SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is entered into as of the
date set forth on the signature page hereof by and between Convera Corporation,
a Delaware corporation (together with its successors and permitted assigns, the
"Issuer"), and the undersigned investor (together with its successors and
permitted assigns, the "Investor"). Capitalized terms used but not otherwise
defined herein shall have the meanings set forth in Section 9.1.
RECITALS
Subject to the terms and conditions of this Agreement, the Investor desires
to subscribe for and purchase, and the Issuer desires to issue and sell to the
Investor, certain shares of the Issuer's common stock, par value $0.01 per share
(the "Common Stock"). The Issuer is offering up to $38.3 million worth of shares
of Common Stock in a private placement to the Investor and to other investors on
identical terms (the "Other Investors") at a purchase price of $7.50 per share
and on the other terms and conditions contained in this Agreement (the
"Offering").
The Other Investors purchasing shares of Common Stock in this Offering will
be purchasing such shares pursuant to agreements (the "Other Agreements")
identical to this Agreement and the closing of such sales to the Other Investors
will occur on or about the same date of Closing set forth in Section 2.1 herein.
TERMS OF AGREEMENT
In consideration of the mutual representations and warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
SUBSCRIPTION AND ISSUANCE OF COMMON STOCK
1.1 Subscription and Issuance of Common Stock. Subject to the terms and
conditions of this Agreement, the Issuer will issue and sell to the Investor and
the Investor subscribes for and will purchase from the Issuer the number of
shares of Common Stock set forth on the signature page hereof (the "Shares") for
the aggregate purchase price set forth on the signature page hereof, which shall
be equal to the product of the number of Shares subscribed for by the Investor
times $7.50 (the "Purchase Price").
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1.2 Transfer Restrictions. The Shares may be disposed of only in compliance
with state and federal securities laws. In connection with any transfer of
Shares other than pursuant to an effective registration statement, to the
Issuer, or to an Affiliate of Investor, the Issuer may require the transferor
thereof to provide to the Issuer an opinion of counsel selected by the
transferor, at the expense of the Investor or transferee, the form and substance
of which opinion shall be reasonably satisfactory to the Issuer, to the effect
that such transfer does not require registration of such transferred Shares
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights of an Investor under this Agreement.
1.3 Legend. Any certificate or certificates representing the Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT
THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND ALSO MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH ANY APPLICABLE RULES OF THE SECURITIES AND
EXCHANGE COMMISSION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF
A SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, WHICH MAY
RESTRICT THE TRANSFER OF SUCH SECURITIES IN CERTAIN CIRCUMSTANCES. A COPY
OF SUCH AGREEMENT MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY'S
PRINCIPAL OFFICE.
1.4 Removal of Legends. Any legend endorsed on a certificate evidencing the
Shares shall be removed upon the request of the Investor, and the Issuer shall
issue a certificate without such legend to the holder of such Shares, if such
Shares are being sold pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 promulgated thereunder, and the purchaser
thereof may immediately resell such Shares without restriction and without
registration; provided, however, that in the case of a sale or request to remove
a legend pursuant to Rule 144(k), such holder of Shares shall provide such
information as is reasonably requested by the Issuer to ensure that such Shares
may be sold in reliance on Rule 144(k).
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1.5 Legal, Tax or Investment Advice. The Investor understands that nothing
in this Agreement or any other materials presented to such Investor in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Shares.
ARTICLE 2
CLOSING
2.1 Closing. The closing of the transactions contemplated herein (the
"Closing") shall take place on a date designated by the Issuer, which date shall
be on or about February 23, 2006. The Closing shall take place at the offices of
Allen & Company LLC, 711 Fifth Avenue, New York, New York 10022. At the Closing,
unless the Investor and the Issuer otherwise agree (i) the Investor shall pay
the Purchase Price to the Issuer, by wire transfer of immediately available
funds to an account designated in writing by the Issuer; (ii) the Issuer shall
issue to the Investor the Shares, and deliver to the Investor certificates for
the Shares duly registered in the name of the Investor, within three business
days or as soon as practicable thereafter; and (iii) all other agreements and
other documents referred to in this Agreement which are required for the Closing
shall be executed and delivered (if that is not done prior to the Closing).
Notwithstanding the previous sentence, in the event the Investor, due to
regulatory requirements, requires delivery versus payment (DVP), the Issuer will
arrange for delivery of the certificates for the Shares to the Investor (or its
designated custodian) on the date of Closing and the Investor will arrange for
payment of the Purchase Price immediately thereafter on such date.
2.2 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of the Issuer and the Investor;
(b) by the Investor, upon a breach of any material representation and
warranty, covenant or agreement on the part of the Issuer set forth in this
Agreement, or if any material representation and warranty of the Issuer shall
have become untrue in any material respect, in either case such that the
conditions in Section 8.1 would be incapable of being satisfied by the date of
the Closing; or
(c) by the Issuer, upon a breach of any material representation and
warranty, covenant or agreement on the part of the Investor set forth in this
Agreement, or if any material representation and warranty of the Investor shall
have become untrue in any material respect, in either case such that the
conditions in Section 8.2 would be incapable of being satisfied by the date of
the Closing.
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2.3 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 2.2, this Agreement shall forthwith become void, there shall
be no liability on the part of the Issuer or the Investor to each other and all
rights and obligations of any party hereto shall cease; provided, however, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations and warranties, covenants or agreements set forth in
this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
As a material inducement to the Investor entering into this Agreement and
subscribing for the Shares, the Issuer represents and warrants to the Investor
as follows:
3.1 Corporate Status. The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and lease its properties and
assets and to conduct its business as now conducted except where the failure to
do so would not have a Material Adverse Effect. Each subsidiary as referred to
in the SEC Reports (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own and
lease its properties and assets and to conduct its business as now conducted
except where the failure to do so would not have a Material Adverse Effect. The
Issuer and its subsidiaries are each qualified to do business as a foreign
corporation and are in good standing in all states where the conduct of their
respective businesses or their ownership or leasing of property requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect.
3.2 Corporate Power and Authority. The Issuer has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. At the time of
the closing, the Issuer will have taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
3.3 Enforceability. This Agreement has been duly executed and delivered by
the Issuer and (assuming it has been duly authorized, executed and delivered by
the Investor) constitutes a legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles, regardless of
whether such enforceability is considered in a proceeding at law or in equity.
