Exhibit 4.1(a)
-35-
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (the "Agreement"), dated as January 13,
2000, has been executed by the undersigned (individually, a "Subscriber" and
collectively, the "Subscribers") in connection with the offer and sale (the
"Offering") of (i) up to 30,000 shares of Series A Cumulative Convertible
Preferred Stock, par value $0.05 per share (the "Preferred Stock"), of Xceed,
Inc., a Delaware corporation (the "Company"), for a purchase price of $1,000 per
share, convertible into shares of common stock, par value $0.01 per share, of
the Company (the "Common Stock"), and possessing such other rights and
preferences as are set forth in the Certificate of Designation, Preferences and
Rights of the Preferred Stock, attached hereto as EXHIBIT A and filed with
Secretary of State of the State of Delaware on or prior to the date hereof (the
"Certificate"), and (ii) warrants (the "Warrants") to purchase an aggregate of
183,273 shares of Common Stock substantially in the form attached hereto as
EXHIBIT B. The solicitation of this Agreement and, if accepted by the Company,
the offer and sale of the Preferred Stock and the Warrants, are being made in
reliance upon the provisions of Regulation D ("Regulation D") promulgated by the
Securities and Exchange Commission (the "SEC") under the United States
Securities Act of 1933, as amended (the "Securities Act"). The shares of Common
Stock issuable upon conversion of the Preferred Stock (the "Underlying Common
Shares") and the shares of Common Stock issuable upon exercise of the Warrants
(the "Underlying Warrant Shares") are sometimes referred to in this Agreement as
the "Underlying Shares."
Upon the terms and subject to the conditions set forth herein, the
Subscribers hereby, severally but not jointly, agree to purchase, and the
Company hereby agrees to issue and sell, up to 30,000 shares of Preferred Stock
and the Warrants at the aggregate purchase price set forth in Section 14 in the
name, number of shares of Preferred Stock and the Warrants set forth opposite
the name of each Subscriber on Schedule I attached hereto. In consideration of
the mutual promises, representations, warranties and conditions set forth
herein, and intending to be legally bound hereby, the Company and the
Subscribers hereby agree as follows:
1. Agreement to Subscribe
1.1 Purchase and Sale of Preferred Stock and Warrants. On the basis of the
representations and warranties contained in this Agreement and subject
to the terms and conditions hereinafter set forth, the Company shall
issue and sell to each Subscriber and each Subscriber hereby subscribes
for and shall purchase the specified number of shares of Preferred
Stock and the specified number of Warrants set forth opposite the name
of such Subscriber on Schedule I attached hereto for an aggregate
purchase price of $1,000 for each share of Preferred Stock and related
Warrants. The closing of the purchase of the shares of Preferred Stock
and Warrants (the "Closing") shall occur on January 13, 2000 or such
other date as may be agreed to in writing by the Company and the
Subscribers (the "Closing Date"); provided that: (a) the aggregate
purchase price for the subscriptions evidenced hereby shall have been
delivered by the Subscribers to the Company or as otherwise agreed
between the parties (in immediately available funds via a wire transfer
pursuant to instructions previously delivered for such purpose); (b)
the shares of Preferred Stock and the Warrants subscribed for hereby
shall have been issued and delivered by the Company to the Subscribers
or as otherwise agreed between the parties; and (c) all other
conditions precedent to the obligations of the Subscribers and the
Company to the Closing set forth herein shall have been satisfied or
waived in writing.
1.2 Conditions Precedent to the Obligation of the Company at Closing. The
obligation of the Company hereunder to issue and sell the shares of
Preferred Stock to each Subscriber is subject to the satisfaction at or
before the Closing of each of the conditions set forth below. Each of
these conditions are for the Company's sole benefit and may be waived
in writing by the Company with respect to any or all Subscribers at any
time in its sole discretion.
(a) Accuracy of the Subscribers' Representations and Warranties.
The representations and warranties of each Subscriber shall be
true and correct as of the date when made and in all material
respects as of the Closing Date as though made at each time.
-36-
(b) Performance by the Subscribers. Each Subscriber shall have
performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement or any other Transaction Documents (as defined in
Section 1.3(j) hereof) to be performed, satisfied or complied
with by such Subscriber at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits or adversely effects
any of the transactions contemplated by this Agreement and the
other Transaction Documents, and no proceeding shall have been
commenced which may have the effect of prohibiting or
adversely affecting any of the transactions contemplated
hereby and thereby.
(d) Legal Investment. At the time of the Closing, the purchase of
the shares of Preferred Stock and the Warrants by the
Subscribers shall be legally permitted by all statutes, rules
and regulations to which each of the Subscribers and the
Company are subject.
1.3 Conditions Precedent to the Obligation of the Subscribers at Closing.
The obligation of each of the Subscribers hereunder to acquire and pay
for the shares of Preferred Stock and Warrants is subject to the
satisfaction at or before the Closing of each of the conditions set
forth below. Each of these conditions is for each Subscriber's sole
benefit and may be waived in writing by each such Subscriber at any
time in its sole discretion (any such waiver shall have effect only
with respect to the waiving Subscriber).
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true
and correct as of the date when made and in all material
respects as of the Closing Date as though made at such time.
(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 or any of the other Transaction Documents to be
performed, satisfied or complied with by the Company at or
prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits or adversely effects
any of the transactions contemplated by this Agreement and the
other Transaction Documents, and no proceeding shall have been
commenced which may have the effect of prohibiting or
adversely affecting any of the transactions contemplated
hereby and thereby.
