agreement. Neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any material violation or
default (or any condition which with the passage of time or the giving of notice
would cause such a violation of or a default) by any party under any Company
Material Agreement.
(w) Transactions with
Affiliates. There are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other continuing
transactions between (a) the Company, any of its Subsidiaries or any of their
respective customers or suppliers on the one hand, and (b) on the other hand,
any officer, employee, consultant or director of the Company, or any of its
Subsidiaries, or any person or entity owning at least 5% of the outstanding
capital stock of the Company or any of its Subsidiaries or any member of the
immediate family of such officer, employee, consultant, director or shareholder
or any corporation or other entity controlled by such officer, employee,
consultant, director or shareholder, or a member of the immediate family of such
officer, employee, consultant, director or shareholder which, in each case, is
required by law, rule or regulation to be disclosed in the Commission Documents
or in the Company’s most recently filed definitive proxy statement on Schedule
14A, that is not so disclosed in the Commission Documents or in such proxy
statement.
11
(x) Employees. (i) Neither
the Company nor any of its Subsidiaries has any collective bargaining
arrangements or agreements covering any of its employees. There is
not currently in force any employment contract, agreement regarding proprietary
information, non-competition agreement, non-solicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or such Subsidiary required to be disclosed
in the Commission Documents that is not so disclosed. The Company and
each Subsidiary is in material compliance with all foreign, federal, state and
local laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, and employee benefits
plans (including, without limitation, the Employee Retirement Income Security
Act of 1974, as amended), except where such non-compliance would not,
individually or in the aggregate, reasonably be expected to have or result in a
Material Adverse Effect.
(ii) No
executive officer of the Company or any of its Subsidiaries (as defined in Rule
501(f) of the Securities Act) has notified the Company or any such Subsidiary
that such officer intends to leave the Company or any such Subsidiary or
otherwise terminate such officer’s employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its
Subsidiaries, to the knowledge of the Company or any of its Subsidiaries, is in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters.
(y) Absence of Certain
Developments. Since December 31, 2009, and except as described
in the Public Filings, neither the Company nor any of its Subsidiaries
has:
(i) issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto;
(ii) borrowed
any amount in excess of $25 million or incurred or become subject to any other
liabilities in excess of $50 million (absolute or contingent) except current
liabilities incurred in the ordinary course of business which are comparable in
nature and amount to the current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the business of the Company and its
Subsidiaries;
(iii) discharged
or satisfied any Lien in excess of $1 million or paid any obligation or
liability (absolute or contingent) in excess of $25 million, other than current
liabilities paid in the ordinary course of business;
(iv) declared
or made any payment or distribution of cash or other property to shareholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock;
(v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, in each case in excess of $1 million, except in the ordinary course of
business;
12
(vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights in
excess of $1 million, or disclosed any proprietary confidential information to
any person or entity except to customers in the ordinary course of business or
to the Purchasers or their representatives;
(vii) suffered
any losses or waived any rights of value, whether or not in the ordinary course
of business, or suffered the loss of any amount of prospective business, which
individually or in the aggregate would have a Material Adverse
Effect;
(viii) made
any changes in employee compensation except in the ordinary course of business
and consistent with past practices;
(ix) made
capital expenditures or commitments therefor that aggregate in excess of $100
million;
(x) entered
into a binding agreement with respect to any material transaction, whether or
not in the ordinary course of business;
(xi) made
charitable contributions or pledges in excess of $1 million;
(xii) suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;
(xiii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment;
(xiv) taken
any steps to seek protection pursuant to any bankruptcy law (nor does the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so);
(xv) individually
and on a consolidated basis, been deemed as of the date hereof, and after giving
effect to the transactions contemplated hereby to occur at the Closing, will not
be Insolvent (as defined below). For purposes of this Section
2.1(xv), “Insolvent”
means, with respect to any Person, that (i) the present fair saleable value of
such Person’s assets is less than the amount required to pay such Person’s total
Indebtedness, (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become due,
(iii) such Person intends to incur or believes that it will incur debts that
would be beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted;
or
(xvi) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.
(z) Investment Company Act
Status. The Company is not, and as a result of and immediately
upon the Closing will not be, an “investment company” or a company “controlled”
by an “investment company,” within the meaning of the Investment Company Act of
1940, as amended.
13
(aa) Independent Nature of
Purchasers. The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents. The Company acknowledges that each Purchaser
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.
(bb) DTC
Status. The Company’s transfer agent is a participant in and
the Common Stock is eligible for transfer pursuant to the Depository Trust
Company (“DTC”) Fast Automated Securities
Transfer Program. The name, address, telephone number, fax number,
contact person and email of the Company’s transfer agent is set forth on Schedule
2.1(bb).
(cc) Governmental
Approvals. Except for any filing or other action that may be
required under applicable state and/or federal securities laws (which if
required, shall be filed on a timely basis), no authorization, consent,
approval, license, exemption of, filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
performance by the Company of its obligations under the Transaction
Documents.
(dd) Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any material insurance coverage
sought or applied for and the Company does not have any reason to believe that
it or any Subsidiary will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
reasonably be expected to have or result in a Material Adverse
Effect.
(ee) Trading
Activities. It is understood and acknowledged by the Company
that none of the Purchasers has been asked to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities, the Warrant Shares or Stock Amortization
Shares for any specified term. The Company further understands and
acknowledges that one or more Purchasers may engage in hedging and/or trading
activities at various times during the period that the Securities or Stock
Amortization Shares, the Warrant Shares are outstanding, including, without
limitation, during the periods that the value of the Stock Amortization Shares
are being determined and such hedging and/or trading activities, if any, can
reduce the value of the existing shareholders’ equity interest in the Company
both at and after the time the hedging and/or trading activities are being
conducted.