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3.4 No Violation. The execution and delivery by the Issuer of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by the Issuer with the terms and provisions hereof (including,
without limitation, the Issuer's issuance to the Investor of the Shares as
contemplated by and in accordance with this Agreement), will not result in a
default under (or give any other party the right, with the giving of notice or
the passage of time (or both), to declare a default or accelerate any obligation
under) or violate any provision of the Certificate of Incorporation or By-Laws
of the Issuer or any material Contract to which the Issuer is a party (except to
the extent such a default, acceleration or violation would not, in the case of a
Contract, have a Material Adverse Effect on the Issuer), or violate any material
Requirement of Law applicable to the Issuer, or result in the creation or
imposition of any material Lien upon any of the capital stock, properties or
assets of the Issuer or any of its Subsidiaries (except where such Lien would
not have a Material Adverse Effect on the Issuer).
3.5 Consents/Approvals. Except for the filing of a registration statement
in accordance with Article 6 hereof and filings with the SEC, the securities
commissions of the states in which the Shares are to be issued and the Nasdaq
Stock Market, no consents, permits, filings, authorizations or other actions of
any Governmental Authority are required to be obtained or made by the Issuer for
the Issuer's execution, delivery and performance of this Agreement which have
not already been obtained or made. No consent, approval, waiver or other action
by any Person under any Contract to which the Issuer is a party or by which the
Issuer or any of its properties or assets are bound is required or necessary for
the execution, delivery or performance by the Issuer of this Agreement and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents would not have a Material Adverse Effect on the Issuer.
3.6 Valid Issuance. Upon payment of the Purchase Price by the Investor and
delivery to the Investor of the certificates for the Shares, such Shares will be
validly issued, fully paid and non-assessable, free from all Liens with respect
to the issuance of such Shares and will not be subject to any preemptive or
similar rights.
3.7 SEC Filings, Other Filings and Nasdaq Compliance. The Issuer has
delivered or made accessible to the Investor true, accurate and complete copies
of (i) the Issuer's Annual Report on Form 10-K for the fiscal year ended January
31, 2005, (ii) the Issuer's Quarterly Reports on Form 10-Q for the fiscal
quarters ended April 30, 2005, July 31, 2005 and October 31, 2005; (iii) the
Issuer's Current Reports on Form 8-K dated March 2, 2005, March 22, 2005, May
25, 2005, June 1, 2005, July 1, 2005, July 29, 2005, August 24, 2005, October
24, 2005, November 9, 2005, November 14, 2005, November 30, 2005, December 5,
2005 and February 13, 2006; and (iv) the Issuer's definitive proxy statement
dated May 31, 2005 relating to its 2005 Annual Meeting of Stockholders (the "SEC
Reports"). The SEC Reports, when filed, complied in all material respects with
all applicable requirements of the Exchange Act. None of the SEC Reports, at the
time of filing, 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 in light of the circumstances in
which they were made. The Issuer has filed in a timely manner all documents that
the Issuer was required to file under the Exchange Act during the 12 months
preceding the date of this Agreement. The Issuer is currently eligible to
register the resale of the Shares in a secondary offering on a registration
statement on Form S-3 under the Securities Act. The Issuer has taken all
necessary actions to ensure its continued inclusion in, and the continued
eligibility of the Common Stock for trading on, The Nasdaq Stock Market under
all currently effective inclusion requirements. Each balance sheet included in
the SEC Reports (including any related notes and schedules) fairly presents in
all material respects the consolidated financial position of the Issuer as of
its date, and each of the other financial statements included in the SEC Reports
(including any related notes and Schedules) fairly presents in all material
respects the consolidated results of operations of the Issuer for the periods or
as of the dates therein set forth in accordance with GAAP consistently applied
during the periods involved (except that the interim reports are subject to
adjustments which might be required as a result of year end audit and except as
otherwise stated therein).
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3.8 Commissions. The Issuer has not incurred any other obligation for any
finder's or broker's or agent's fees or commissions in connection with the
transactions contemplated hereby, except that the Issuer will pay a 4%
commission to Allen & Company LLC ("Allen"), the placement agent for the
Offering on gross proceeds received from entities other than Allen or its
affiliates. The Investor acknowledges the following: that Allen and its
affiliates own more than a majority of the outstanding equity of the Issuer;
that the Placement Agent, together with certain of its officers, directors and
employees, is a majority shareholder of the Company and that (i) Herbert A.
Allen III, a Managing Director and President of the Placement Agent, serves as a
Director of the Company, (ii) Herbert A. Allen, Jr., President of Allen &
Company Incorporated, serves as a Director of the Company and is Chairman of the
Compensation and Stock Option Administration Committee of the Company, (iii)
Donald R. Keough, Chairman of the Placement Agent and Allen & Company
Incorporated, serves as a Director of the Company, and (iv) Stephen D.
Greenberg, a Managing Director of the Placement Agent, serves as a Director of
the Company and is a member of the Compensation and Stock Option Administration
Committee of the Company. The Investor also acknowledges that the Placement
Agent and/or its affiliates may be providing, or may in the future provide,
financial or other services to the Company or other parties with conflicting
interests.
3.9 Capitalization. The authorized capital stock of the Issuer consists of
140,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. All
issued and outstanding shares of capital stock of the Issuer have been, and as
of the Closing Date will be, duly authorized and validly issued and are fully
paid and non-assessable. As of February 9, 2006, the Issuer has issued and
outstanding 47,137,670 shares of Common Stock and no shares of Preferred Stock.
Except as described in this Section 3.9 and on Schedule 3.9, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal and similar rights) or agreements, orally or in
writing, for the purchase or acquisition from the Issuer of any shares of
capital stock and the Issuer is not a party to or subject to any agreement or
understanding, and to the Issuer's knowledge, there is no agreement or
understanding between any person and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Issuer. The Issuer has no obligation, contingent or otherwise,
to redeem or repurchase any equity security or any security that is a
combination of debt and equity.
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3.10 Material Changes. Except as set forth in the SEC Reports or as
otherwise contemplated herein, since October 31, 2005, there has been no
Material Adverse Change in the Issuer and its subsidiaries taken as a whole.
Except as set forth in the SEC Reports, since October 31, 2005, there has not
been (i) any direct or indirect redemption, purchase or other acquisition by the
Issuer of any shares of the Common Stock or (ii) declaration, setting aside or
payment of any dividend or other distribution by the Issuer with respect to the
Common Stock.