(d) Adverse Changes. For the period from August 31, 1999 until the
Closing Date, except as (i) publicly disclosed in the
Company's press releases or filings (the "Recent Exchange Act
Reports") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (ii) set forth on Schedule
1.3(d) hereto (collectively, "Prior Public Disclosures"), no
event shall have occurred or be threatened to occur which has
had or is likely to have a Material Adverse Effect (as defined
in Section 3.6 hereof) on the Company.
(e) No Suspension of Trading in or Delisting of Common Stock. The
trading in the Common Stock shall not have been suspended by
the SEC or the National Association of Securities Dealers,
Inc. (the "NASD"); the Common Stock shall not have been
delisted from the Nasdaq National Market and the Company shall
not have received any notice of threatened or pending
proceedings for delisting the Common Stock from the Nasdaq
National Market; and trading in securities generally as
reported by the Nasdaq National Market shall not have been
suspended or limited or minimum prices shall not have been
established on securities whose trades are reported by the
Nasdaq National Market.
-37-
(f) Legal Opinion. The Company shall have delivered to the
Subscribers an opinion of Akin Gump Strauss Hauer & Feld,
L.L.P., counsel to the Company, substantially in the form of
EXHIBIT C annexed hereto, dated the Closing Date.
(g) Officer's Certificate. The Company shall have delivered to the
Subscribers a certificate in form and substance reasonably
satisfactory to the Subscribers, executed by an executive
officer of the Company, to the effect that all the conditions
to the Closing shall have been satisfied and that the
representations and warranties of the Company contained in the
Agreement are true and correct in all respects on and as of
the Closing Date with the same force and effect as though such
representations and warranties had been made on the date
hereof.
(h) Registration Rights Agreement. The Company shall have entered
into the Registration Rights Agreement with the Subscribers
(the "Registration Rights Agreement"), substantially in the
form of EXHIBIT D annexed hereto.
(i) Certificate of Designation. The Company shall have filed the
Certificate in accordance with the provisions hereof, the
Certificate shall have become effective and the Company shall
have delivered evidence thereof to the Subscribers.
(j) Reservation of Shares. On or prior to the Closing Date, the
Company shall have duly reserved the number of Underlying
Shares required by this Agreement, the Certificate, the
Registration Rights Agreement, and the Warrants (collectively,
the "Transaction Documents") to be reserved for issuance upon
conversion of the Preferred Stock and upon exercise of the
Warrants.
(k) Legal Investment. At the time of the Closing, the purchase of
the Preferred Stock and the Warrants by the Subscribers shall
be legally permitted by all statutes, rules and regulations to
which the Subscriber and the Company are subject.
(l) Warrants. The Company shall have executed and delivered to
each Subscriber its respective Warrants.
(m) Secretary's Certificate. The Company shall have delivered to
the Subscribers a certificate in form and substance reasonably
satisfactory to each Subscriber, executed by the secretary of
the Company, certifying as to the truth and accuracy of the
certificate of incorporation of the Company (the "Certificate
of Incorporation"), as in effect on the Closing Date, the
By-Laws of the Company, as in effect on the Closing Date, and
the resolutions duly adopted by the Board of Directors
authorizing and approving the execution and delivery of this
Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and
thereby.
(n) Nasdaq Filing. Pursuant to Rule 4310(c)(17) of The Nasdaq
Stock Market, Inc.'s Marketplace Rules, the Company shall have
filed a form with The Nasdaq Stock Market, Inc. designated by
The Nasdaq Stock Market, Inc. for the listing of the
Underlying Shares not later than required by The Nasdaq Stock
Market, Inc.
(o) Good Standing. On or prior to the Closing Date, the Company
shall have delivered to the Subscribers a long-form
certificate of good standing and tax status of the Company and
each of its subsidiaries, if any, certified as of a recent
date by the Secretary of State of the State of Delaware, and
from every jurisdiction in which the Company is qualified to
do business.
2. Representations and Warranties of the Subscribers
Each Subscriber, with respect only to itself, represents and warrants
to the Company that:
-38-
2.1 No Government Recommendation or Approval. The Subscriber understands
that no federal or state agency or similar agency of any other country,
has passed upon or made any recommendation or endorsement of the
Company or of the Offering.
2.2 Intent. The Subscriber (i) is purchasing the Preferred Stock and the
Warrants, (ii) upon conversion of the Preferred Stock, will acquire the
Underlying Common Shares and (iii) upon exercise of the Warrants, will
acquire the Underlying Warrant Shares (the Preferred Stock, the
Warrants, the Underlying Common Shares and the Underlying Warrant
Shares collectively are referred to herein as the "Securities") for its
own account for investment purposes only and not with a present view
toward resale or distribution and the Subscriber has no contract,
agreement, undertaking or other arrangement to sell the Securities to
or through any person or entity; provided, however, that by making the
representation herein, the Subscriber does not agree, other than as may
be required to be in compliance with applicable federal and state
securities laws, to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at
any time in accordance with federal and state securities laws. The
Subscriber understands that the Securities must be held indefinitely
unless such Securities are subsequently the subject of registration
under the Securities Act or an exemption from the registration
requirement of the Securities Act is available. The Subscriber has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act.
2.3 Sophisticated Investor. The Subscriber is an "accredited investor" (as
defined in Rule 501 of Regulation D), and the Subscriber has such
experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Securities. The
Subscriber acknowledges that the Securities are speculative and involve
a high degree of risk.