14
(ff) Certain Business
Practices. None of the Company or any Company Subsidiary or
any director, officer, agent, employee or other person or entity acting for or
on behalf of Company or any Subsidiary has violated the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or any other anti-bribery or anti-corruption
laws applicable to the Company or any Subsidiary.
(gg)
Shell Company
Status. The Company is not currently, and has not been, an
issuer of the type described in paragraph (i) of Rule 144 under the Securities
Act.
(hh) Registration
Statement.
(i) The
Registration Statement has become effective and is available for the issuance of
the Shares, the Warrants and the Warrant Shares thereunder; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of the
Company, threatened by the Commission. Upon issuance and delivery to
the Purchasers in accordance with the related Prospectus Supplement, the Shares,
the Warrants and the Warrant Shares shall be free of any restriction on
transferability under federal securities laws and state “Blue Sky” laws and any
certificates or other instruments evidencing or representing the Shares, the
Warrants and the Warrant Shares shall be free of any restrictive
legend. The section in the Prospectus entitled “Securities We May
Offer” permits the issuance and sale of the Shares and the Warrants
hereunder.
(ii) The
Company is in compliance in all material respects with the applicable listing
and corporate governance rules and regulations of the NASDAQ Global Market (the
“Principal
Market”). The Company has not, in the preceding twelve (12)
months, received notice from the Principal Market to the effect that the Company
is not in compliance with the listing or maintenance requirements of the
Principal Market. The Company is, and has no reason to believe that
it will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.
(ii)
No Integrated
Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from selling the
Securities pursuant to Regulation D and Rule 506 thereof under the Securities
Act.
(jj)
Dilutive
Effect. The Company acknowledges that its obligation to issue
the Warrant Shares upon exercise of the Warrants in accordance with this
Agreement and the Warrants is, in each case, is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other shareholders of the Company.
15
(kk)
Application of Takeover
Protections; Rights Agreement. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation or the laws of the
State of Florida which is or could become applicable to any Purchaser as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and any Purchaser’s
ownership of the Securities. Neither the Company nor its Board of
Directors has adopted a shareholder rights plan or similar arrangement relating
to accumulations of beneficial ownership of Common Stock or a change in control
of the Company.
(ll)
Form S-3
Eligibility. The Company is eligible to register the Stock
Amortization Shares for resale by the Purchasers using Form S-3 promulgated
under the Securities Act.
(mm)
Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed or that otherwise would be reasonably likely to
have a Material Adverse Effect.
(nn) Ranking of
Notes. Except as set forth on Schedule
2.1(nn), no Indebtedness of the Company is senior to or ranks pari passu
with the Notes in right of payment, whether with respect of payment of
redemptions, interest, damages or upon liquidation or dissolution or
otherwise.
(oo) Manipulation of
Price. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.
(pp) Transfer
Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection
with the sale and transfer of the Securities to be sold to each Purchaser
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied
with.
(qq) U.S. Real Property Holding
Corporation. The Company is not, has never been, and so long
as any Securities remain outstanding, shall not become, a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company shall so certify upon any Purchaser’s
request.
(rr)
No
Additional Agreements. The Company does not have any agreement
or understanding with any Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
2.2 Representations and
Warranties of each Purchaser . Each
Purchaser hereby represents and warrants to the Company, with respect to itself
solely and not with respect to any other Purchaser, as follows as of the date
hereof:
16
(a) Organization and
Standing. Such Purchaser is a legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.
(b) Authorization and
Power. Such Purchaser has the requisite power and authority to
enter into and perform the Transaction Documents and to purchase the Securities
being sold to it hereunder. The execution, delivery and performance
of the Transaction Documents by such Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate or partnership action, and no further consent or authorization of such
Purchaser or its board of directors, shareholders, members or partners, as the
case may be, is required. This Agreement constitutes the valid and
binding obligation of such Purchaser enforceable against such Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by general
principles of equity.
(c) No
Conflicts. The execution, delivery and performance by such
Purchaser of the Transaction Documents to which it is a party and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
such Purchaser, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations that would not, individually or in the
aggregate, reasonably be expected to have or result in a material adverse effect
on the ability of such Purchaser to perform its obligations
hereunder.
(d) Certain
Fees. Except as set forth on Schedule
2.2(d), such Purchaser has not employed any broker or finder or incurred
any liability for any brokerage or investment banking fees, commissions,
finders’ structuring fees, financial advisory fees or other similar fees in
connection with the Transaction Documents.
(e) Accredited
Investor. Such Purchaser is an “accredited investor” (as
defined in Rule 501 of Regulation D), and such Purchaser has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Securities. Such Purchaser acknowledges
that an investment in the Securities is speculative and involves a high degree
of risk and that it has sufficient financial resources to bear the loss of its
investment.
(f) Information. The
Company has provided such Purchaser with information regarding the business,
operations and financial condition of the Company and has granted to such
Purchaser the opportunity to ask questions of and receive answers from
representatives of the Company, its officers, directors, employees and agents
concerning the Company and materials relating to the terms and conditions of the
purchase and sale of the Securities hereunder, in order for such
Purchaser to make an informed decision with respect to its investment in the
Securities. Neither such information nor any other investigation
conducted by such Purchaser or any of its representatives shall modify, amend or
otherwise affect such Purchaser’s right to rely on the Company’s representations
and warranties contained in this Agreement.
17
(g) Limitations on
Disposition. Such Purchaser acknowledges that the Notes and
the Stock Amortization Shares have not been and are not being registered under
the Securities Act and may not be transferred or resold without registration
under the Securities Act or unless pursuant to an exemption
therefrom.
(h) Legend. Such
Purchaser understands that the certificates representing the Notes may bear a
restrictive legend in substantially the following form:
“The
securities represented by this certificate or issuable upon the exercise hereof
have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or the securities laws of any state, and may not be offered
or sold unless a registration statement under the Securities Act and applicable
state securities laws shall have become effective with regard thereto, or an
exemption from registration under the Securities Act and applicable state
securities laws is available in connection with such offer or sale and the
holder delivers an opinion of counsel in a form reasonably satisfactory to the
issuer that registration is not required under the Securities Act, or unless
sold pursuant to Rule 144 under the Securities Act. The securities
represented by this certificate or issuable upon the exercise or exchange hereof
may be pledged in connection with a bona fide margin financing or extension of
credit.”