3.11 Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, proceeding or investigation pending or, to the Issuer's knowledge,
currently threatened against the Issuer or any of its subsidiaries that
questions the validity of this Agreement or the right of the Issuer to enter
into it, or to consummate the transactions contemplated hereby, or that could
reasonably be expected to either individually or in the aggregate, in a Material
Adverse Effect on the Issuer or any change in the current equity ownership of
the Issuer. The foregoing includes, without limitation, actions pending or, to
the Issuer's knowledge, threatened involving the prior employment of any of the
Issuer's employees or their use in connection with the Issuer's business of any
information or techniques allegedly proprietary to any of their former
employers. Neither the Issuer nor any of its subsidiaries is a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Issuer or any of its subsidiaries currently
pending or which the Issuer or any of its subsidiaries currently intends to
initiate.
3.12 Rights of Registration and Voting Rights. Except as contemplated in
this Agreement and as disclosed on Schedule 3.12, the Issuer has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity, which rights remain outstanding as of the date hereof. To the
knowledge of the Issuer, no stockholder of the Issuer has entered into any
agreements with respect to the voting of capital shares of the Issuer.
3.13 Offerings. Subject in part to the truth and accuracy of Investor's
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws, and neither the Issuer nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.
3.14 Compliance with Certificate of Incorporation and By-laws; Compliance
with Laws. The Issuer is not in violation or default of any provisions of its
Certificate of Incorporation or Bylaws. The business and operations of the
Issuer have been conducted in accordance with all applicable laws, rules and
regulations of all governmental agencies, authorities and instrumentalities
(including, without limitation, under the federal and state securities laws,
Employee Retirement Income Security Act of 1974, as amended and all laws
relating to the employment of labor), except for such violations which would
not, individually or in the aggregate, have a Material Adverse Effect.
3.15 Nasdaq. The Common Stock is listed on the Nasdaq Stock Market and, to
the knowledge of the Issuer, there are no proceedings to revoke or suspend such
listing. The issuance of the Shares will not contravene any Nasdaq Marketplace
Rule. The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. The Issuer has taken no action designed to, or which to its knowledge is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act, delisting the Common Stock from the Nasdaq Stock Market.
The Issuer has not received any notification that, and has no knowledge that,
the SEC or the NASD is contemplating terminating such listing or registration.
The issuance of the Shares does not require stockholder approval, including,
without limitation, as may be required pursuant to the Nasdaq Rules.
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3.16 Tax Matters. The Issuer has filed all tax returns and reports as
required by federal, state, local, and foreign law and has paid all taxes shown
thereon that have become due and payable. Such returns and reports were
materially accurate and complete when filed and reflect all taxes and other
assessments due thereunder to be paid by the Issuer, except those contested by
it in good faith. The provision for taxes of the Issuer included in the
provision for accrued liabilities in the Issuer's Financial Statements is
adequate for taxes due or accrued as of the dates thereof. The Issuer has never
had any material tax deficiency proposed or assessed against it.
3.17 Sarbanes-Oxley. The Chief Executive Officer and the Chief Financial
Officer of the Issuer have signed, and the Issuer has furnished to the SEC, all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of
2002, and neither the Issuer nor any of its officers has received notice from
any governmental entity questioning or challenging the accuracy, completeness,
form or manner of filing or submission of such certifications.
3.18 Disclosure. The Issuer is aware of no facts which lead it to believe
that the Disclosure Documents, as of their respective dates, contain any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
As a material inducement to the Issuer entering into this Agreement and
issuing the Shares, the Investor represents and warrants to the Issuer as
follows:
4.1 Power and Authority. The Investor, if other than a natural person, is
an entity duly organized, validly existing and in good standing under the laws
of the state of its incorporation or formation. The Investor has the corporate,
partnership or other power and authority under applicable law to execute and
deliver this Agreement and consummate the transactions contemplated hereby, and
has all necessary authority to execute, deliver and perform its obligations
under this Agreement and consummate the transactions contemplated hereby. The
Investor has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
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4.2 No Violation. The execution and delivery by the Investor of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by the Investor with the terms and provisions hereof, will not result
in a default under (or give any other party the right, with the giving of notice
or the passage of time (or both), to declare a default or accelerate any
obligation under) or violate any charter or similar documents of the Investor,
if other than a natural person, or any Contract to which the Investor is a party
or by which it or its properties or assets are bound, or violate any Requirement
of Law applicable to the Investor, other than such violations or defaults which,
individually and in the aggregate, do not and will not have a Material Adverse
Effect on the Investor. The Investor is familiar with Regulation M promulgated
under the Exchange Act, a copy of which is attached hereto as Exhibit A, and is
in full compliance with the provisions thereof with respect to the transactions
contemplated hereby.
4.3 Consents/Approvals. No consents, filings, authorizations or actions of
any Governmental Authority are required for the Investor's execution, delivery
and performance of this Agreement. No consent, approval, waiver or other actions
by any Person under any Contract to which the Investor is a party or by which
the Investor or any of its properties or assets are bound is required or
necessary for the execution, delivery and performance by the Investor of this
Agreement and the consummation of the transactions contemplated hereby.
4.4 Enforceability. This Agreement has been duly executed and delivered by
the Investor and constitutes a legal, valid and binding obligation of the
Investor, enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in equity.
4.5 Investment Intent. The Investor is acquiring the Shares hereunder for
its own account and with no present intention of distributing or selling such
Shares and further agrees not to transfer such Shares in violation of the
Securities Act or any applicable state securities law, and no one other than the
Investor has any beneficial interest in the Shares. The Investor agrees that it
will not sell or otherwise dispose of any of the Shares unless such sale or
other disposition has been registered under the Securities Act or, in the
opinion of counsel acceptable to the Issuer, is exempt from registration under
the Securities Act and has been registered or qualified or, in the opinion of
such counsel acceptable to the Issuer, is exempt from registration or
qualification under applicable state securities laws. The Investor understands
that the offer and sale by the Issuer of the Shares being acquired by the
Investor hereunder has not been registered under the Securities Act by reason of
their contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
thereof, and that the reliance of the Issuer on such exemption from registration
is predicated in part on these representations and warranties of the Investor.
The Investor acknowledges that pursuant to Section 1.3 of this Agreement a
restrictive legend consistent with the foregoing has been or will be placed on
the certificates for the Shares. The Investor is acquiring the Shares hereunder
in the ordinary course of its business. The Investor does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Shares.
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4.6 Accredited Investor. The Investor is an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D under the Securities Act (a copy
of which is attached hereto as Exhibit B), and has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the investment to be made by it hereunder.