2.4 Independent Investigation. The Subscriber, in making the decision to
purchase the Securities, has relied upon an independent investigation
made by it and/or its representatives and has not relied on any
information or representations made by third parties or on any oral or
written representations or assurances from the Company or any
representative or agent of the Company other than the representations
of the Company set forth herein, in the other Transaction Documents and
in Prior Public Disclosures. The Subscriber has had a reasonable
opportunity to ask questions of, and receive answers from, the Company
concerning the Company, the Securities and the Offering. The Subscriber
acknowledges that the price and terms of the Securities and the
conversion and exercise prices of the Underlying Shares have been
determined by negotiation based in substantial part on the market price
for the Common Stock, and that it does not necessarily bear any
relationship to the assets, book value or potential performance of the
Company or any other recognized criteria of value. Neither such
inquiries nor any other due diligence investigations conducted by such
Subscriber, its representatives and advisors, if any, shall modify,
amend or affect such Subscriber's right to rely on the Company's
representations and warranties contained in Section 3 below.
2.5 Authority. This Agreement has been duly authorized and validly executed
and delivered by the Subscriber and is a legal, valid and binding
obligation of the Subscriber, enforceable against the Subscriber in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application.
2.6 No Legal Advice from Company. The Subscriber acknowledges that it has
had sufficient and ample opportunity to review this Agreement and the
other Transaction Documents and to evaluate the transactions
contemplated herein and therein with its own legal counsel and
investment and tax advisors. Except for any statements or
representations of the Company made in this Agreement and the other
Transaction Documents, the Subscriber is relying solely on its counsel
and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or
investment advice with respect to this investment, the transactions
contemplated by this Agreement and the other Transaction Documents or
the securities laws of any jurisdiction.
-39-
2.7 No Brokers. The Subscriber has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 Not an Affiliate. The Subscriber is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of Securities Act) of
the Company.
2.9 Reliance on Representations and Warranties. The Subscriber understands
that the Securities are being offered and sold to it in reliance on
specific provisions of federal and state securities laws (including
specifically, but without limitation, the provisions of Regulation D)
and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Subscriber set forth in this Agreement and the
other Transaction Documents in order to determine the availability of
such provisions.
2.10 No General Solicitation. The Subscribers acknowledges that the
Securities were not offered or sold to the Subscriber by means of
general solicitation, publicly disseminated advertisement or sales
literature.
2.11 Information Provided by Subscribers. All of the information which the
Subscriber has provided to the Company concerning such Subscriber, such
Subscriber's financial condition/position and such Subscriber's
knowledge of financial and business matters was correct and complete
when provided and is correct and complete as of the date hereof. The
Subscriber agrees that, to the extent required by applicable laws,
rules and regulations, any information provided by the Subscriber may
be disclosed by the Company. Each Subscriber further agrees, if
requested by the Company or its representative, to provide bank and
other references confirming the information provided by such
Subscriber.
3. Representations and Warranties of Company
The Company represents and warrants to each Subscriber that:
3.1 Company Status. The Company has registered its Common Stock pursuant to
Section 12(b) or 12(g) of the Exchange Act, is in full compliance with
all reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued quotation of its Common
Stock on the Nasdaq National Market, and such Common Stock is currently
listed for trading on the Nasdaq National Market.
3.2 Current Public Information. The Recent Exchange Act Reports are the
only filings made by the Company with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act since August 31, 1999.
3.3 No Directed Selling Efforts or General Solicitation in Regard to this
Transaction. The Company has not conducted any general solicitation (as
that term is used in Regulation D) with respect to the Securities, nor
has it made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would require
registration of the Securities under the Securities Act.
3.4 Valid Issuance of Capital Stock. (a) The Company has an authorized
capitalization consisting of 30,000,000 shares of Common Stock and
1,000,000 shares of preferred stock, par value $0.05 per share. The
Company has issued and outstanding on the date hereof 18,693,390 shares
of Common Stock, of which zero shares are held in treasury. As of the
date hereof, the Company has outstanding the following securities
convertible into or exercisable or exchangeable for Common Stock (the
"Derivative Securities"): (i) options to purchase 4,999,161 shares of
Common Stock; and (ii) warrants to purchase 976,562 shares of Common
Stock.
(b) All of the issued shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable. On or before the Closing Date, the authorized
capitalization of the Company shall include the Preferred Stock and the
Warrants; upon issuance and payment therefor in accordance with the
Certificate, the shares of Preferred Stock shall be (i) validly
authorized and issued, fully paid and non-assessable, (ii) free and
clear from all taxes, liens and charges with respect to the
-40-
issuance thereof and (iii) entitled to the rights and preferences set
forth in the Certificate. The number of shares of Common Stock required
hereunder and under the other Transaction Documents to be reserved for
issuance upon conversion of the Preferred Stock and exercise of the
Warrants (subject to adjustment pursuant to the Company's covenant set
forth in Section 5.2 below) have been duly authorized and reserved for
issuance. Upon conversion of the Preferred Stock and exercise of the
Warrants, in each case, in accordance with the terms thereof, the
Underlying Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issuance
thereof, with the holders thereof being entitled to all rights accorded
to holders of Common Stock. The holders of outstanding shares of
capital stock of the Company are not and shall not be entitled to
preemptive or other rights afforded by the Company to subscribe for the
capital stock or other securities of the Company as a result of the
sale of the Securities or the issuance of Underlying Shares upon the
conversion or exercise thereof. The issuance by the Company of the
Securities is exempt from registration under the Securities Act. The
issuance by the Company of the Securities is being made in reliance
upon the exemption from registration set forth in Rule 506 of
Regulation D under the Securities Act and is only being made to
"accredited investors" that meet the requirements of Rule 501(a) of
Regulation D and similar exemptions under state law.