Notwithstanding the foregoing, it is
agreed that the legend set forth above and other restrictive language shall be
removed and the Company shall issue a certificate without such legend to the
holder of the Notes upon which it is stamped, if, unless otherwise required by
state securities laws, (A) the resale or transfer (including, without
limitation, a pledge) of any of the Stock Amortization Shares is registered
pursuant to an effective registration statement, (B) such Notes have been sold
pursuant to Rule 144, subject to receipt by the Company of customary
documentation reasonably acceptable to the Company in connection therewith, or
(C) such Notes are eligible for resale under Rule 144(b)(1) or any successor
provision. The Company shall be responsible for the fees associated
with such issuance.
(i) Reliance on
Exemptions. Such Purchaser understands that the Securities are
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the accuracy and completeness of the
representations and warranties of such Purchaser set forth in this Agreement in
order to determine the availability of such exemptions and the eligibility of
such Purchaser to acquire the Securities.
(j) Non-Affiliate Status; Common
Stock Ownership. Such Purchaser is not an “affiliate” (as such
term is defined in Regulation D) of the Company, and such Purchaser’s investment
in the Securities is not for the purpose of acquiring, directly or indirectly,
control of, and it has no intent to acquire or exercise control of, the
Company.
18
(k) Qualified Institutional
Purchasers. Such Purchaser is a "qualified institutional
buyer" as that term is defined in Rule 144A of the Securities Act.
ARTICLE
3
COVENANTS
OF THE COMPANY
The
Company agrees with each Purchaser that the covenants in this Article 3
shall apply to it until all obligations under the Notes have been paid in
full.
3.1 Compliance with Laws;
Commission . The
Company shall comply in all material respects with all applicable laws, rules,
regulations and orders, and shall take all necessary actions as may be required
by applicable law, rule and regulation in order to legally and validly issue and
deliver the Securities, the Warrant Shares and the Stock Amortization Shares to
the Purchasers or their respective transferees.
3.2 Registration and
Listing . The
Company shall secure the listing of all of the Shares, Warrant Shares and Stock
Amortization Shares upon each national securities exchange and automated
quotation system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance). The Company shall cause its Common
Stock (including all Shares, Warrant Shares and Stock Amortization Shares from
time to time issuable under the terms of the Transaction Documents) to continue
to be registered under Section 12(b) of the Exchange Act, shall comply in all
material respects with its reporting and filing obligations under the Exchange
Act. The Company shall not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) with the effect of terminating or suspending such registration or
its reporting and filing obligations under the Exchange Act or Securities
Act. The Company will use commercially reasonable efforts to (i)
maintain the listing or trading of its Common Stock and (ii) secure
the inclusion for quotation of all of the Registrable Securities on The NASDAQ
Global Market or The New York Stock Exchange or if, despite the Company’s best
efforts, the Company is unsuccessful in maintaining the listing or trading
described in clause (i) above, The NASDAQ Global Select Market, The NASDAQ
Capital Market or the NYSE Amex. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section
3.2.
3.3 Reporting Status . Until
the date on which the Purchasers shall have sold all the Stock Amortization
Shares and the Warrant Shares (the “Reporting
Period”), the Company shall timely file all reports required to be filed
with the Commission pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
otherwise permit such termination.
19
3.4 Financial
Information . The
Company agrees to send the following to each Purchaser during the Reporting
Period (i) unless the following are filed with the Commission through EDGAR and
are available to the public through the EDGAR system, within one (1) Business
Day after the filing thereof with the Commission, a copy of its Annual Reports
on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form
8-K and any registration statements (other than on Form S-8) or amendments filed
pursuant to the Securities Act, (ii) on the same day as the release thereof,
electronic copies of all press releases issued by the Company or any of its
Subsidiaries, and (iii) copies of any notices and other information made
available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the
shareholders.
3.5 Pledge of
Securities . The
Company acknowledges and agrees that the Securities may be pledged by a
Purchaser in connection with a bona fide margin agreement or other loan or
financing arrangement that is secured by the Securities. The pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Purchaser effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section
2.2(h) of this Agreement; provided that a Purchaser and
its pledgee shall be required to comply with the terms of the legend described
in Section
2.2(h) of this Agreement in order to effect a sale, transfer or
assignment of Securities to such pledgee, whether by foreclosure or
otherwise. The Company hereby agrees to execute and deliver such
documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a
Purchaser.
3.6 Keeping of Records and Books
of Account . The Company shall keep and cause each of its
Subsidiaries to keep adequate records and books of account, in which complete
entries will be made, (a) with respect to the Company’s Subsidiaries located in
the U.S., in accordance with GAAP consistently applied and (b) with respect to
the Company’s Subsidiaries located outside the U.S., in accordance with the
applicable law, rule or regulation of the jurisdictions in which such
Subsidiaries are located, in each case reflecting all financial transactions of
the Company and its Subsidiaries, and in which, for each fiscal year,
appropriate reserves for depreciation, depletion, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
3.7 Other
Agreements . The Company shall not enter into any
agreement the terms of which would restrict or impair the right or ability of
the Company to perform its obligations under any Transaction Document,
including, without limitation, the Company’s obligation to pay any amounts due
under the Notes in cash or shares of common stock. The Company shall
comply in all material respects with each of its obligations, covenants and
agreements under the Notes and the other Transaction Documents; provided, that
the Company shall comply in all respects with respect to such obligations,
covenants and agreements under the Notes and other Transaction Documents which
are already qualified by materiality, "material" or similar
qualifiers.