4.7 Adequate Information. The Investor has received from the Issuer, and
has reviewed, such information which the Investor considers necessary or
appropriate to evaluate the risks and merits of an investment in the Shares,
including without limitation, the documents listed on Exhibit C, which have been
received by Investor as part of an informational packet of materials from the
Issuer (the "Disclosure Documents"). The Investor acknowledges that each of the
SEC Reports, including the risk factors contained therein, are specifically
incorporated herein by reference and form an integral part of this Agreement.
The Investor also acknowledges that the additional risk factors set forth on
Exhibit C and contained in the Disclosure Documents are specifically
incorporated herein by reference and forms an integral part of this Agreement.
4.8 Opportunity to Question. The Investor has had the opportunity to
question, and has questioned, to the extent deemed necessary or appropriate,
representatives of the Issuer so as to receive answers and verify information
obtained in the Investor's examination of the Issuer, including the information
that the Investor has received and reviewed as referenced in Section 4.7 hereof
in relation to its investment in the Shares.
4.9 No Other Representations. No oral or written representations have been
made to the Investor in connection with the Investor's acquisition of the Shares
which were in any way inconsistent with the information reviewed by the
Investor. The Investor acknowledges that no representations or warranties of any
type or description have been made to it by any Person with regard to the
Issuer, any of its Subsidiaries, any of their respective businesses, properties
or prospects or the investment contemplated herein, other than the
representations and warranties set forth in Article 3 hereof.
4.10 Knowledge and Experience. The Investor has such knowledge and
experience in financial, tax and business matters, including substantial
experience in evaluating and investing in common stock and other securities
(including the common stock and other securities of speculative companies), so
as to enable the Investor to utilize the information referred to in Section 4.7
hereof and any other information made available by the Issuer to the Investor in
order to evaluate the merits and risks of an investment in the Shares and to
make an informed investment decision with respect thereto. The Investor is able
to bear the economic risk of an investment in the Shares and is able to afford a
complete loss of such investment.
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4.11 Independent Decision. The Investor is not relying on the Issuer, any
other potential Investor or on any legal or other opinion in the materials
reviewed by the Investor with respect to the financial or tax considerations of
the Investor relating to its investment in the Shares. The Investor has relied
solely on the representations and warranties, covenants and agreements of the
Issuer in this Agreement (including the Exhibits hereto) and on its examination
and independent investigation in making its decision to acquire the Shares.
4.12 General Solicitation. The Investor is not purchasing the Shares as a
result of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
solicitation or general advertisement.
4.13 Residence. If the Investor is an individual, then such Investor
resides in the state or province identified in the address of such Investor set
forth on the signature page hereto; if such Investor is a partnership,
corporation, limited liability company or other entity, then the office or
offices of such Investor in which its investment decision was made is located at
the address or addresses of such Investor set forth on the signature page
hereto.
4.14 No Prior Short Selling. At no time during the 30 days prior to the
Closing has the Investor engaged in or effected, in any manner whatsoever,
directly or indirectly, in any "short sale" (as such term is defined in Rule
3b-3 of the Exchange Act) of the Common Stock (a "Short Sale").
4.15 Commissions. The Investor has not incurred any obligation for any
finder's or broker's or agent's fees or commissions in connection with the
transactions contemplated hereby.
4.16 No Broker -Dealer. The Investor is not required to be registered as a
broker-dealer pursuant to Section 15 of the Exchange Act.
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ARTICLE 5
COVENANTS
5.1 Public Announcements. Each party to this Agreement agrees that it shall
not issue or release any public announcement with respect to this Agreement or
the transactions provided for herein, which names the other party, without the
prior consent of the other party. Notwithstanding the foregoing, nothing in this
Section 5.1 shall prevent any party hereto from making such public announcements
or filings as it may consider necessary in order to satisfy its legal
obligations. On the business day following the execution of this Agreement and
the Other Agreements, the Issuer will issue a press release acceptable to each
of the parties hereto describing the transactions contemplated by this
Agreement, and promptly thereafter file a Current Report on Form 8-K with the
SEC, attaching such press release.
5.2 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Each of
the Investor and the Issuer shall make on a prompt and timely basis all
governmental or regulatory notifications and filings required to be made by it
with or to any Governmental Authority in connection with the consummation of the
transactions contemplated hereby. The Issuer and the Investor each agree to
cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Requirement of Law or the rules of Nasdaq Stock Market
in connection with the transactions contemplated by this Agreement and to use
their respective best efforts to agree jointly on a method to overcome any
objections by any Governmental Authority to any such transactions. Except as may
be specifically required hereunder, neither of the parties hereto or their
respective Affiliates shall be required to agree to take any action that in the
reasonable opinion of such party would result in or produce a Material Adverse
Effect on such party.
5.3 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other party of the occurrence, or non-occurrence, of any event
which would be likely to cause any representation and warranty herein to be
untrue or inaccurate, or any covenant, condition or agreement herein not to be
complied with or satisfied.
5.4 Confidential Information. The Investor agrees that no portion of the
Confidential Information (as defined below) which may have been or may be
provided to it shall be disclosed to third parties, except as may be required by
law, without the prior express written consent of the Issuer provided that the
Investor may share any such information with such of its officers and
professional advisors as may need to know such information to assist the
Investor in its evaluation thereof on the condition that such parties agree to
be bound by the terms hereof. All Confidential Information, if any, received by
the Investor shall be promptly returned or destroyed, as directed in writing by
the Issuer. "Confidential Information" means all oral or written data, reports,
records or materials and any and all other confidential or disclosure
information or materials which may have been or may be obtained from the Issuer
or its professional advisors, which are not yet publicly available. Confidential
Information excludes information that is publicly available or already known to
the Investor through a source not bound by any confidentiality obligation.
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5.5 Form D Filing. The Issuer agrees that it shall file in a timely manner
a Form D relating to the sale of the Shares under this Agreement, pursuant to
Regulation D promulgated under the Securities Act.
ARTICLE 6
REGISTRATION RIGHTS
The Investor shall have the following registration rights with respect to
the Registrable Securities owned by it:
6.1 Transfer of Registration Rights. The Investor may assign the
registration rights with respect to the Shares to any party or parties to which
it may from time to time transfer the Shares, provided that the transferee
agrees in writing with the Issuer to be bound by the applicable provisions of
this Agreement regarding such registration rights and indemnification relating
thereto. Upon assignment of any registration rights pursuant to this Section
6.1, the Investor shall deliver to the Issuer a notice of such assignment which
includes the identity and address of any assignee and such other information
reasonably requested by the Issuer in connection with effecting any such
registration (collectively, the Investor and each such subsequent holder is
referred to as a "Holder").