(c) Other than as set forth in Section 3.4(a): (i) no shares of the
Company's capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding debt securities issued by
the Company; (iii) 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 (or any subsidiary of the
Company (each hereinafter referred to as a "Subsidiary" and
collectively, the "Subsidiaries"), or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary
is or may become bound to issue additional shares of capital stock of
the Company or any Subsidiary or 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 or any Subsidiary; (iv) there are no agreements or
arrangements under which the Company (or any Subsidiary) is obligated
to register the sale of any of their securities under the Securities
Act (except the Registration Rights Agreement); (v) there are no
outstanding securities of the Company or any Subsidiary which contain
any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to redeem a security of the Company
or any Subsidiary; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered
by the issuance of the Securities as described in this Agreement; and
(vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement.
(d) All of the authorized shares of capital stock of each Subsidiary
are owned by the Company, free and clear of any lien, charge, security
interest, encumbrance, adverse claim or other restriction, and all the
issued and outstanding shares of capital stock of the Subsidiaries are
validly issued and are fully paid, non-assessable and free of
preemptive and similar rights. Except as set forth on Schedule 3.4(d)
hereto, there are no outstanding agreements or commitments requiring
the Company or any Subsidiary to issue capital stock or Derivative
Securities.
3.5 Share Issuance. The number of shares of Common Stock issuable upon
conversion of the Preferred Stock may increase substantially in certain
circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines
prior to conversion of the Preferred Stock. The Company's executive
officers and directors have studied and fully understand the nature of
the Preferred Stock being sold hereby and recognize that they have a
potentially dilutive effect. The Board of Directors of the Company has
concluded, in its good faith business judgment, that such issuance is
in the best interest of the Company. The Company specifically
acknowledges that its obligation to issue the Underlying Common Shares
upon conversion of the Preferred Stock is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the
ownership interests of other stockholders of the Company.
-41-
3.6 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to own its
properties and assets and to carry on its business as now being
conducted. The Subsidiaries are listed on Schedule 3.6 hereto. Except
as set forth on Schedule 3.6 hereto, the Company owns no securities
other than the capital stock of the Subsidiaries. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under
the laws of its respective state of organization, with the requisite
corporate power to own its properties and assets and to carry on its
business as now being conducted. The Company and each Subsidiary is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary
other than those jurisdictions in which the failure so to qualify would
not have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the business, operations, properties, cash
flows, prospects or condition (financial or otherwise) of the Company
and the Subsidiaries taken as a whole and any condition or situation
which would prohibit or otherwise materially adversely interfere with
the ability of the Company to enter into and perform its obligations
under the Transaction Documents.
3.7 Authorization; Enforcement. (a) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and the
other Transaction Documents, to issue the Preferred Stock in accordance
with the terms hereof and thereof and to file and perform its
obligations under the Certificate and its Certificate of Incorporation;
(b) the execution and delivery of this Agreement and the other
Transaction Documents, the issuance and delivery of the Preferred Stock
and the Warrants, the filing of the Certificate by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action,
and no further consent or authorization of the Company or its Board of
Directors or stockholders is required; (c) this Agreement has been, and
on or before the Closing Date each of the other Transaction Documents
will be, duly executed and delivered by the Company and on the Closing
Date, the Certificate will be duly filed and effective; and (d) this
Agreement constitutes, and upon execution and delivery thereof, each of
the other Transaction Documents shall constitute, legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application.
3.8 Corporate Documents. The Company has furnished or made available to the
Subscribers true, correct and complete copies of the Certificate of
Incorporation, as in effect on the date hereof, and each Subsidiary's
articles of incorporation, as in effect on the date hereof (each, a
"Subsidiary Charter"), and the Company's and each Subsidiary's Bylaws,
as in effect on the date hereof (the Certificate of Incorporation, the
Certificate, each Subsidiary Charter, the Company's Bylaws and each
Subsidiary's Bylaws are collectively referred to herein as the "Charter
Documents"). Neither the Company nor any Subsidiary is in violation of
any of the provisions of its Charter Documents.
3.9 No Conflicts. The execution, delivery and performance of this Agreement
and the other Transaction Documents and consummation of the
transactions contemplated hereby and thereby (including the issuance of
the Preferred Stock and the Warrants, conversion of the Preferred
Stock, exercise of the Warrants, issuance of the Underlying Shares upon
conversion of the Preferred Stock and upon exercise of the Warrants and
the filing of the Certificate) do not and will not: (i) result in a
violation of the Charter Documents; or (ii) result in the creation of
any lien, charge, security interest or encumbrance upon any of the
assets of the Company or any Subsidiary pursuant to the terms or
provisions of or, 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, credit
facility or instrument to which the Company or any Subsidiary is a
party, or result in a violation of any federal, state, local or foreign
law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, except, in the case of clause (ii),
for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of each of
the Company and each Subsidiary are not being conducted in violation of
any law, ordinance or regulations of
-42-
any governmental entity, except for violations or potential violations
which either individually or in the aggregate do not and will not have
a Material Adverse Effect. The Company is not required under federal,
state or local law, rule or regulation in the United States to obtain
any consent, authorization or order of, or make any filing or
registration with, any court or governmental or self-regulatory agency
in order for it to execute, deliver or perform any of its obligations
under this Agreement or the Registration Rights Agreement or issue and
sell the Preferred Stock, the Warrants or the Underlying Common Shares
in accordance with the terms hereof and thereof (other than any SEC,
NASD, The Nasdaq Stock Market, Inc. or state securities filings which
may be required to be made by the Company, any registration statement
which may be filed pursuant hereto and the filing of the Certificate).
3.10 Exchange Act Reports. The Company has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a)
or 15(d) thereof, since August 31, 1995 (the foregoing materials being
collectively referred to herein as the "Exchange Act Reports"). The
Company has delivered or made available to the Subscribers true,
correct and complete copies of the Exchange Act Reports (including,
without limitation, proxy information and solicitation materials). The
Company has not provided to the Subscribers any information which,
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed.
As of their respective dates, the Exchange Act Reports complied in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder and other
applicable federal, state and local laws, rules and regulations, and
none of the Exchange Act Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The audited financial statements of the Company included in
the Exchange Act Reports comply or will comply in all material respects
as to form with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (a)
as may be otherwise indicated in such financial statements or the notes
thereto or (b) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements) and fairly present (or will fairly present) in all material
respects the consolidated financial position of the Company as of the
dates thereof and the consolidated results of operations and cash flows
for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). The Company has
filed (including filing such documents by incorporation by reference)
all agreements or documents to which the Company is a party that are
required to be filed as exhibits to the Exchange Act Reports.
3.11 No Material Adverse Change. Since August 31, 1999, except as disclosed
in the Prior Public Disclosures, no Material Adverse Effect has
occurred or exists with respect to the Company and the Subsidiaries
taken as a whole.
3.12 No Undisclosed Liabilities. The Company and the Subsidiaries have no
liabilities or obligations not disclosed in the Exchange Act Reports,
other than those incurred in the ordinary course of the Company's or
such Subsidiary's respective businesses since August 31, 1999 and
which, individually or in the aggregate, do not or would not have a
Material Adverse Effect.
3.13 No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or any Subsidiary or
their respective business, operations, properties, prospects or
condition (financial or otherwise), which, under applicable law, rule
or regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed.
3.14 Application of Takeover Protections. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or
other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the State of Delaware which is or could
become applicable to the Subscribers as a result of the Subscribers and
the Company fulfilling their obligations under the Transaction
Documents, including, without limitation, the Company's issuance of the
Securities and the Subscribers' ownership of the Securities.
-43-
3.15 No Brokers. The Company has not taken any action which would give rise
to a claim by any person for brokerage commissions, finder's fees or
similar payments by any Subscriber relating to this Agreement or the
transactions contemplated hereby.
3.16 Effectiveness of SEC Filings. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement
filed by the Company or the Subsidiary under the Exchange Act or the
Securities Act.
3.17 No Material Litigation Proceedings. Neither the Company nor any
Subsidiary is a party to or the subject of any litigation, arbitration
or other proceeding which, if adversely determined, would individually
or in the aggregate have a Material Adverse Effect. There is no action,
suit, proceeding or investigation pending, or, to the knowledge of the
Company, threatened, against the Company or any Subsidiary before or by
any court, regulatory body or administrative agency or any other
governmental agency or body, domestic or foreign, or any action, suit,
proceeding or investigation pending, or, to the knowledge of the
Company, threatened, which in any such case challenges the validity of
any action taken or to be taken by the Company or any Subsidiary
pursuant to or in connection with this Agreement, the other Transaction
Documents or the issuance of the Securities.
3.18 Compliance with Instruments, etc. Neither the Company nor any
Subsidiary (or the manner in which any of them conducts its businesses)
is in breach or violation of, or in default under, any term or
provision of (i) its Charter Documents, (ii) any indenture, mortgage,
deed of trust, voting trust agreement, stockholders agreement, note
agreement or other agreement or instrument to which it is a party or by
which it is or may be bound or to which any of its property or assets
is or may be subject, or any indebtedness, the effect of which breach
or default, individually or in the aggregate, would have a Material
Adverse Effect, or (iii) any statute, judgment, decree, order, rule or
regulation applicable to the Company or any Subsidiary or of any
arbitrator, court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, having jurisdiction
over the Company or any Subsidiary or any of their respective
activities, properties or assets and the effect of which breach or
default, individually or in the aggregate, would have a Material
Adverse Effect.
3.19 Intellectual Property.
(a) Each of the Company and each Subsidiary has full and exclusive
right, title and interest in and to, or license rights to, all patents,
patent applications, registered or unregistered trademarks, service
marks and trade names, registered or unregistered copyrights and
applications therefor, licenses, approvals or governmental
authorizations to conduct their business as now conducted, know-how,
proprietary rights and processes, trade secrets, customer lists,
methodologies (to the extent protectible), proprietary development and
marketing information and know-how, inventions, inventors' notes (to
the extent such notes exist), drawings, designs associated with the
foregoing, and other confidential information (collectively,
"Intellectual Property") relating to their respective businesses or
otherwise used in or necessary for the proper conduct of their
respective businesses, free and clear of all liens, security interests,
claims and encumbrances of any nature; and (ii) neither the Company nor
any Subsidiary has any obligation to any other person or entity with
respect to the Intellectual Property or any product or process of the
Company or any Subsidiary utilizing or embodying any Intellectual
Property.
(b) There is (i) no infringement, misuse or misappropriation of any
Intellectual Property owned, licensed or controlled by any third party
arising out of any product or process now being used, manufactured or
distributed, or ever having been used, manufactured or distributed at
any time previously, by or on behalf of the Company or the
Subsidiaries, (ii) no pending or, to the knowledge of the Company,
threatened claim or challenge of or proceeding for infringement, misuse
or misappropriation of or interference with any Intellectual Property
owned, licensed or controlled by any third party arising out of any
product or process now being used, manufactured or distributed, or ever
having been used, manufactured or distributed at any time previously,
by or on behalf of the Company or the Subsidiaries, (iii) except as set
forth in Schedule 3.22 hereto, no pending or threatened or potential
claim, challenge or proceeding by the Company or any Subsidiary against
any third party for infringement, misuse or misappropriation of or
interference with any Intellectual Property owned, licensed or
controlled by the
-44-
Company or such Subsidiary or (iv) no notice or, to the knowledge of
the Company, facts or information rendering any Intellectual Property
owned, controlled or licensed by the Company or the Subsidiaries
invalid or unenforceable, nor, to the knowledge of the Company, is
there any allegation that any such Intellectual Property is invalid or
unenforceable.
3.20 Material Contracts. All contracts to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is
bound which are filed as or incorporated by reference as exhibits to
the Exchange Act Reports (the "Material Contracts"), are valid, binding
and enforceable in accordance with their terms (assuming the other
parties thereto are bound) and are in full force and effect, except
where such invalidity or unenforceability would not have a Material
Adverse Effect. No payment default, breach or violation or alleged
default by the Company or any Subsidiary exists under the Material
Contracts.
3.21 Investment Company. The Company is not, and is not controlled by or
under common control with an affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.22 No Integration. Neither the Company nor any of its affiliates nor any
person acting on the Company's behalf has, directly or indirectly, at
any time within the past six (6) months made any offer or sale of any
security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D in connection with the
offer and sale of the Securities as contemplated hereby; or (ii) 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 or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of the
NASD, as applicable.
3.23 Year 2000 Compliance. All computer hardware, software, databases,
systems and other computer equipment (collectively, "Software") used by
the Company or the Subsidiaries can be used during and after the
calendar year 2000, and shall operate during each such time period,
both on a stand-alone basis and when interacting or interoperating with
third-party Software, without error relating to the processing,
calculating, comparing, sequencing or other use of Date Data. "Date
Data" is any data derived from or dependent upon the proper recognition
by software or hardware of dates prior to or after the year 2000.
3.24 Form S-3 Eligible. The Company currently meets the requirements for use
of Form S-3 under the Securities Act.
3.25 Disclosure. The written information with respect to the Company and the
Subsidiaries heretofore provided and to be provided by the Company
pursuant to this Agreement and the other Transaction Documents,
including the schedules and exhibits hereto, and each of the
agreements, documents, certificates and writings to be delivered to the
Subscribers or their respective representatives at the Closing, do not
and will not on the Closing Date contain any untrue statement of a
material fact or omit to state a material fact required to be stated
herein or therein or necessary in order to make the statements and
writings contained herein and therein not false or misleading in the
light of the circumstances under which they were made.
4. Covenants of each Subscriber
4.1 Resales. No Subscriber shall make any offers or sales of the Securities
other than pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. Each Subscriber will comply with applicable prospectus
delivery requirements.
5. Covenants of the Company
5.1 Reservation of Common Stock. As of the Closing, the Company will
reserve and the Company shall continue to reserve and keep available at
all times, free of preemptive rights, shares of Common Stock in a
number sufficient to enable the Company to satisfy one and one-half
times the number of shares necessary
-45-
to satisfy any obligation to issue shares of Common Stock upon
conversion of the Preferred Stock as if all the Preferred Stock were
converted as of the Closing at the then applicable conversion price and
at all times thereafter, plus the number of additional shares of Common
Stock as would be issued upon exercise of the Warrants. The number of
shares so reserved may be reduced by the number of shares actually
delivered pursuant to conversion of a portion of the Preferred Stock
(provided that in no event shall the number of shares so reserved be
less than one and one-half times the number required to satisfy the
remaining conversion rights on the unconverted Preferred Stock) and the
number of shares so reserved shall be increased to reflect stock splits
and stock dividends and distributions.
5.2 Listing of Underlying Shares. The Company hereby agrees, promptly
following the Closing, to take such action to cause the Underlying
Shares to be quoted for trading on the Nasdaq National Market not later
than the effective date of the registration statement relating to the
Underlying Shares required to be filed pursuant to the terms of the
Registration Rights Agreement (the "Registration Statement"). The
Company further agrees, if the Company applies to have the Common Stock
traded on any other principal stock exchange or market, that it will
include in such application the Underlying Shares and will take such
other action as is reasonably necessary to cause the Underlying Shares
to be listed on such other exchange or market concurrently with any
other Common Stock.
5.3 Exchange Act Registration. The Company will use its best efforts: (a)
to cause its Common Stock to continue to be registered under Section
12(b) or 12(g) of the Exchange Act; (b) to comply in all material
respects with its reporting and filing obligations under the Exchange
Act; and (c) not to take any action or file any document (whether or
not permitted by the Exchange Act or the rules and regulations
thereunder) to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under the Exchange Act.
The Company will use its best efforts to continue the listing and
trading of its Common Stock on the Nasdaq National Market and will use
its best efforts to comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of
the NASD and the Nasdaq National Market.
5.4 Legends. Except as provided in Section 6.1 below, the Underlying Shares
and certificates evidencing the same shall at all times be free of
legends, "stop transfers," "stock transfer restrictions" or other
restrictions, upon the effectiveness of the Registration Statement.
5.5 Corporate Existence. So long as any Subscriber beneficially owns any
Preferred Stock or Warrants, the Company shall maintain its corporate
existence and shall not sell all or substantially all of the Company's
assets, except in the event of a merger or consolidation or sale of all
or substantially all of the Company's assets, where the surviving or
successor entity in such transaction assumes the Company's obligations
hereunder and under the other Transaction Documents; and (ii) is a
publicly traded corporation on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or The Nasdaq
SmallCap Market.
5.6 Transfer Agent Instructions. The Company covenants and agrees that,
promptly following execution and delivery of this Agreement, it shall
issue irrevocable instructions (the "Irrevocable Transfer Agent
Instructions") to its transfer agent for the Common Stock, and any
subsequent transfer agent, such instructions to be in form and
substance reasonably acceptable to the Subscribers, to facilitate
trades of the Underlying Shares and to permit the Subscribers to timely
deliver within any applicable settlement period certificates
representing such shares in connection with any transfer or disposition
of the Underlying Shares. The Company further covenants and agrees
that, except as otherwise required by law, no instruction, other than
the Irrevocable Transfer Agent Instructions, will be given by the
Company to its transfer agent and that the Underlying Shares shall
otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Each of the Subscribers and the Company
acknowledge and agree that their respective obligations pursuant to
this Section 5.6 are subject to compliance by each of them with
applicable securities laws. The Company covenants that it will use its
best efforts to cause the Company's transfer agent to deliver
certificates representing shares issued in connection with a transfer
of Underlying Shares as promptly as practicable but in no event later
than three (3) business days after delivery by a Subscriber of all
required documentation in respect of such transfer to both the Transfer
Agent and the Company as
-46-
required pursuant to Paragraphs 7 and 8 of the Certificate. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Subscribers by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5.6 will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the
provisions of this Section 5.6, that the Subscribers shall be entitled,
in addition to all other available remedies, to an 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.
5.7 Use of Proceeds. The Company shall use all the proceeds of the Offering
for general corporate purposes, including working capital and for the
repayment of the Company's borrowings, provided that the Company shall
not use the proceeds to redeem its equity or equity-equivalent
securities. Pending application of the proceeds of the Offering in the
manner permitted hereby, the Company will invest such proceeds in
interest bearing accounts and/or short-term, investment grade interest
bearing securities.
5.8 Rule 144A Information. The Company will (i) make available, upon
request, to any holder of Securities and any prospective purchaser
thereof designated by such a holder, upon the request of such holder or
prospective purchaser, the information required to be provided to such
holder or prospective purchaser by Rule 144A(d)(4) under the Securities
Act and (ii) update such information from time to time in order to
prevent such information from becoming false and misleading and will
take such other actions as are reasonably necessary to ensure that the
safe harbor exemption from the registration requirements of the
Securities Act under Rule 144A is and will be available for resales of
the Preferred Stock and the Warrants Shares conducted in accordance
with Rule 144A.
5.9 Notice of Adverse Change. The Company will notify the Subscribers
promptly (but in any event within seven days) after becoming aware of
the existence of any condition or event which has had or is likely to
have a Material Adverse Effect.
5.10 Dividends and Distributions. Until the delivery by the Company to the
Subscribers of all of the shares of Common Stock issuable upon
conversion of the Preferred Stock or all sums of cash upon redemption
of the Preferred Stock, as applicable, such that after such delivery
upon any such conversion or redemption no more than 10% of the
Preferred Stock issued on the Closing Date remains outstanding, the
Company shall not make or fix a record date for the determination of
holders of Common Stock or other securities entitled to receive a
dividend or other distribution (special or otherwise) or declare a cash
dividend or other distribution payable in cash or property of the
Company.
5.11 Filing of Current Report on Form 8-K. On or before the second business
day following the Closing Date, the Company shall file with the SEC a
Current Report on Form 8-K in a form reasonably acceptable to the
Subscribers describing the terms of the transaction consummated at the
Closing.
5.12 Form D. The Company agrees to file one or more Form D's with respect to
the Offering as required under Regulation D and to provide a copy
thereof to the Subscribers promptly upon request.
5.13 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of any or all of
such Securities to any Subscriber.
5.14 Shareholder Approval. The Company shall provide each stockholder
entitled to vote at a meeting of the stockholders of the Company, which
meeting shall occur on or before the date which is 60 days after the
Proxy Statement Triggering Date (as defined below) (the "Stockholder
Meeting Deadline"), a proxy statement, which has been previously
reviewed by the Subscribers and counsel of their choice, soliciting
each such stockholder's affirmative vote at such stockholder meeting
for approval of the Company's issuance of all of the Securities as
described in this Agreement, and the Company shall use its best efforts
to (i) solicit its stockholders' approval of such issuance of the
Securities and (ii) cause the Board of Directors of the Company to
recommend to the stockholders that they approve such proposal. A "Proxy
-47-
Statement Triggering Date" shall mean the first date after the date of
this Agreement on which the sum of (A) the number of Underlying Shares
issued and (B) the number of Underlying Shares issuable upon conversion
of all the outstanding shares of Preferred Stock based on the
Conversion Price (as defined in the Certificate), and upon exercise of
all the outstanding Warrants based on the Warrant Price (as defined in
the Warrants) in effect on the date of such determination (without
regard to any limitation upon the conversion of any shares of Preferred
Stock or exercise of Warrants), equals or exceeds 15% of the number of
shares of Common Stock issued and outstanding immediately prior to the
Closing Date.
6. Legends; Subsequent Transfer of Securities; Denominations
6.1 Legend. The Company shall issue one or more certificates evidencing the
Preferred Stock and the Warrants in the name of each Subscriber and in
such number of shares to be specified by such Subscriber prior to (or
from time to time subsequent to) the Closing. The Preferred Stock, the
Warrants and the Underlying Shares shall bear the following legend (the
"Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
Following the effectiveness of the Registration Statement, the Company
will issue certificates representing the Securities without the Legend
to any transferee other than holders who are "affiliates" of the
Company (as such term is defined under the Securities Act). In
addition, the Company will issue certificates representing the
Securities without the Legend, promptly upon request, if: (i) the
holder thereof is permitted to dispose of Securities pursuant to Rule
144 under the Securities Act; (ii) the Securities are sold to a
purchaser or purchasers in a transaction exempt from registration under
the Securities Act, as evidenced by an opinion of counsel to the
transferor delivered and reasonably satisfactory to the Company; or
(iii) the Securities are sold to a purchaser or purchasers pursuant to
an effective registration statement and the prospectus delivery
requirements under the Securities Act are met.