3.8 Use of
Proceeds . The proceeds from the sale of the Securities
hereunder shall be used by the Company for general corporate
purposes. Notwithstanding anything to the contrary, neither Company
nor any of its Subsidiaries may repay any of their outstanding Indebtedness nor
redeem or repurchase any of its or its Subsidiaries’ equity securities with the
proceeds from the sale of the Securities.
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3.9 Disclosure of
Transaction.
(a) Except
for press releases and public statements as may upon the advice of outside
counsel be required to be made by law or the rules or regulations of the
Commission or the principal market on which the Common Stock then trades or is
quoted (“Required
Disclosures”), the Company shall provide to each Purchaser, before
issuing any press release or public statement with respect to the Transaction
Documents or the transactions contemplated thereby, a copy of such proposed
press release or public statement and shall not issue any such press release or
public statement to which such Purchaser reasonably objects within two (2)
Business Days of such Purchaser’s receipt thereof. In the case of any
Required Disclosure, the Company shall provide each Purchaser with a copy of
such Required Disclosure. Unless the Company and each Purchaser
otherwise agree, the Company shall include in a Required Disclosure only such
information that is legally required to be disclosed upon the advice of
counsel. Notwithstanding the foregoing, without the prior written
consent of any applicable Purchaser, neither the Company nor any of its
Subsidiaries or affiliates shall disclose the name of such Purchaser in any
filing, announcement, release or otherwise unless it is obligated, upon the
written advice of counsel, to do so in a Required Disclosure; provided, that
Purchaser shall have the right to review any such filing, announcement, release
or otherwise prior to such disclosure.
(b) The
Company shall on or before 8:30 a.m., New York City time, on the first Business
Day after the date of this Agreement (i) issue a press release (the “Press
Release”) reasonably acceptable to the Purchasers disclosing all material
terms of the transactions contemplated hereby and (ii) file with the Commission
a Current Report on Form 8-K (the “Form
8-K”), which shall attach as exhibits all press releases relating to the
transactions contemplated by this Agreement and all material Transaction
Documents (including without limitation, this Agreement (and all schedules to
this Agreement), the form of the Notes, the form of Warrant, the form of
Registration Rights Agreement) as exhibits to such filing. From and
after the issuance of the Press Release, no Purchaser shall be in possession of
any material, nonpublic information received from the Company, any of its
Subsidiaries or any of its respective officers, directors, employees or agents,
that is not disclosed in the Press Release.
3.10 Disclosure of Material
Information . The Company covenants and agrees that
neither it nor any other person or entity acting on its behalf will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information without such Purchaser’s
consent. The Company understands and confirms that each Purchaser
shall be relying on the foregoing covenant and agreement in effecting
transactions in securities of the Company, and based on such covenant and
agreement, unless otherwise expressly agreed in writing by such Purchaser: (i)
such Purchaser does not have any obligation of confidentiality with respect to
any information that the Company provides to such Purchaser; and (ii) such
Purchaser shall not be deemed to be in breach of any duty to the Company and/or
to have misappropriated any non-public information of the Company, if such
Purchaser engages in transactions of securities of the Company, including,
without limitation, any hedging transactions, short sales and/or any derivative
transactions based on securities of the Company while in possession of such
material non-public information. In the event of a breach of the
foregoing covenant by the Company, any Subsidiary, or its each of respective
officers, directors, employees and agents, in addition to any other remedy
provided herein or in the Transaction Documents, a Purchaser shall have the
right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Purchaser
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, shareholders or agents for any
such disclosure.
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3.11 Additional Registration
Statements . Except
as may be required under any agreement existing on the date hereof and described
on Schedule
3.11 hereto, until the earlier of (i) the Effective Date (as defined in
the Registration Rights Agreement) and (ii) the date all of the Registrable
Securities may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, the Company will not file a registration statement under
the Securities Act other than the registration statement relating to the
Registrable Securities.
3.12 Amendments to Charter
Documents . The
Company shall not, without the consent of each Purchaser then holding a Note,
amend or waive any provision of the Articles or By-laws of the Company whether
by merger, consolidation or otherwise in any way that would materially and
adversely affect any rights of the holder of the Securities.
3.13 Public
Information . At any time during the period commencing
from the six (6) month anniversary of the Closing Date and ending at such time
that all of the Stock Amortization Shares can be sold either pursuant to a
registration statement, or if a registration statement is not available for the
resale of all of the Securities, may be sold without the requirement for the
Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for
any reason to satisfy the current public information requirement under Rule
144(c) (a “Public
Information Failure”) then, as partial relief for the damages to any
Purchaser by reason of any such delay in or reduction of its ability to sell the
Stock Amortization Shares (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each such
Purchaser an amount in cash equal to one percent (1.0%) of the aggregate
Purchase Price of such Purchaser’s Stock Amortization Shares on the day of a
Public Information Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) thereafter until the earlier of (i) the date
such Public Information Failure is cured and (ii) such time that such public
information is no longer required pursuant to Rule 144. The payments
to which a holder shall be entitled pursuant to this Section
3.13 are referred to herein as “Public
Information Failure Payments.” Public Information Failure
Payments shall be paid on the earlier of (I) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (II) the
third Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event the Company fails
to make Public Information Failure Payments in a timely manner, such Public
Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full.
3.14 Closing
Documents . On or prior to fourteen (14) calendar days
after the Closing Date, the Company agrees to deliver, or cause to be delivered,
to each Purchaser and Schulte Roth & Zabel LLP a complete closing set of the
Transaction Documents, Securities and any other document required to be
delivered to any party pursuant to Section
4.2 hereof or otherwise.
22
3.15 Notice of Events of
Default . The Company will immediately notify each
Purchaser in writing of the occurrence of any Event of Default (as defined in
the Notes) under the Notes.