6.2 Required Registration. As promptly as practicable after the Closing,
but in no event later than sixty (60) days after the date of the Closing, the
Issuer agrees to file a Registration Statement on Form S-3 (the "Shelf
Registration Statement") to register the resale of all of the Shares. The Issuer
shall use reasonable efforts to cause the SEC to declare the Shelf Registration
Statement effective as soon as practicable after filing and to thereafter
maintain the effectiveness of the Shelf Registration Statement until such time
as the Issuer reasonably determines, based on an opinion of counsel, that the
Holders will be eligible to sell under Rule 144 promulgated under the Securities
Act all of the Shares then owned by the Holders without the need for continued
registration of the Shares in the three month period immediately following the
termination of the effectiveness of the Shelf Registration Statement. The period
of time during which the Company is required hereunder to keep the Registration
Statement effective is referred to herein as the "Registration Period."
Notwithstanding the foregoing, the Issuer's obligations contained in this
Section 6.2 shall terminate on the second anniversary of the date on which the
Shares are issued hereunder. The Issuer covenants that it will provide written
notice to the Investor that the Issuer's registration statement on Form S-3
registering the Shares sold hereunder to the Investor has been declared
effective by the SEC, which notice shall be given promptly after the Issuer has
received notice of such effectiveness from the SEC. The Issuer will provide a
draft of the Shelf Registration Statement to the Investor at least three days
prior to filing and give the Investor an opportunity to review the same.
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6.3 Registration Procedures.
(a) In case of the Shelf Registration Statement effected by the Issuer
subject to this Article 6, the Issuer shall keep the Investor, on behalf of each
Holder, advised in writing as to the initiation of such registration, and as to
the completion thereof. In addition, subject to Section 6.2 above, the Issuer
shall, to the extent applicable to the Shelf Registration Statement:
(i) prepare and file with the SEC such amendments and supplements to
the Shelf Registration Statement as may be necessary to keep such
registration, effective and comply with provisions of the Securities Act
with respect to the disposition of all securities covered thereby during
the period referred to in Section 6.2;
(ii) update, correct, amend and supplement the Shelf Registration
Statement as necessary;
(iii) notify Holder when the Shelf Registration Statement is declared
effective by the SEC, and furnish such number of prospectuses, including
preliminary prospectuses, and other documents incident thereto as Holder
may reasonably request from time to time;
(iv) use its commercially reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of
such jurisdictions of the United States where an exemption is not available
and as Holder may reasonably request to enable it to consummate the
disposition in such jurisdiction of the Registrable Securities (provided
that the Issuer will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this provision, or (ii) consent to general service of
process in any such jurisdiction, or (iii) subject itself to taxation in
any jurisdiction where it is not already subject to taxation);
(v) notify Holder at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus
included in the Shelf Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements
therein not misleading, and at the request of Holder, the Issuer will
prepare a supplement or amendment to such prospectus, so that, as
thereafter delivered to purchasers of such shares, such prospectus will not
contain any untrue statements of a material fact or omit to state any fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
14
(vi) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Issuer are
then listed and obtain all necessary approvals from the Nasdaq Stock Market
for trading thereon;
(vii) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of the Shelf Registration
Statement; and
(viii) upon the sale of any Registrable Securities pursuant to the
Shelf Registration Statement, direct the transfer agent to remove all
restrictive legends from all certificates or other instruments evidencing
the Registrable Securities.
(b) Notwithstanding anything stated or implied to the contrary in Section
6.3(a) above, the Issuer shall not be required to consent to any underwritten
offering of the Registrable Securities or to any specific underwriter
participating in any underwritten public offering of the Registrable Securities.
(c) Each Holder agrees that upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 6.3(a)(v), such
Holder will forthwith discontinue such Holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6.3(a)(v) and, if so directed by the
Issuer, will deliver to the Issuer at the Issuer's expense all copies, other
than permanent file copies, then in such Holder's possession, of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.
(d) Except as required by law, all expenses incurred by the Issuer in
complying with this Article 6, including but not limited to, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Issuer, blue sky fees and expenses (including
fees and disbursements of counsel related to all blue sky matters)
("Registration Expenses") incurred in connection with any registration,
qualification or compliance pursuant to this Article 6 shall be borne by the
Issuer. All underwriting discounts and selling commissions applicable to a sale
incurred in connection with any registration of Registrable Securities and the
legal fees and other expenses of a Holder shall be borne by such Holder.
6.4 Further Information. If Registrable Securities owned by a Holder are
included in any registration, such Holder shall furnish the Issuer such
information regarding itself as the Issuer may reasonably request and as shall
be required in connection with any registration (or amendment thereto), referred
to in this Agreement, and Holder shall indemnify the Issuer with respect thereto
in accordance with Article 7 hereof. The Investor hereby represents and warrants
to the Issuer that it has accurately and completely provided the requested
information and answered the questions numbered (a) through (g) on the signature
pages of this Agreement or provided the information in another form reasonably
acceptable to the Issuer, and the Investor agrees and acknowledges that the
Issuer may rely on such information as being true and correct for purposes of
preparing and filing the Shelf Registration Statement at the time of filing
thereof and at the time it is declared effective, unless the Investor has
notified the Issuer in writing to the contrary prior to such time.
15
6.5 Right of Suspension.
(a) Notwithstanding any other provision of this Agreement or any related
agreement to the contrary, if any, the Issuer shall have the right, at any time,
to suspend the effectiveness of the Shelf Registration Statement and offers and
sales of the Registrable Securities covered thereby whenever, in the good faith
judgment of the Issuer, (i) continuing such effectiveness or permitting such
offers and sales could reasonably be expected to have an adverse effect upon a
proposed sale of all or substantially all of the assets of the Issuer or a
merger, acquisition, reorganization, recapitalization or similar current
transaction materially affecting the capital structure or equity ownership of
the Issuer, (ii) there exists a material development or a potential material
development with respect to or involving the Issuer that the Issuer would be
obligated to disclose in the prospectus used in connection with the Shelf
Registration Statement, which disclosure, in the good faith judgment of the
Issuer, after considering the advice of counsel, would be premature or otherwise
inadvisable at such time, or (iii) the Shelf Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances, not misleading (a "Suspension Event").