6.2 Subscriber's Compliance. Nothing in this Section 6 shall affect in any
way the Subscribers' obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
6A. Payment Set Aside
To the extent that the Company makes a payment or payments to any
Subscriber hereunder or pursuant to the Registration Rights Agreement
or the Certificate or any Subscriber enforces or exercises its rights
hereunder or thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other
person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action) by
the court of competent jurisdiction in a final non-appealable judgment,
then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made
or such enforcement or set-off had not occurred.
7. Governing Law; Jurisdiction
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to
principles of conflicts of law or choice of law, except for matters
arising under the Securities Act or the Exchange Act which matters
shall be construed and interpreted in accordance with such laws. The
Company and the Subscribers hereby agree that all
-48-
actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the Supreme
Court of the State of Delaware or the United States District Court of
Delaware located in New Castle County, Delaware. The Company and each
Subscriber consents to the jurisdiction and venue of the foregoing
courts and consent that any process or notice of motion or other
application to either of said courts or a judge thereof may be served
inside or outside the State of Delaware by registered mail, return
receipt requested, directed to the such party at its address set forth
in this Agreement (and service so made shall be deemed complete five
(5) days after the same has been posted as aforesaid) or by personal
service or in such other manner as may be permissible under the rules
of said courts. The parties hereto hereby waive any right to a trial by
jury in connection with any litigation pursuant to this Agreement and
the transactions contemplated hereby.
8. Assignment; Entire Agreement; Amendment
8.1 Assignment. Neither this Agreement nor any rights hereunder may be
assigned by either party without the prior written consent of the other
party hereto; provided, however, that the Company may assign its rights
and obligations under this Agreement in connection with a transaction
of the nature contemplated by Section 5.5 hereof and any Subscriber may
assign its rights under this Agreement to an affiliate of such
Subscriber who agrees to be bound by the terms hereof. To the extent
that any party assigns this Agreement with the prior written consent of
the other or any Subscriber assigns this Agreement as permitted herein
to an affiliate of such Subscriber, the provisions of this Agreement,
the Certificate and the Registration Rights Agreement shall inure to
the benefit of, be binding upon, and be enforceable by and against any
such assignee. Notwithstanding anything to the contrary contained
herein or any other Transaction Document, any Subscriber shall be
entitled to pledge the Securities in connection with a bona fide margin
account or other loan secured by the Securities.
8.2 Entire Agreement; Amendment. This Agreement, the Certificate, the
Registration Rights Agreement, the Warrants and the other documents
delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to
any other party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or
therein. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
9. Publicity
The Company and the Subscribers shall consult with each other in
issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and no party shall
issue any such press release or otherwise make any such public
statement without the prior written consent of the others, which
consent shall not be unreasonably withheld or delayed, except that no
prior consent shall be required if such disclosure is required by law
or applicable law, to the extent a party determines in good faith that
it is legally obligated to do so, in which such case the disclosing
party shall provide the other parties with prior notice of such public
statement. The Company shall not publicly or otherwise disclose the
names of any of the Subscribers without each such Subscriber's prior
written consent unless otherwise required by law, in which case the
Company shall inform such Subscriber of such disclosure in writing
prior to making such disclosure.
-49-
10. Notices, Etc.; Expenses, Indemnity
10.1 Notices. Any notice, demand or request required or permitted to be
given by either the Company or the Subscribers pursuant to the terms of
this Agreement shall be in writing and shall be deemed given when
delivered personally or by facsimile, with a hard copy to follow by two
day courier, addressed to the parties at the addresses of the parties
set forth on Schedule I hereto or such other address as a party may
request by notifying the other in writing. Copies of all notices to a
Subscriber shall be sent to its designee or representative.
10.2 Expenses. The Company shall reimburse the Subscribers for their
respective reasonable expenses and fees in connection with this
Agreement, which amount shall be withheld by the Subscribers from the
purchase price, in an amount not to exceed an aggregate of $50,000.
10.3 Indemnification. Each party shall indemnify the other against any loss,
cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of such parties' breach of any representation,
warranty, covenant or agreement in this Agreement.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument.
12. Survival; Severability
The representations, warranties, covenants and agreements of the
parties hereto shall survive the Closing notwithstanding any due
diligence investigation conducted by or on behalf of the Subscribers.
In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall
be effective if it materially changes the economic benefit of this
Agreement to any party.
13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
[Remainder of Page Intentionally Left Blank]
-50-
IN WITNESS WHEREOF, the Company and the Subscribers have caused this
Subscription Agreement to be duly executed as of the date first written above.
COMPANY: SUBSCRIBERS:
XCEED, INC. PECONIC FUND, LTD.
By: RAMIUS CAPITAL GROUP, LLC,
Its: Investment Advisor
By: /s/ Werner Haase
-----------------------------------
Name: Werner Haase
Title: Chief Executive Officer By: /s/ Jeffrey M. Solomon
------------------------------
Name: Jeffrey M. Solomon
Title: Managing Officer
LEONARDO, L.P.
By: ANGELO, GORDON & CO., L.P.
Its: General Partner
By:/s/ Michael L. Gordon
---------------------------------
Name: Michael L. Gordon
Title: Chief Operating Officer
HTFP INVESTMENT L.L.C.
By: PROMETHEAN ASSET MANAGEMENT,
L.L.C.
Its: Investment Manager
By:/s/ James F. O'Brien, Jr.
----------------------------------
Name: James F. O'Brien, Jr.
Title: Managing Member
-51-