3.16 Reservation of
Shares . So long as any Purchaser owns any Securities,
the Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance no less than the sum of (i) 100% of the
maximum number of shares of Common Stock issuable as Stock Amortization Shares
under the Notes (assuming a Stock Payment Price of $2.29375 as of the Trading
Day immediately preceding the date of determination) and (ii) 100% of the number
of shares of Common Stock issuable upon exercise of the Warrants then
outstanding in their entirety at the Exercise Price in effect on the Closing
Date (without taking into account any limitations on exercise of the Warrants)
(collectively, the “Required Reserved
Amount”). If at any time the number of shares of Common Stock
authorized and reserved for issuance is not sufficient to meet the Required
Reserved Amount, the Company will promptly take all corporate action necessary
to authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of shareholders to authorize additional
shares, so that the number of authorized shares is sufficient to meet the
Required Reserved Amount.
3.17 Register; Transfer
Instructions.
(a) Register. The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Notes and the Warrants, in which the Company
shall record the name and address of the Person in whose name the Notes and the
Warrants have been issued (including the name and address of each transferee),
the principal amount of Notes held by such Person, and the number of
Warrant Shares issuable upon exercise of the Warrants held by such
Person. The Company shall keep the register open and available at all
times during business hours for inspection of any Purchaser or its legal
representatives.
(b) Transfer Agent
Instructions. Upon exercise of the Warrant by any Purchaser,
the Company shall instruct its transfer agent to issue certificates or credit
shares to the applicable balance accounts at DTC, registered in the name of such
Purchaser or its respective nominee(s), in such amounts as specified from time
to time by such Purchaser. If a Purchaser effects a sale, assignment
or transfer of the Warrant Shares, the Company shall permit the transfer and
shall promptly instruct its transfer agent to issue one or more certificates or
to credit shares to the applicable balance accounts at DTC in such name and in
such denominations as specified by such Purchaser to effect such sale, transfer
or assignment, without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Purchaser. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section
3.17(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section
3.17(b), that a Purchaser shall be entitled, in addition to all other
available remedies, to seek an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being
required.
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3.18 Account
Agent.
(a) Each
Purchaser hereby (a) appoints Liberty Harbor Special Investments, LLC, as the
Account Agent under the Control Agreement, and (b) authorizes the Account Agent
(and its officers, directors, employees and agents) to take such action on such
Purchaser's behalf in accordance with the terms hereof and
thereof. The Account Agent shall not have, by reason hereof or the
Control Agreement, a fiduciary relationship in respect of any
Purchaser. Neither the Account Agent nor any of its officers,
directors, employees and agents shall have any liability to any Purchaser for
any action taken or omitted to be taken in connection hereof or the Control
Agreement except to the extent caused by its own gross negligence or willful
misconduct, and each Purchaser agrees to defend, protect, indemnify and hold
harmless the Account Agent and all of its officers, directors, employees and
agents (collectively, the "Account Agent Indemnitees") from and against
any losses, damages, liabilities, obligations, penalties, actions, judgments,
suits, fees, costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Account Agent Indemnitee,
whether direct, indirect or consequential, arising from or in connection with
the performance by such Account Agent Indemnitee of the duties and obligations
of Account Agent pursuant hereto or the Control Agreement.
(b) The
Account Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message believed by it
in good faith to be genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters pertaining to this Agreement
or any of the other Transaction Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it.
(c) The
Account Agent may resign from the performance of all its functions and duties
hereunder and under the Control Agreement at any time by giving at least ten
(10) Business Days prior written notice to the Company and each holder of the
Notes. Such resignation shall take effect upon the acceptance by a
successor Account Agent of appointment as provided below. Upon any
such notice of resignation, the holders of 75% of the outstanding principal
under the Notes shall appoint a successor Account Agent. Upon the
acceptance of the appointment as Account Agent, such successor Account Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Account Agent, and the retiring Account Agent shall be
discharged from its duties and obligations under this Agreement and the Control
Agreement. After any Account Agent's resignation hereunder, the
provisions of this Section
3.18 shall inure to its benefit. If a successor Account Agent shall not
have been so appointed within said ten (10) Business Day period, the retiring
Account Agent shall then appoint a successor Account Agent who shall serve until
such time, if any, as the holders of 75% of the outstanding principal under the
Notes appoint a successor Account Agent as provided above.
ARTICLE
4
CONDITIONS
4.1 Conditions Precedent to the
Obligation of the Company to Close and to Sell the
Securities. The obligation hereunder of the Company to issue
and sell the Securities to each Purchaser pursuant to this Agreement is subject
to the satisfaction or waiver by the Company, at or before the Closing, of the
conditions set forth below. These conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole
discretion.
24
(a) Accuracy of the Purchasers’
Representations and Warranties. The representations and
warranties of such Purchaser shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date.
(b) Performance by the
Purchasers. Such Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing Date.
(c) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Delivery of Purchase
Price. Such Purchaser shall have delivered to the Company the
Purchase Price for the Securities purchased by such Purchaser.
(e) Delivery of Transaction
Documents. The Transaction Documents shall have been duly
executed and delivered by such Purchaser to the Company.
4.2 Conditions Precedent to the
Obligation of each Purchaser to Purchase the Securities. The
obligation hereunder of each Purchaser to purchase Securities and consummate the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver, at or before the Closing, of each of the conditions set forth
below. These conditions are for such Purchaser’s sole benefit and may
be waived by such Purchaser at any time in its sole discretion.
(a) Accuracy of the Company’s
Representations and Warranties. The representations and
warranties of the Company in this Agreement and the other Transaction Documents
shall be true and correct in all respects as of the date when made and as of the
Closing Date, except for representations and warranties that speak as of a
particular date, which shall be true and correct in all respects as of such
date.
(b) Performance by the
Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
(c) Prospectus: Registration
Statement. The Prospectus Supplement shall have been filed
with the Commission pursuant to Rule 424(b) under the Securities Act within the
applicable time period prescribed for such filing by the rules and regulations
under the Securities Act; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or, to the Company’s
knowledge, threatened by the Commission and no notice of objection by the
Commission to the use of the Registration Statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the Securities Act shall have
been received; and no stop order suspending or preventing the use of the
Prospectus shall have been initiated or threatened by the
Commission.