In the event that the Issuer shall determine to so suspend the effectiveness of
the Shelf Registration Statement and offers and sales of the Registrable
Securities covered thereby, the Issuer shall, in addition to performing those
acts required to be performed under the Securities Act and/or the Exchange Act
or deemed advisable by the Issuer, deliver to each Holder written notice
thereof, signed by the Chief Financial Officer or Chief Executive Officer of the
Issuer. Upon receipt of such notice, the Holders shall discontinue disposition
of the Registrable Securities covered by the Shelf Registration Statement and
prospectus until such Holders (x) are advised in writing by the Issuer that the
use of the Shelf Registration Statement and prospectus (and offers and sales
thereunder) may be resumed, (y) have received copies of a supplemental or
amended prospectus, if applicable, and (z) have received copies of any
additional or supplemental filings which are incorporated or deemed to be
incorporated by reference into such prospectus. The Issuer will exercise
commercially reasonable efforts to ensure that the use of the Shelf Registration
Statement and prospectus may be resumed as quickly as practicable, provided,
however, that in the event of a Suspension Event, the Issuer's obligation under
Section 6.2 to maintain the effectiveness of the registration statement for the
Registration Period shall be extended on a day-for-day basis equal to the amount
of time that such Shelf Registration Statement shall have been suspended.
(b) The Issuer's right to suspend the effectiveness of the Shelf
Registration Statement and the offers and sales of the Registrable Securities
covered thereby, as described above, shall be for a period of time (the
"Suspension Period") beginning on the date of the occurrence of the Suspension
Event and expiring on the earlier to occur of (i) the date on which the
Suspension Event ceases, or (ii) forty five (45) days after the occurrence of
the Suspension Event; provided, however, that there shall not be more than two
Suspension Periods in any 12 month period.
16
6.6 Liquidated Damages. If the Shelf Registration Statement covering the
Shares is not declared effective by the SEC within 120 days after the Closing,
then the Issuer shall pay to the Investor 1% of the Investor's aggregate
Purchase Price for the Investor's Shares purchased hereunder for each thirty-day
period (or a pro rata amount for any period of less than 30 days) commencing
with the 121st day after the Closing during which the Shelf Registration
Statement is not declared effective; provided however, that, at the Issuer's
discretion, in lieu of paying 1% of the Investor's Purchase Price for any
thirty-day period in cash, the Issuer may issue to the Investor additional
shares of the Issuer's Common Stock equal to 1% of the aggregate Shares
purchased by the Investor hereunder (or a pro rata amount for any period of less
than 30 days); provided further however, that in no event shall the Issuer be
required hereunder to pay to the Investor an aggregate amount that exceeds 8.0%
of the aggregate Purchase Price paid by the Investor for the Investor's Shares.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification Generally. The Issuer, on the one hand, and the
Investor, on the other hand (each an "Indemnifying Party"), shall indemnify the
other from and against any and all losses, damages, liabilities, claims,
charges, actions, proceedings, demands, judgments, settlement costs and expenses
of any nature whatsoever (including, without limitation, reasonable attorneys'
fees and expenses) or deficiencies resulting from any breach of a representation
and warranty, covenant or agreement by the Indemnifying Party and all claims,
charges, actions or proceedings incident to or arising out of the foregoing.
7.2 Indemnification Relating to Registration Rights.
(a) With respect to any registration, effected or to be effected pursuant
to Article 6 of this Agreement, the Issuer shall indemnify each Holder of
Registrable Securities whose securities are included or are to be included
therein, each of such Holder's directors and officers, each underwriter (as
defined in the Securities Act) of the securities sold by such Holder (if any),
and each Person who controls (within the meaning of the Securities Act) any such
Holder or underwriter (a "Controlling Person") from and against all losses,
damages, liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, reasonable attorneys' fees and expenses) or deficiencies of any such
Holder or any such underwriter or Controlling Person concerning:
(i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration;
17
(ii) any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by the Issuer of the Securities Act or any rule or
regulation promulgated thereunder applicable to the Issuer, or of any blue
sky or other state securities laws or any rule or regulation promulgated
thereunder applicable to the Issuer,
in each case, relating to any action or inaction required of the Issuer in
connection with any such registration, and subject to Section 7.3 below will
reimburse each such Person entitled to indemnity under this Section 7.2 for all
legal and other expenses reasonably incurred in connection with investigating or
defending any such loss, damage, liability, claim, charge, action, proceeding,
demand, judgment, settlement or deficiency; provided, however, that, the
foregoing indemnity and reimbursement obligation shall not be applicable to the
extent that any such matter arises out of or is based on any untrue statement
(or alleged untrue statement) or omission (or alleged omission) made in reliance
upon and in conformity with written information furnished to the Issuer by or on
behalf of such Holder or by or on behalf of such an underwriter specifically for
use in such prospectus, offering circular or other document.
(b) With respect to any registration, qualification or compliance effected
or to be effected pursuant to this Agreement, each Holder of Registrable
Securities whose securities are included or are to be included therein, shall
indemnify the Issuer from and against all losses, damages, liabilities, claims,
charges, actions, proceedings, demands, judgments, settlement costs and expenses
of any nature whatsoever (including, without limitation, reasonable attorneys'
fees and expenses) or deficiencies of the Issuer concerning:
(i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by such Holder of the Securities Act or any rule
or regulation promulgated thereunder applicable to the Issuer or such
Holder or of any blue sky or other state securities laws or any rule or
regulation promulgated thereunder applicable to the Issuer or such Holder,
18
in each case, relating to any action or inaction required of such Holder in
connection with any such registration, qualification or compliance, and subject
to Section 7.3 below will reimburse the Issuer for all legal and other expenses
reasonably incurred in connection with investigating or defending any such loss,
damage, liability, claim, charge, action, proceeding, demand, judgment,
settlement or deficiency; provided, however, that, the foregoing indemnity and
reimbursement obligation shall only be applicable to the extent that any such
matter arises out of or is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in reliance upon and in
conformity with written information furnished to the Issuer by or on behalf of
the Holder specifically for use in such prospectus, offering circular or other
document; provided, however, that, the obligation of the Holder hereunder shall
be limited to an amount equal to the proceeds to the Holder of Registrable
Securities sold as contemplated hereunder.