25
(d) No Suspension,
Etc. The shares of Common Stock (i) shall be designated for
quotation or listed on the Principal Market and (ii) shall not have been
suspended, as of the Closing Date, by the Commission or the Principal Market
from trading on the Principal Market nor shall suspension by the Commission or
the Principal Market have been threatened, as of the Closing Date, either (A) in
writing by the Commission or the Principal Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Market.
(e) No
Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(f)
No Proceedings or
Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary or any Purchaser, or any of the officers,
directors or affiliates of the Company or any Subsidiary or any Purchaser
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(g) Opinion of
Counsel. Such Purchaser shall have received an opinion(s) of
counsel to the Company, dated the Closing Date, in the form reasonably
acceptable to such Purchaser.
(h) Notes. At
or prior to the Closing, the Company shall have delivered to such Purchaser
certificates representing the Note and Warrant being purchased by such
Purchaser.
(i)
Secretary’s
Certificate. The Company shall have delivered to such
Purchaser a certificate, signed by the Secretary of the Company and dated as of
the Closing Date, as to (i) the resolutions adopted by its board of directors
approving the transactions contemplated hereby, (ii) its charter, as in effect
at the Closing Date, (iii) its bylaws, as in effect at the Closing Date, and
(iv) the authority and incumbency of the officers executing this Agreement, the
Notes or any other documents required to be executed or delivered in connection
therewith.
(j)
Officer’s
Certificate. The Company shall have delivered to such
Purchaser a certificate signed by an executive officer on behalf of the Company,
dated as of the Closing Date, confirming the accuracy of the Company’s
representations, warranties and performance of covenants as of the Closing Date
and confirming the compliance by the Company with the conditions precedent set
forth in paragraphs (a)-(f) and (k)-(n) of this Section
4.2 as of the Closing Date.
(k) Material Adverse
Effect. No change having a Material Adverse Effect shall have
occurred.
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(l)
Listing; Listing
Application. The Shares, the Warrant Shares and the Stock
Amortization Shares shall have been approved for listing on the Principal
Market, subject only to official notice of issuance. The Common Stock
(i) shall be listed on the Principal Market and (ii) shall not have been
suspended, as of the Closing Date, by the Commission or the Principal Market
from trading on the Principal Market nor shall suspension by the Commission or
the Principal Market have been threatened, as of the Closing Date, either (A) in
writing by the Commission or the Principal Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Market.
(m) Delivery of Transaction
Documents. The Transaction Documents shall have been duly
executed and delivered by the Company to such Purchaser.
(n) Good
Standing. The Company shall have delivered to such Purchaser a
certificate evidencing the formation and good standing of the Company and each
of its domestic operating Subsidiaries in such corporation’s state of
incorporation issued by the Secretary of State of such state of incorporation as
of a date within 10 days of the Closing Date.
(o) Qualification as Foreign
Corporation. The Company shall have delivered to such
Purchaser a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable
office) of each jurisdiction in which the Company conducts business and is
required to so qualify, as of a date within ten (10) days of the Closing
Date.
(p) Certification as to Number
of Shares. The Company shall have delivered to such Purchaser
a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five (5) days of the Closing
Date.
(q) Consents. The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
ARTICLE
5
INDEMNIFICATION
5.1 General
Indemnity. The Company agrees to indemnify and hold harmless
each Purchaser and its respective directors, officers, affiliates, members,
managers, employees, agents, successors and assigns (collectively, “Indemnified
Parties”) from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred by any Indemnified Party as
a result of, arising out of or based upon (i) any inaccuracy in or breach of the
Company’s representations or warranties in this Agreement; (ii) the Company’s
breach of agreements or covenants made by the Company in this Agreement or any
Transaction Document; (iii) any third party claims arising out of or resulting
from the transactions contemplated by this Agreement or any other Transaction
Document (unless such claim is based upon conduct by such Indemnified Party that
constitutes fraud, gross negligence or willful misconduct); or (iv) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, any Prospectus Supplement or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Purchaser furnished in writing to the Company by or
on behalf of any Purchaser.
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5.2 Indemnification
Procedure. With respect to any third-party claims giving rise
to a claim for indemnification, the Indemnified Party will give written notice
to the Company of such third party claim; provided that the failure of
any party entitled to indemnification hereunder to give notice as provided
herein shall not relieve the Company of its obligations under this Article 5
except to the extent that the Company is actually materially prejudiced by such
failure to give notice. In case any such action, proceeding or claim
is brought against an Indemnified Party in respect of which indemnification is
sought hereunder, the Company shall be entitled to participate in and, unless in
the reasonable judgment of the Indemnified Party a conflict of interest between
it and the Indemnified Party exists with respect to such action, proceeding or
claim (in which case the Company shall be responsible for the reasonable fees
and expenses of one separate counsel for the Indemnified Parties), to assume the
defense thereof with counsel of its choice. In the event that the
Company advises an Indemnified Party that it will not contest such a claim for
indemnification hereunder, or fails, within 10 days of receipt of any
indemnification notice to notify, in writing, such person or entity of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. The
Company shall keep the Indemnified Party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect
thereto. If the Company elects to defend any such action or claim,
then the Indemnified Party shall be entitled to participate in such defense with
counsel of its choice at its sole cost and expense. Notwithstanding
anything in this Article 5
to the contrary, the Company shall not, without the Indemnified Party’s prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof that does not provide for a complete release of the
Indemnified Party of any and all liability with respect to any such claim or
which constitutes or reflects an acknowledgment of wrongdoing on the part of the
Indemnified Party. The Company will not be liable to any Indemnified
Party under this Agreement for any consent, settlement or compromise effected by
an Indemnified Party without the Company’s prior written consent. The
indemnification obligations to defend the Indemnified Party required by this
Article
5 shall be made by periodic payments of the amount thereof during the
course of investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred, so long as the Indemnified Party shall
refund such moneys if it is ultimately determined by a court of competent
jurisdiction that such party was not entitled to indemnification. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the Indemnified Party against the Company or others,
and (b) any liabilities the Company may be subject to pursuant to the
law.
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5.3 Contribution. If
the indemnification provided for in Section
5.1 is unavailable to any Indemnified Party thereunder in respect of any
losses, liabilities, deficiencies, costs, damages or expenses (or actions in
respect thereof) referred to in such Section, then the Company shall contribute
to the amount paid or payable by such Indemnified Party as a result of such
losses, liabilities, deficiencies, costs, damages or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and such Indemnified Party on the
other. The relative fault shall be determined by reference to, among
other things, whether any untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or such Indemnified Party, and such parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, or whether such losses, claims, damages or
liabilities (or actions in respect thereof) arose out of the action or failure
to act of one or more of such parties.
ARTICLE
6
MISCELLANEOUS
6.1 Termination. In
the event that the Closing shall not have occurred with respect to a Purchaser
on or before five (5) Business Days from the date hereof due to the Company’s or
such Purchaser’s failure to satisfy the conditions set forth in Sections 4.1 and
4.2 above (and the nonbreaching party’s failure to waive such unsatisfied
condition(s)), the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, that
if this Agreement is terminated pursuant to this Section 6.1, the Company shall
remain obligated to reimburse the non-breaching Purchasers for the expenses
described in Section
6.2 below.
6.2 Fees and
Expenses. The Company shall reimburse each Purchaser for all
costs and expenses reasonably incurred by such Purchaser in connection with the
negotiation, drafting and execution of the Transaction Documents and the
transactions contemplated thereby (including all legal fees, travel,
disbursements and due diligence in connection therewith and all fees incurred in
connection with any necessary regulatory filings and clearances); provided, however, that the Company
shall have no obligation to reimburse the Purchasers for any such costs and
expenses to the extent that they exceed, in the aggregate, $125,000, unless
otherwise agreed in writing by the Company. The Company shall be
responsible for its own fees and expenses incurred in connection with the
transactions contemplated by this Agreement. The Company shall pay
all fees of its transfer agent, and all stamp taxes and other taxes and duties
levied in connection with the delivery of the Securities, the Warrant Shares or
Stock Amortization Shares to each Purchaser, unless such delivery is made to a
third party at such Purchaser’s direction. In addition, the
prevailing party in any action commenced in connection with the enforcement of
this Agreement or any of the other Transaction Documents shall be entitled to
receive reasonable attorneys’ fees and court costs.
6.3 Specific Performance;
Consent to Jurisdiction; Venue.
(a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to seek an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement or the other Transaction Documents
and to enforce specifically the terms and provisions hereof or thereof without
the requirement of posting a bond or providing any other security, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.
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(b) The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The parties
irrevocably consent to personal jurisdiction in the state and federal courts in
New York County of the state of New York. The Company and each
Purchaser consent to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this
Section
6.3 shall affect or limit any right to serve process in any other manner
permitted by law. The parties hereby waive all rights to a trial by
jury.
6.4 Amendment. No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and Purchasers holding at least a majority of
the outstanding principal amount of the Notes; provided that if any
Purchaser is materially adversely affected by such waiver or amendment, such
waiver or amendment shall not be effective without the written consent of the
adversely affected Purchaser.
6.5 Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery at the address designated below (if delivered on a Business Day during
normal business hours where such notice is to be received), or the first
Business Day following such delivery (if delivered other than on a Business Day
during normal business hours where such notice is to be received) or (b) on the
second Business Day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:
|
If
to the Company:
|
Ener1,
Inc.
|
|
1540
Broadway, Suite 25C
|
|
|
New
York, New York 10036
|
|
|
Attention: Chief
Executive Officer
|
|
|
with
a copy to:
|
Mazzeo
Song & Bradham LLP
|
|
708
Third Avenue – 19th Floor
|
|
|
New
York, New York 10017
|
|
|
Attention: David
S. Song, Esq.
|
|
|
If
to any Purchaser:
|
At
the address of such Purchaser set forth on
|
|
Exhibit
A to this Agreement
|
|
|
With
a copy to (which shall not
|
Schulte
Roth & Zabel LLP
|
|
constitute
notice):
|
919
Third Avenue
|
|
New
York, New York 10022
|
|
|
Attention: Eleazer
N. Klein, Esq.
|
30
Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.
6.6 Waivers. No
waiver by either party of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right accruing to it
thereafter. No consideration shall be offered or paid to any
Purchaser to amend or waive or modify any provision of this Agreement unless the
same consideration is also offered to all of the parties to this Agreement then
holding Notes. This provision constitutes a separate right granted to
each Purchaser by the Company and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.
6.7 Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.
6.8 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. The
Purchasers may assign the Securities and its rights under this Agreement and the
other Transaction Documents and any other rights hereto and thereto without the
consent of the Company. The Company may not assign or delegate any of
its rights or obligations hereunder or under any Transaction
Document.
6.9 No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person or entity.
6.10 Business
Day. As used herein, “Business
Day” shall mean any day other than a Saturday, Sunday or other day on
which commercial banks in New York City are required or permitted by law to be
closed during regular business hours.
6.11 Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles that would result in the
application of the substantive law of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted.
6.12 Survival. The
covenants, agreements and representations and warranties of the parties under
the Transaction Documents shall survive the execution and delivery hereof
indefinitely.
6.13 Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart. Signature pages to this Agreement may be delivered by
facsimile or other means of electronic transmission.
31
6.14 Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of any Purchaser without the prior written consent of
such Purchaser, which consent shall not be unreasonably withheld or delayed, or
unless and until such disclosure is required by law, rule or applicable
regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, each Purchaser consents
to being identified in any filings the Company makes with the Commission to the
extent required by law or the rules and regulations of the
Commission.
6.15 Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
6.16 Further
Assurances. From and after the date of this Agreement, upon
the request of the Purchasers or the Company, the Company and each Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the other Transaction
Documents
6.17 Independent Nature of
Purchasers’ Obligations and Rights. The rights and obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchaser as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that each Purchaser
has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and
advisors. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
6.18 Time Is of the
Essence. Time is of the essence with respect to the provisions
of this Agreement and each other Transaction Document that specify a time for
performance; provided,
however, that the
foregoing shall not be construed to limit or deprive a party of the benefits of
any grace or similar period allowed by this Agreement or any other Transaction
Document.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
32
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
|
ENER1,
INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
[SIGNATURE
PAGES CONTINUE]
[PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name of
Purchaser:
___________________________________________________________________________________
Signature
of Authorized Signatory of Purchaser:
____________________________________________________________
Name of
Authorized Signatory:
__________________________________________________________________________
Title of
Authorized Signatory:
___________________________________________________________________________
Email
Address of
Purchaser:_____________________________________________________________________________
Fax
Number of Purchaser:
______________________________________________________________________________
Address
for Notice of Purchaser:
_________________________________________________________________________
Address
for Delivery of Securities for Purchaser (if not same as address for
notice):
____________________________________________________________________________________________________
Purchase
Price: $_________________
EIN
Number: __________________
EXHIBIT
A
SCHEDULE
OF PURCHASERS
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
|||||||||||||
|
Buyer
|
Address
and
Facsimile
Number
|
Aggregate
Principal
Amount
of
Notes
|
Number
of
Common
Shares
|
Number
of
Warrant
Shares
|
Purchase
Price
|
Legal
Representative's Address
and
Facsimile Number
|
|||||||||||||
|
Liberty
Harbor Special Investments, LLC
|
c/o
Goldman Sachs Asset Management
200
West Street
New
York NY 10282
Attention:
Thomas N. Secor
Facsimile: (212)
428-1505
Telephone:
(212) 357-7910
Residence:
Cayman Islands
E-mail:
thomas.secor@gs.com
|
$ | 35,000,000 | 611,498 | 1,834,494 | $ | 35,000,000 |
Schulte
Roth & Zabel LLP
919
Third Avenue
New
York, New York 10022
Attention: Eleazer
Klein, Esq.
Facsimile:
(212) 593-5955
Telephone: (212)
756-2376
|
|||||||||||
|
Goldman
Sachs Palmetto State Credit Fund, L.P.
|
c/o
Goldman Sachs Asset Management
200
West Street
New
York NY 10282
Attention:
Thomas N. Secor
Facsimile: (212)
428-1505
Telephone:
(212) 357-7910
Residence:
Cayman Islands
E-mail:
thomas.secor@gs.com
|
$ | 5,000,000 | 87,357 | 262,070 | $ | 5,000,000 |
Schulte
Roth & Zabel LLP
919
Third Avenue
New
York, New York 10022
Attention: Eleazer
Klein, Esq.
Facsimile:
(212) 593-5955
Telephone: (212)
756-2376
|
|||||||||||
|
Whitebox
Multi Strategy Partners, L.P.
|
c/o
Whitebox Advisors LLC
3033
Excelsior Boulevard
Suite
300
Minneapolis
MN 55416
United
States
Attention:
Dan Philp
Mark
Strefling, CLO
Telephone:
(612) 253-6084
E-mail:
dphilp@whiteboxadvisors.com
|
$ | 6,500,000 | 113,564 | 340,692 | $ | 6,500,000 | ||||||||||||
A-1
|
Whitebox
Concentrated Convertible Arbitrage Partners, L.P.
|
c/o
Whitebox Advisors LLC
3033
Excelsior Boulevard
Suite
300
Minneapolis
MN 55416
United
States
Attention:
Dan Philp
Mark
Strefling, CLO
Telephone:
(612) 253-6084
E-mail:
dphilp@whiteboxadvisors.com
|
$ | 3,000,000 | 52,414 | 157,242 | $ | 3,000,000 | ||||||||||||
|
Pandora
Select Partners, L.P.
|
c/o
Whitebox Advisors LLC
3033
Excelsior Boulevard
Suite
300
Minneapolis
MN 55416
United
States
Attention:
Dan Philp
Mark
Strefling, CLO
Telephone:
(612) 253-6084
E-mail:
dphilp@whiteboxadvisors.com
|
$ | 2,500,000 | 43,679 | 131,035 | $ | 2,500,000 | ||||||||||||
|
Whitebox
Credit Arbitrage Partners, L.P
|
c/o
Whitebox Advisors LLC
3033
Excelsior Boulevard
Suite
300
Minneapolis
MN 55416
United
States
Attention:
Dan Philp
Mark
Strefling, CLO
Telephone:
(612) 253-6084
E-mail:
dphilp@whiteboxadvisors.com
|
$ | 2,000,000 | 34,943 | 104,828 | $ | 2,000,000 | ||||||||||||
|
Whitebox
Special Opportunities Fund LP, Series B
|
c/o
Whitebox Advisors LLC
3033
Excelsior Boulevard
Suite
300
Minneapolis
MN 55416
United
States
Attention:
Dan Philp
Mark
Strefling, CLO
Telephone:
(612) 253-6084
E-mail:
dphilp@whiteboxadvisors.com
|
$ | 1,000,000 | 17,471 | 52,414 | $ | 1,000,000 |
A-2
EXHIBIT
B
FORM
OF 8.25% SENIOR UNSECURED PROMISSORY NOTE
B-1
EXHIBIT
C
FORM
OF WARRANT
C-1
EXHIBIT
D
FORM
OF REGISTRATION RIGHTS AGREEMENT
D-1
EXHIBIT
E
OPINION
OF COUNSEL TO COMPANY
E-1