7.3 Indemnification Procedures. Each Person entitled to indemnification
under this Article 7 (an "Indemnified Party") shall give notice as promptly as
reasonably practicable to each party required to provide indemnification under
this Section (an "Indemnifying Party") of any action commenced against or by it
in respect of which indemnity may be sought hereunder, but failure to so notify
an Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it may have otherwise than on account of this indemnity agreement
so long as such failure shall not have materially prejudiced the position of the
Indemnifying Party. Upon such notification, the Indemnifying Party shall assume
the defense of such action if it is a claim brought by a third party, and after
such assumption the Indemnified Party shall not be entitled to reimbursement of
any expenses incurred by it in connection with such action except as described
below but may participate in the defense of such action with its own counsel at
its expense. In any such action, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the contrary or (ii) the named
parties in any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
or conflicting interests between them. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed by such Indemnifying
Party), but if settled with such consent or if there be final judgment for the
plaintiff, the Indemnifying Party shall indemnify the Indemnified Party from and
against any loss, damage or liability by reason of such settlement or judgment.
7.4 Non-Exclusive Remedies. The remedies provided for in this Article 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or in equity.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of the Investor. The obligation of the
Investor to proceed with the Closing is subject to the following conditions any
and all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
19
(a) Representations and Warranties. Each of the representations and
warranties of the Issuer contained in this Agreement shall be true and correct
in all material respects as of the Closing as though made on and as of the
Closing, except (i) for changes specifically permitted by this Agreement, and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date, except in any
case for such failures to be true and correct which would not, individually or
in the aggregate, have a Material Adverse Effect on the Issuer. Unless the
Investor receives written notice to the contrary at the Closing, Investor shall
be entitled to assume that the preceding is accurate in all respects at the
Closing.
(b) Agreement and Covenants. The Issuer shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Investor receives written notice to the contrary at the Closing,
Investor shall be entitled to assume that the preceding is accurate in all
respects at the Closing.
(c) No Order. No governmental authority or other agency or commission or
federal or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
(d) Opinion of Issuer's Counsel. The Holder shall have received an opinion
of Issuer's counsel, dated the Closing Date, with respect to legal matters
customary for private offerings of this type.
(e) Securities Exemptions. The offer and sale of the Shares pursuant to
this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all
applicable state securities laws.
(f) No Suspension of Trading or Listing of Common Stock. The Common Stock
of the Issuer (i) shall be designated for quotation or listed on Nasdaq and (ii)
shall not have been suspended from trading on Nasdaq.
8.2 Conditions to the Obligations of the Issuer. The obligation of the
Issuer to proceed with the Closing is subject to the following conditions any
and all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. Each of the representations and
warranties of the Investor contained in this Agreement shall be true and correct
as of the Closing as though made on and as of the Closing, except (i) for
changes specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date. Unless the Issuer receives
written notification to the contrary at the Closing, the Issuer shall be
entitled to assume that the preceding is accurate in all respects at the
Closing.
20
(b) Agreement and Covenants. The Investor shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
Unless the Issuer receives written notification to the contrary at the Closing,
the Issuer shall be entitled to assume that the preceding is accurate in all
respects at the Closing.
(c) No Order. No governmental authority or other agency or commission or
federal or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts, prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement.
(d) Securities Exemptions. The offer and sale of the Shares pursuant to this
Agreement shall be exempt from the registration requirements of the Securities
Act and the registration and/or qualification requirements of all applicable
state securities laws.
(e) No Suspension of Trading or Listing of Common Stock. The Common Stock
of the Issuer (i) shall be designated for quotation or listed on Nasdaq and (ii)
shall not have been suspended from trading on Nasdaq.
ARTICLE 9
MISCELLANEOUS
9.1 Defined Terms. As used herein the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
"Certificate of Incorporation" means the Issuer's Certificate of
Incorporation, as the same may be supplemented, amended or restated from time to
time.
"Closing" has the meaning in Article 2 of this Agreement.
"Common Stock" has the meaning specified in the Recitals to this Agreement.
"Contract" means any indenture, lease, sublease, loan agreement, mortgage,
note, restriction, commitment, obligation or other contract, agreement or
instrument.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity or official exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Investor" has the meaning specified in the Recitals to this Agreement.
"Issuer" means Convera Corporation, a Delaware corporation.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code or comparable law
or any jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a material and adverse change
in (or effect on) the financial condition, properties, assets, liabilities,
rights, obligations, operations or business, of a Person and its Subsidiaries
taken as a whole.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority or other entity, of whatever nature.
"Purchase Price" has the meaning specified in Section 1.1 of this
Agreement.
"Register", "registered" and "registration" refer to a registration of the
offering and sale or resale of Common Stock effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of the effectiveness of such registration statement.
"Registrable Securities" means all Shares of Common Stock acquired by the
Investor pursuant to this Agreement and any other shares of Common Stock or
other securities issued in respect of such Shares by way of a stock dividend or
stock split or in connection with a combination or subdivision of the Issuer's
Common Stock or by way of a recapitalization, merger or consolidation or
reorganization of the Issuer; provided, however, that, as to any particular
securities, such securities will cease to be Registrable Securities when they
have been sold pursuant to registration or in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale and the
purchaser and seller receive an opinion of counsel for the Issuer, which shall
be in form and substance reasonably satisfactory to the purchaser and seller and
their respective counsel, to the effect that such stock in the hands of the
purchaser is freely transferable without restriction or registration under the
Securities Act in any public or private transaction.
22
"Requirements of Law" means as to any Person, the certificate of
incorporation, by-laws or other organizational or governing documents of such
person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning specified in Section 3.7 of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in Section 1.1 of this Agreement.
"Subsidiary" means as to any Person, a corporation or limited partnership
of which more than 50% of the outstanding capital stock or partnership interests
having full voting power is at the time directly or indirectly owned or
controlled by such Person.
9.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificates, reports or other documents made or delivered
pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
(c) All accounting terms shall have a meaning determined in accordance with
GAAP.
(d) As used herein, the neuter gender shall also denote the masculine and
feminine, and the masculine gender shall also denote the neuter and feminine,
where the context so permits.
23
(e) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any Exhibits hereto) and not to any particular provision of this
Agreement.
9.3 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
subsequently designate in writing to the other party):
(a) if to the Issuer to:
Convera Corporation
1921 Gallows Road, Suite 200
Vienna, Virginia 22182
Attention: Chief Financial Officer
Telecopy: (703) 761-1990
(b) if to the Investor to the address set forth next to its name on the
signature page hereto.
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if delivered by
hand, by messenger or by courier, or if sent by facsimile, upon confirmation of
receipt.
9.4 Entire Agreement. This Agreement (including the Exhibits attached
hereto) and other documents delivered at the Closing pursuant hereto, contain
the entire understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings between or among the parties
with respect to such subject matter. The Exhibits constitute a part hereof as
though set forth in full above.
9.5 Expenses; Taxes. Except as otherwise provided in this Agreement, the
parties shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby. Any sales tax, stamp duty, deed transfer or other tax (except taxes
based on the income of the Investor) arising out of the issuance of the Shares
by the Issuer to the Investor and consummation of the transactions contemplated
by this Agreement shall be paid by the Issuer.
9.6 Amendment; Waiver. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
both parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
24
9.7 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of the Company and the Investor
and their respective successors and legal assigns. The rights and obligations of
this Agreement may not be assigned by any party without the prior written
consent of the other party.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
9.9 Headings. The headings contained in this Agreement are for convenience
of reference only and are not to be given any legal effect and shall not affect
the meaning or interpretation of this Agreement.
9.10 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Delaware applicable to contracts executed and to be wholly performed within such
State.
9.11 Severability. The parties stipulate that the terms and provisions of
this Agreement are fair and reasonable as of the date of this Agreement.
However, any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, activity or subject, it shall be
construed by limiting, reducing or defining it, so as to be enforceable.
[SIGNATURES AND OTHER INFORMATION ON NEXT THREE PAGES]
25
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed and delivered as of the date set forth below.
NAME OF INVESTOR: ADDRESS FOR NOTICES (Please Print):
______________________________ _______________________________________
_______________________________________
SIGNATURE: _______________________________________
Attention:_____________________________
By:___________________________ Telecopy:______________________________
Name:
Title: Tax Identification #:__________________
Exact Name to appear on Stock Certificate: ________________________________
Number of Shares Subscribed For: ______________________
Aggregate Purchase Price (see Section 1.1): $______________________
The Investor hereby provides the following additional information:
(a) Excluding the shares of Common Stock subscribed for above, set forth
below is the number of shares of Common Stock and options rights or warrants of
Convera Corporation. ("Options" and together with the Common Stock,
"Securities") which the Investor beneficially owns or of which the Investor is
the record owner on the date hereof. Please refer to the definition of
beneficial ownership on Exhibit D attached hereto. If none, please so state.
Number of Shares: __________________ (excluding the Shares subscribed for above)
Number of Options: __________________
Please indicate by an asterisk (*) above if the Investor disclaims "beneficial
ownership" of any of the above listed Securities, and indicate in response to
question (b) below who has beneficial ownership.
(b) If the Investor disclaims "beneficial ownership" in question (a),
please furnish the following information with respect to the person(s) other
than the Investor who is the beneficial owner(s) of the Securities in question.
If not applicable, please check box: |_|
Name of Beneficial Owner:________________________________
Relationship to the Investor:____________________________
Number of Securities Beneficially Owned:_________________
NAME OF INVESTOR:____________________________
(c) As to the Securities indicated as being "beneficially owned" in answers
to question (a) and (b) does any person other than the person identified as the
"beneficial owner" have:
(i) the sole or shared power to vote or to direct the vote of any such
Securities?
Yes No
or (ii) the sole or shared power to dispose or to direct the
disposition of any such Securities (referred to as "dispositive power")?
Yes No
If the answer is "Yes" to either of the forgoing questions, the Investor should
set forth below the name and address of each person who has either such power or
with whom the indicated "beneficial owner" shares such power, together with such
number of shares to which such rights relates.
IF THE INVESTOR IS AN ENTITY OR A TRUST:
The Investor must list the name of each natural person associated with the
Investor entity or trust who has or shares voting or dispositive power with
respect to the shares indicated as being "beneficially owned" in answers to
questions (a) or (c). For an investment or holding company, the investment
manager(s) would normally be the person(s) who hold(s) or share(s) voting and
dispositive power. For a trust, the natural person(s) holding or sharing voting
or dispositive power would normally be the trustee(s). For other types of
entities, the natural person(s) holding or sharing voting or dispositive power
would normally be the officer(s) empowered by the board of directors to make
such decisions, or if there is no such officer, each of the directors.
Disclosure is required for each natural person who in practice has voting or
dispositive power, regardless of that person's formal title or position within
the organization.
NAME OF INVESTOR:____________________________
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Type of Power:
Name of Natural Person Voting/Dispositive/
Both Address Position or Title
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
(d) In any pending legal proceeding, is the Investor or any of its
affiliates a party, or does the Investor or any such associate have an interest,
adverse to the Issuer or any affiliate of the Issuer?
Yes No
If the answer is "Yes," please describe, and state the nature and amount of,
such interest.
(e) Is there any family relationship (including relationships by blood,
marriage, and adoption, except those more remote than first cousin) between the
Investor or any of its affiliates and any director or officer of the Issuer, any
affiliate of the Issuer or any person who has been chosen to become a director
or officer of the Issuer?
Yes No
If the answer is "Yes," please describe the relationship.
(f) Are any of the Securities listed in response to question (a) the
subject of a voting agreement, contract or other arrangement whereby others have
voting control over, or any other interest in, any of the Investor's Securities?
|_| Yes |_| No
If the answer is "Yes", please give details:__________________________________.
(g) Please describe each position, office or other material relationship
which the Investor has had with the Issuer or any of its affiliates, including
any Subsidiary of the Issuer, within the past three years. Please include a
description of any loans or other indebtedness, and any contracts or other
arrangements or transactions involving a material amount, payable by the
Investor to the Issuer or any of its affiliates, including its Subsidiaries, or
by the Issuer or any of its affiliates, including its Subsidiaries, to the
Investor. "Affiliates" of the Issuer include its directors and executive
officers, and any other person controlling or controlled by the Issuer. If none,
please so state.
Answer:
(h) Please provide the name and address of other person(s), if any, to whom
any proxy statements, registration statements (including notice of effectiveness
thereof), prospectuses or similar documents and information should be delivered
by the Issuer on behalf of the Investor in the future, with respect to the
Investor's shares:
____________________________ _____________________________
____________________________ _____________________________
____________________________ _____________________________
____________________________ _____________________________
(i) Please advise of special stock certificate delivery requirements for
closing, if any:
(j) Please advise if a NASD member has placed with you the Shares being
purchased hereunder: (Name of Member:)
__________________________________________
ACCEPTED: CONVERA CORPORATION
By: Dated: ____________, 2006
Name:
Title: