EXHIBIT 10.2
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
January 31, 2005 by and among Cadence Resources Corporation, a Utah corporation
(the "COMPANY"), and each purchaser listed on the Schedule of Purchasers
attached hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").
WHEREAS:
A. The Company and each Purchaser is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and Rule 506 of Regulation D ("REGULATION D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act.
B. Each Purchaser wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, (i) the aggregate number of
shares of common stock of the Company, par value $0.01 per share (the "COMMON
STOCK") set forth opposite such Purchaser's name in column (3) on the Schedule
of Purchasers (collectively, the "NEW COMMON STOCK"), and (ii) Warrants, in
substantially the form attached hereto as Exhibit A (collectively, the
"WARRANTS") to acquire up to that number of shares of Common Stock set forth
opposite such Purchaser's name in column (4) of the Schedule of Purchasers
attached hereto (collectively, the "WARRANT SHARES").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each of the
Purchasers agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"AFFILIATE" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed
under Rule 144.
"ANNUAL REPORT" means the Company's Annual Report (Form 10-KSB) for
the fiscal year ended September 30, 2003.
"AURORA" means Aurora Energy, Ltd, a Nevada company.
"BUSINESS DAY" means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
"CLOSING" means the closing of the purchase and sale of the New
Common Stock and Warrants pursuant to Section 2.1.
"CLOSING DATE" means the date of the Closing.
"COMMON STOCK" means the common stock of the Company, par value
$0.01 per share.
"COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.
"COMPANY COUNSEL" means Jenkens & Gilchrist Parker Chapin LLP.
"CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock.
"EFFECTIVE DATE" means the date that the Registration Statement is
first declared effective by the SEC.
"EFFECTIVENESS PERIOD" means the fourth anniversary of the Effective
Date or such earlier date when either (i) all Registrable Securities of
the Purchaser covered by the applicable Registration Statement have been
sold or (ii) all Registrable Securities owned by the Purchaser may be sold
pursuant to Rule 144(k) as evidenced by a written opinion letter to such
effect, addressed to the Company's transfer agent and the affected
Holders.
"ELIGIBLE MARKET" means any of The New York Stock Exchange, Inc.,
the American Stock Exchange, the Nasdaq National Market, The Nasdaq
SmallCap Market or the OTC Bulletin Board.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means thirty days after the effective date of the
closing of the Merger.
"HYDROCARBONS" means oil, gas, coal seam gas, casinghead gas,
condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all
products refined, separated, settled and dehydrated therefrom and all
products refined therefrom, including, without limitation, kerosene,
liquefied petroleum gas, refined lubricating oils, diesel fuel, drip
gasoline, natural gasoline, helium, sulfur and all other gaseous or liquid
minerals.
"HYDROCARBON INTERESTS" means all rights, titles, interests and
estates now owned or hereafter acquired by the Company in and to
Hydrocarbon leases, Hydrocarbon or mineral fee or lease interests,
farm-ins, overriding royalty and royalty interests, net profit interests,
oil payments, production payment interests and similar mineral interests,
including any reserved or residual interest of whatever nature.
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"LEAD PURCHASER" means Rubicon Master Fund, a company organized
under the laws of the Cayman Islands.
"LIEN" means any lien, charge, claim, tax, security interest,
encumbrance, right of first refusal or other restriction.
"LOSSES" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including, without limitation, costs of
preparation and reasonable attorneys' fees.
"MERGER" means the merger of the Company (or a subsidiary of the
Company) and Aurora, as contemplated by the Merger Agreement.
"MERGER S-4" means the registration statement on Form S-4, or such
other form of registration statement permitted by law, with respect to the
Merger.
"OIL AND GAS PROPERTIES" means Hydrocarbon Interests; the personal
property and/or real property now or hereafter pooled or unitized with
Hydrocarbon Interests; all presently existing or future unitization,
pooling agreements and declarations of pooled units and the units created
thereby (including without limitation all units created under orders,
regulations and rules of any governmental authority having jurisdiction)
which may affect all or any portion of the Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced, saved, processed or
attributable to the Hydrocarbon Interests, the lands covered thereby and
all Hydrocarbons in pipelines, gathering lines, tanks and processing
plants and all rents, issues, profits, proceeds, products, revenues and
other incomes from or attributable to the Hydrocarbon Interests; all
tenements, hereditaments, appurtenances and personal property and/or real
property in any way appertaining, belonging, affixed or incidental to the
Hydrocarbon Interests, and all rights, titles, interests and estates
described or referred to above, including any and all real property, now
owned or hereafter acquired, used or held for use in connection with the
operating, working or development of any of such Hydrocarbon Interests or
personal property and/or real property and including any and all
pipelines, gathering lines, compression facilities, tanks and processing
plants, all oil wells, gas wells, water wells, injection wells, platforms,
spars or other offshore facilities, casings, rods, tubing, pumping units
and engines, Christmas trees, derricks, separators, gun barrels, flow
lines, gas systems (for gathering, treating and compression), and water
systems (for treating, disposal and injection); surface leases,
rights-of-way, easements and servitude together with all additions,
substitutions, replacements, accessions and attachments to any and all of
the foregoing.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
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"PERMITTED LIENS" means (i) royalties, overriding royalties,
reversionary interests, production payments and similar burdens which have
been taken into account in the ownership interests of the Company in and
to the Oil and Gas Properties as set forth in the Annual Report, as the
case may be; (ii) sales contracts or other arrangements for the sale of
production of Hydrocarbons which would not (when considered cumulatively
with the matters discussed in clause (i) above) deprive the Company of any
material right in respect of the Oil and Gas Properties (except for rights
customarily granted with respect to such contracts and arrangements);
(iii) statutory Liens for taxes or other assessments that are not yet
delinquent (or that, if delinquent, are being contested in good faith by
appropriate proceedings, levy and execution thereon having been stayed and
continue to be stayed and for which the Company has set aside on its books
adequate reserves); (iv) easements, rights of way, servitudes, permits,
surface leases and other rights in respect to surface operations,
pipelines, grazing, logging, canals, ditches, reservoirs or the like,
conditions, covenants and other restrictions, and easements of streets,
alleys, highways, pipelines, telephone lines, power lines, railways and
other easements and rights of way on, over or in respect of the Oil and
Gas Properties and that do not individually or in the aggregate, have a
material adverse effect on the Oil and Gas Properties; (v) rights reserved
to or vested in any municipality, governmental, statutory or other public
authority to control or regulate the Oil and Gas Properties in any manner,
and all applicable laws, rules and orders from any governmental authority;
(vi) Liens in favor of operators and non-operators under joint operating
agreements to secure amounts owing, which amounts are not yet due or are
being contested in good faith by appropriate proceedings, if adequate
reserves shall have been made therefor; and (vii) such imperfections of
title which do not in the aggregate materially detract from the value of
the Oil and Gas Properties, or the use thereof, in the business of the
Company.
"PERSON" means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or any court or other federal, state, local or other
governmental authority or other entity of any kind.
"POST-EFFECTIVE AMENDMENT" means a post-effective amendment to the
Registration Statement.
"POST-EFFECTIVE AMENDMENT FILING DEADLINE" means the tenth Trading
Day after the Registration Statement ceases to be effective pursuant to
applicable securities laws due to the passage of time or the occurrence of
an event requiring the Company to file a Post-Effective Amendment;
provided, however, that such number of Trading Days does not include any
days that the Post-Effective Amendment cannot be filed because one or more
Purchasers has not provided the Company with information required to be
contained in the Post-Effective Amendment, but only to the extent one or
more Purchasers fails to deliver such information within five (5) Trading
Days after the date that the Company reasonably requests, in writing, the
Purchasers to provide such information.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
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"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" means any New Common Stock or Warrant
Shares issued or issuable pursuant to the Transaction Documents, together
with any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing.
"REGISTRATION STATEMENT" means each registration statement required
to be filed under Article VI, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"REQUIRED EFFECTIVENESS DATE" means 90 days after the Filing Date,
provided, however, that such date shall be extended by such number of days
as the Company is unable to file the Registration Statement or an
amendment thereto because one or more Purchasers has not provided the
Company with information required to be included in the Registration
Statement or an amendment thereto, but only to the extent one or more
Purchasers fails to deliver such information within five (5) Trading Days
after the date that the Company reasonably requests, in writing, that the
Purchasers to provide such information.
"RULE 144," "RULE 415," and "RULE 424" means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the SEC pursuant to the Securities
Act, as such Rules may be amended from time to time, or any similar rule
or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"SECURITIES" means, collectively, New Common Stock, Warrants and
Warrant Shares.
"SUBSIDIARY" means any Person in which the Company, directly or
indirectly, owns capital stock or holds an equity or similar interest.
"TRADING DAY" means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market, then
a day on which trading occurs on The Nasdaq SmallCap Market (or any
successor thereto), or (c) if trading does not occur on The Nasdaq
SmallCap Market (or any successor thereto), any Business Day.
"TRADING MARKET" means the OTC Bulletin Board or any other Eligible
Market on which the Common Stock is then listed or quoted.
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"TRANSACTION DOCUMENTS" means this Agreement, the Warrants, the
Transfer Agent Instructions and any other documents or agreements executed
in connection with the transactions contemplated hereunder.
"TRANSFER AGENT" means OTC Stock Transfer Company of Salt Lake City,
Utah, or any other transfer agent selected by the Company
"TRANSFER AGENT INSTRUCTIONS" means the Irrevocable Transfer Agent
Instructions, in the form of Exhibit B, executed by the Company and
delivered to and acknowledged in writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the satisfaction (or waiver) of the conditions set
forth in Section 5 below, the Company shall issue and sell to each Purchaser,
and each Purchaser severally, but not jointly, agrees to purchase from the
Company on the Closing Date, (A) such number of shares of New Common Stock as is
set forth opposite such Purchaser's name in column (3) on the Schedule of
Purchasers, and (B) one or more Warrants to acquire up to that number of Warrant
Shares as is set forth opposite such Purchaser's name in column (4) on the
Schedule of Purchasers. The aggregate purchase price for the Securities to be
purchased by each Purchaser at the Closing (the "PURCHASE PRICE") shall be the
amount set forth opposite such Purchaser's name in column (5) of the Schedule of
Purchasers. For the avoidance of doubt and subject to the satisfaction (or
waiver) of the conditions set forth in Section 5 below, no Purchaser shall be
obligated to purchase any Securities hereunder other than such Securities set
forth opposite such Purchaser's name on the Schedule of Purchasers. The Closing
shall take place at the offices of Schulte Roth & Zabel LLP immediately
following the execution hereof, or at such other location or time as the parties
may agree.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) each of the Transaction Documents to which the Company is
a party duly executed by the Company;
(ii) Warrants and certificates for the New Common Stock such
Purchaser is purchasing hereunder (in each case, in such denominations as
the Purchaser shall reasonably request).
(iii) a certificate, executed by a duly authorized executive
officer of the Company, dated as of the Closing Date in the form attached
hereto as Exhibit D.
(iv) a certificate, executed by a duly authorized executive
officer of Aurora, dated as of the Closing Date in the form attached
hereto as Exhibit E.
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(v) a legal opinion of Company Counsel, in the form of Exhibit
C, executed by such counsel and delivered to the Purchasers; and
(vi) duly executed Transfer Agent Instructions acknowledged by
the Transfer Agent.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company (i) each Transaction Document to which such Purchaser
is a party duly executed by such Purchaser and (ii) the purchase price indicated
below such Purchaser's name on the signature page of this Agreement, in United
States dollars and in immediately available funds, by wire transfer to an
account designated in writing by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien, and
all the issued and outstanding shares of capital stock or comparable equity
interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) Organization and Qualification. Except as disclosed in Schedule
3.1(b) each of the Company and the Subsidiaries is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. To the
knowledge of the Company, each of the Company and the Subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation or
other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, (i) adversely affect the legality, validity or
enforceability of any Transaction Document, (ii) have or result in a material
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) impair the Company's ability to materially perform on a timely
basis its obligations under any of the Transaction Documents (any of (i), (ii)
or (iii), a "MATERIAL ADVERSE EFFECT").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
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(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company's, Aurora's or any Subsidiary's (or
following the effective date of the closing of the Merger, the surviving
entity's) certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that 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 (with or without notice, lapse of time or both) of, any agreement
(including the Merger Agreement), credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company, Aurora, or any Subsidiary (or following the effective date of
the closing of the Merger, the surviving entity) is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, except
to the extent that such conflict, default or termination right could not
reasonably be expected to have a Material Adverse Effect, or (iii), to the
knowledge of the Company, result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations and the rules and
regulations of any self-regulatory organization to which the Company or its
securities are subject), or by which any property or asset of the Company or a
Subsidiary is bound or affected.
(e) Issuance of the Securities. New Common Stock and Warrants are
duly authorized and, when issued and paid for in accordance with the Transaction
Documents, shall be free and clear from all Liens with respect to the issue
thereof and shall not be subject to preemptive rights or similar rights of
stockholders. As of the Closing Date, a number of shares of Common Stock shall
have been duly authorized and reserved for issuance which equals 130% of the
number of shares of Common Stock issuable upon conversion of the exercise of the
Warrants to be issued at such Closing. Upon exercise and issuance in accordance
with the Warrants, the Warrant Shares shall be validly issued, fully paid and
nonassessable and free from all Liens with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock.
Assuming the accuracy of each of the representations and warranties of the
Purchasers contained in Section 3.2, the issuance by the Company of the
Securities is exempt from registration under the Securities Act.
(f) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
with all applicable securities laws, except where the failure to be so
authorized, issued or in compliance could not reasonably be expected to result
in a Material Adverse Effect (as defined below). Except as disclosed in Schedule
3.1(f), there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock. Except as set forth in Schedule 3.1(f), there are no anti-dilution
or price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) and the issue and
sale of the Securities will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. To the knowledge of
the Company, except as specifically disclosed in Schedule 3.1(f), no Person or
group of related Persons beneficially owns (as determined pursuant to Rule 13d-3
under the Exchange Act), or has the right to acquire, by agreement with or by
obligation binding upon the Company, beneficial ownership of in excess of 5% of
the outstanding Common Stock, ignoring for such purposes any limitation on the
number of shares of Common Stock that may be owned at any single time.
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(g) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with this Agreement and the
Schedules to this Agreement, the "DISCLOSURE MATERIALS") on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. The Company has delivered
to the Purchasers true, correct and complete copies of all SEC Reports filed
within the ten (10) days preceding the date hereof. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the
SEC promulgated thereunder, and none of the SEC Reports, when filed, 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, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or specifically identified in the SEC Reports.
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(h) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that could result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company's financial statements pursuant to
GAAP or required to be disclosed in filings made with the SEC, (iii) the Company
has not altered its method of accounting or the identity of its auditors, (iv)
the Company has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock, and (v) the Company has
not issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans or as set forth in Schedule
3.1(h). No event, liability, development or circumstance has occurred or exists,
or is contemplated to occur with respect to the Company or its Subsidiaries or
their respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
(i) Absence of Litigation. Except as set forth in Schedule 3.1(i),
there is no action, suit, claim, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries that could, individually or in
the aggregate, have a Material Adverse Effect. Schedule 3.1(i) contains a
complete list and summary description of any pending or, to the knowledge of the
Company, threatened proceeding against or affecting the Company or any of its
Subsidiaries that could individually or in the aggregate, have a Material
Adverse Effect.
(j) Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
to the knowledge of the Company, is or has been in violation of any statute,
rule or regulation of any governmental authority, including without limitation
all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or result in a Material Adverse Effect.
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(k) Title to Assets. The Company and the Subsidiaries have good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries. To the knowledge of the
Company, any real property and facilities held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance.
(l) Certain Fees. Except as set forth on Schedule 3.1(l), no
brokerage or finder's fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Company has not taken any action that would
cause any Purchaser to be liable for any such fees or commissions.
(m) Private Placement. Neither the Company nor any Person acting on
the Company's behalf has sold or offered to sell or solicited any offer to buy
the Securities by means of any form of general solicitation or advertising. To
the knowledge of the Company, 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 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
under the Securities Act in connection with the offer and sale of the Securities
as contemplated hereby or (ii) cause the offering of the Securities pursuant to
the Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and regulations of
any Trading Market. The Company is not, and is not an Affiliate of, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980.
(n) Form SB-2 Eligibility. The Company is eligible to register its
Common Stock for resale by the Purchasers using Form SB-2 promulgated under the
Securities Act.
(o) Listing and Maintenance Requirements. The Company is in
compliance with the listing or maintenance requirements of its Trading Market
and will take all steps necessary to have its shares of Common Stock continue to
be traded and listed on its Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.
(p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the SEC or any other governmental authority that have not been
satisfied.
11
(q) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company's
charter documents or the laws of its state of incorporation that is or could
become applicable to any of the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, as a result of the
Company's issuance of the Securities and the Purchasers' ownership of the
Securities. The foregoing notwithstanding, the Company has authorized in its
articles of incorporation blank check preferred stock.
(r) Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that constitutes or might constitute material,
nonpublic information. The Company understands and confirms that each of the
Purchasers will rely on the foregoing representations in effecting transactions
in securities of the Company. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the
Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, 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. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.
(s) Acknowledgment Regarding Purchasers' Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company or any
other Purchaser (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to such
Purchaser's purchase of the Securities. The Company further represents to each
Purchaser that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
(t) Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the "INTELLECTUAL
PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or any
Subsidiary violates or infringes upon the rights of any Person. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights.
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(u) Regulatory Permits. To the knowledge of the Company, the Company
and the Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or result in a Material Adverse Effect
("MATERIAL PERMITS"), and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
Material Permit.
(v) Transactions With Affiliates and Employees. Except as set forth
below or in SEC Reports filed at least ten days prior to the date hereof, none
of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(w) Indebtedness. Except as disclosed in Schedule 3.1(w), neither
the Company nor any of its Subsidiaries has any outstanding Indebtedness (as
defined below). Schedule 3.1(w) provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (i)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease, (G) all indebtedness
referred to in clauses (A) through (F) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above;
and (ii) "CONTINGENT OBLIGATION" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
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(x) Solvency. Based on the financial condition of the Company as of
the Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
(y) Internal Accounting Controls. To the knowledge of the Company.
the Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z) Sarbanes-Oxley Act. The Company is in compliance with any and
all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective
as of the date hereof, and any and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof,
except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect.
(aa) Merger. The Company and Aurora have executed a merger
agreement, in the form delivered to the Lead Purchaser on or prior to the date
hereof (the "Merger Agreement"). The Merger Agreement has been duly and validly
executed on or prior to the date hereof by the parties thereto, is enforceable
in accordance with its terms and has not been terminated, amended, modified or
revoked nor has Cadence or Aurora agreed to, or given notice, whether formal or
informal of its intention to, terminate, amend, modify or revoke or make claims
relating to the Merger Agreement, on or prior to the date hereof. As of the date
hereof, neither Cadence nor Aurora has failed to comply with any material term
or condition of the Merger Agreement or asserted that the other party has so
failed or may fail, and no third party or authority has asserted any claims
relating to or indicated any intention to assert any claims relating to the
Merger Agreement. As of the date hereof the conditions to the closing of the
Merger set forth on Schedule 3.1(aa) have been met to the extent set forth
therein.
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3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership or
other applicable power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations hereunder and thereunder. The purchase by such Purchaser of
the Securities hereunder has been duly authorized by all necessary action on the
part of such Purchaser. This Agreement and the Security Agreement has been duly
executed and delivered by such Purchaser and constitutes the valid and binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. Such Purchaser is (i) acquiring the New
Common Stock and Warrants and (ii) upon exercise of the Warrants will acquire
the Warrant Shares issuable upon exercise of the Warrants, in the ordinary
course of business for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act; provided,
however, that by making the representations herein, such Purchaser does not
agree to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. Such Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
Securities it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
(e) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
15
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k), except as otherwise set
forth herein, the Company may require the transferor to provide to the Company
an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its Transfer Agent, without any
such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser, provided that the transferee certifies to the Company that it is
an "accredited investor" as defined in Rule 501(a) under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 4.1(b), of a legend substantially in the following form on any
certificate evidencing Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.
16
Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act; provided, that the
Company's counsel shall have delivered a legal opinion relating to the removal
of legends upon a sale or transfer of such Securities, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the SEC). The Company
shall cause its counsel to issue the legal opinion included in the Transfer
Agent Instructions to the Transfer Agent on the Effective Date and to deliver
any required legal opinions with respect to the removal of legends upon the sale
or transfer of Securities. Following the Effective Date or at such earlier time
as a legend is no longer required for certain Securities, the Company will no
later than five Trading Days following the delivery by a Purchaser to the
Company of a legended certificate representing such Securities, use its
reasonable best efforts to deliver or cause to be delivered to such Purchaser a
certificate representing such Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. For so long as any Purchaser owns
Securities, the Company will not effect or publicly announce its intention to
effect any exchange, recapitalization or other transaction that effectively
requires or rewards physical delivery of certificates evidencing the Common
Stock.
(c) The Company acknowledges and agrees that a Purchaser may
from time to time pledge or grant a security interest in some or all of
the Securities in connection with a bona fide margin agreement or other
loan or financing arrangement secured by the Securities and, if required
under the terms of such agreement, loan or arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval of the Company
and no legal opinion of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of
a pledge. At the appropriate Purchaser's expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer
of the Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list
of selling stockholders thereunder.
4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to use its best efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Upon the request of any Purchaser, the Company shall deliver
to such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns any Securities, if the Company is not required to file reports pursuant to
such laws, it will prepare and furnish to the Purchasers and make publicly
available in accordance with paragraph (c) of Rule 144 such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any Purchaser or
subsequent holder of Securities may reasonably request to satisfy the provisions
of Rule 144 applicable to the issuer of securities relating to transactions for
the sale of securities pursuant to Rule 144, but only to the extent that the
Company, or counsel of the Company agree, that the Purchaser or subsequent
holder is able to avail themselves of the exemption created by Rule 144.
17
4.3 Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, 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 the Securities to the Purchasers, or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market.
4.4 Reservation and Listing of Common Stock.
(a) The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in
full under the Transaction Documents. In the event that at any time the
then authorized shares of Common Stock are insufficient for the Company to
satisfy its obligations in full under the Transaction Documents, the
Company shall promptly take such actions as may be required to increase
the number of authorized shares.
(b) The Company shall take all steps necessary to cause its
Common Stock to be approved for listing on its Trading Market and maintain
the listing of such Common Stock on such Trading Market or another
Eligible Market. The Company covenants to promptly file any listing
application required by its Trading Market with respect to the Warrant
Shares.
4.5 [Intentionally Deleted.]
4.6 Variable Securities; Additional Registration Statement. For so long as
any Warrants remain outstanding, the Company shall not, in any manner, issue or
sell any rights, warrants or options to subscribe for or purchase Common Stock
or directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which varies or may vary with the market price of the
Common Stock, including by way of one or more reset(s) to any fixed price unless
the conversion, exchange or exercise price of any such security cannot be less
than the then applicable Exercise Price (as defined in the Warrants) with
respect to the Common Stock under any into which any Warrant is exerciseable.
Until the Effective Time, the Company will not file a registration statement
under the Securities Act relating to securities that are not the Securities,
other than (i) a registration statement on Form S-8, in order to register
increases in the shares underlying equity incentive plans in existence as of the
date of this Agreement, and or (ii) the Merger S-4 in connection with the
Merger.
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4.7 Securities Laws Disclosure; Publicity. The Company shall, on or before
8:30 a.m., New York City Time, on the day following execution of this Agreement,
issue a press release, not in violation of any applicable securities laws,
acceptable to the Purchasers disclosing all material terms of the transactions
contemplated hereby. On the Closing Date, the Company shall file a Current
Report on Form 8-K with the SEC (the "8-K FILING") describing the terms of the
transactions contemplated by the Transaction Documents and including as exhibits
to such Current Report on Form 8-K this Agreement, the form of Warrant in the
form required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices required by the SEC or applicable law with respect to the
transactions contemplated hereby and provide copies thereof to the Purchasers
promptly after filing. Except with respect to the 8-K Filing and the press
release referenced above (a copy of which will be provided to the Purchasers for
their review as early as practicable prior to its filing), the Company shall, at
least two Trading Days prior to the filing or dissemination of any disclosure
required by this paragraph, provide a copy thereof to the Purchasers for their
review. The Company and the Purchasers shall consult with each other in issuing
any press releases or otherwise making public statements or filings and other
communications with the SEC or any regulatory agency or Trading Market with
respect to the transactions contemplated hereby, and neither party shall issue
any such press release or otherwise make any such public statement, filing or
other communication without the prior consent of the other, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the SEC or any regulatory agency or Trading Market,
without the prior written consent of such Purchaser, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure. The Company shall
not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents not to, provide any
Purchaser with any material nonpublic information regarding the Company or any
of its Subsidiaries from and after the filing of the 8-K Filing without the
express written consent of such Purchaser. In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, a Purchaser shall
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents. No Purchaser shall
have any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents for any such
disclosure. Each Purchaser hereby agrees not to knowingly request any
information from the Company, its directors, officers, employees or agents which
such purchaser should reasonably know is material non-public information.
Subject to the foregoing, neither the Company nor any Purchaser shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) the Lead Purchaser shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release). Each press
release disseminated during the 12 months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading
4.8 Use of Proceeds. The Company shall use the net proceeds from the sale
of the New Common Stock and Warrants hereunder (i) to pay any and all expenses
incurred in connection with the sale of the Securities hereunder, (ii) to pay
for the filing and maintaining of any registration statement required by this
Agreement, (iii) to pay for any and all expenses related to the Merger, (iv) to
pay off up to $6,000,000 of notes issued by the Company which are to be repaid
pursuant to the Merger, (v) to pay for any and all expenses relating to the
filing of the Merger S-4 and (vi) for the general working capital requirements
of the Company.
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4.9 Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents other than
one brought by the applicable Purchaser or a Related Person thereof, the Company
will indemnify and hold harmless such Purchaser or Related Person for its
reasonable legal and other expenses (including the costs of any investigation,
preparation and travel) and for any Losses incurred in connection therewith, as
such expenses or Losses are incurred, excluding only Losses that result directly
from such Purchaser's or Related Person's gross negligence or willful
misconduct. In addition, the Company shall indemnify and hold harmless each
Purchaser and Related Person from and against any and all Losses, as incurred,
arising out of or relating to any breach by the Company of any of the
representations, warranties or covenants made by the Company in this Agreement
or any other Transaction Document, or any allegation by a third party that, if
true, would constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from the gross negligence
or willful misconduct of the applicable Purchaser or Related Person in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or reimburse the Purchasers on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses). Subject to the
foregoing, the Company specifically agrees to reimburse the Purchasers on demand
for all costs of enforcing the indemnification obligations in this paragraph.
4.10 Lost, etc. Certificates Evidencing New Common Stock; Exchange. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any certificate evidencing any New Common
Stock owned by one of the Purchasers, and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of shares evidenced by such certificate which remain
outstanding. Such Purchaser's agreement of indemnity shall constitute indemnity
satisfactory to the Company for purposes of this Section 4.10. Upon surrender of
any certificate representing any New Common Stock for exchange at the office of
the Company, the Company at its expense will cause to be issued in exchange
therefor new certificates in such denomination or denominations as may be
requested for the same aggregate number of New Common Stock represented by the
certificate so surrendered and registered as such holder may request. The
Company will also pay the cost of all deliveries of certificates for such shares
to the office of such Purchaser (including the cost of insurance against loss or
theft in an amount satisfactory to the holders) upon any exchange provided for
in this Section 4.10.
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4.11 Corporate Existence. So long as any Purchaser beneficially owns any
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 (i) assumes
the Company's obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an Eligible Market.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire the Securities set forth opposite such
Purchaser's name on the Schedule of Purchasers at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing, of each of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing as
though made on and as of such date.
(b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by it at or prior to the
Closing.
(c) Good Standing. The Company shall have delivered to such
Purchaser a certificate evidencing the formation and good standing of the
Company and each of its Subsidiaries in such entity's jurisdiction of
formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within 10 days of the Closing Date.
(d) Qualification. The Company shall have delivered to such
Purchaser a certificate evidencing the Company's qualification as a
foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company is so
qualified, as of a date within 10 days of the Closing Date.
(e) Listing. The Common Stock (I) shall be designated for
quotation or listed on the Trading Market and (II) shall not have been
suspended, as of the Closing Date, by the SEC or the Trading Market from
trading on the Trading Market nor shall suspension by the SEC or the
Trading Market have been threatened, as of the Closing Date, either (A) in
writing by the SEC or the Trading Market or (B) by falling below the
minimum listing maintenance requirements of the Trading Market.
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5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell the Securities set forth opposite each Purchaser's name
on the Schedule of Purchasers is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing Date
as though made on and as of such date; and
(b) Performance. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Purchasers at or prior to the
Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Shelf Registration
(a) On or prior to the Filing Date, the Company shall prepare
and file with the SEC a "Shelf" Registration Statement covering the resale
of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form
SB-2 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form SB-2, in which case such registration
shall be on another appropriate form in accordance herewith as the
Purchasers may reasonably consent) and shall contain (except if otherwise
directed by the Purchasers) the "Plan of Distribution" attached hereto as
Exhibit G.
(b) The Company shall use its commercially reasonable efforts
to cause the Registration Statement to be declared effective by the SEC as
promptly as possible after the filing thereof, but in any event prior to
the Required Effectiveness Date, and shall use its best efforts to keep
the Registration Statement continuously effective under the Securities Act
until the end of the Effectiveness Period; provided, however, the
Company's obligation to keep such Registration Statement effective shall
cease in the event the Company has replaced such Regitration Statement
with a Registration Statement on Form S-3, declared effective by the SEC,
covering the resale of all of the Registrable Securities for an offering
to be made on a continuous basis pursuant to Rule 415. The Company shall
use its best efforts to keep such Registration Statement on Form S-3
continuously effective under the Securities Act until the end of the
Effectiveness Period.
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(c) The Company shall notify each Purchaser in writing
promptly (and in any event within one Trading Day) after receiving
notification from the SEC that the Registration Statement has been
declared effective.
(d) As promptly as possible, and in any event no later than
the Post-Effective Amendment Filing Deadline, the Company shall prepare
and file with the SEC a Post-Effective Amendment. The Company shall use
its best efforts to cause the Post-Effective Amendment to be declared
effective by the SEC as promptly as possible after the filing thereof, but
in any event prior to the fifteenth Trading Day after the Post-Effective
Amendment Filing Deadline. The Company shall notify each Purchaser in
writing promptly (and in any event within one business day) after
receiving notification from the SEC that the Post-Effective Amendment has
been declared effective.
(e) Upon the occurrence of any Event (as defined below) prior
to the 24-month anniversary of the Closing, and on every monthly
anniversary thereof occurring no later than the 24-month anniversary of
the Closing until the applicable Event is cured, as partial relief for the
damages suffered therefrom by the Purchasers (which remedy shall not be
exclusive of any other remedies available under this Agreement, at law or
in equity), the Company shall pay to each Purchaser an amount in cash, as
liquidated damages and not as a penalty, equal to 1% of the aggregate
purchase price paid by such Purchaser. The payments to which a Purchaser
shall be entitled pursuant to this Section 6.1(e) are referred to herein
as "EVENT PAYMENTS". Any Event Payments payable pursuant to the terms
hereof shall apply on a pro-rata basis for any portion of a month prior to
the cure of an Event. In the event the Company fails to make Event
Payments within 10 Business Days of any demand therefore, such Event
Payments shall bear interest at the rate of 1.5% per month (prorated for
partial months) until paid in full.
For such purposes, each of the following shall constitute an "EVENT":
(i) the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;
(ii) a Post-Effective Amendment is not filed on or prior to
the Post-Effective Amendment Filing Deadline or is not declared effective
on or prior to the twenty-first Trading Day after the Post-Effective
Amendment Filing Deadline;
(iii) after the Effective Date, a Purchaser is not permitted
to sell Registrable Securities under the Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) for any
reason (other than the requirement of the Company to file a Post-Effective
Amendment and for such Post-Effective Amendment to be declared effective)
for either (A) 10 or more consecutive Trading Days or (B) 30 Trading Days,
whether or not consecutive, in any 365-day period); provided, however,
that none of the foregoing shall constitute an "Event" if the delay is
caused by any act of war, terrorism, natural disaster or power failure.
23
(f) The Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities.
6.2 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall (i)
furnish to each Purchaser and any counsel designated by any Purchaser
(each, a "PURCHASER COUNSEL", and the Lead Purchaser has initially
designated Schulte Roth & Zabel LLP) copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to
be incorporated by reference) will be subject to the review of such
Purchasers and each Purchaser Counsel, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of each
Purchaser Counsel, to conduct a reasonable investigation within the
meaning of the Securities Act. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto
to which Purchasers holding a majority of the Registrable Securities shall
reasonably object. However, any objection to the filing of such
registration statement or other document enumerated above, shall suspend
from occurring any of the "Events" listed above in Section 6.1 ((e)
i.-iv.) for the period of time during which the objection remains, but in
no case will the period of suspension exceed ten Trading Days.
(b) (i) Prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep
the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file
with the SEC such additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably
possible, and in any event within ten Business Days, to any comments
received from the SEC with respect to the Registration Statement or any
amendment thereto and as promptly as reasonably practicable provide the
Purchasers true and complete copies of all correspondence from and to the
SEC relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Purchasers
thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented
24
(c) Notify the Purchasers of Registrable Securities to be sold
and each Purchaser Counsel as promptly as reasonably practicable, and (if
requested by any such Person) confirm such notice in writing no later than
two Trading Days thereafter, of any of the following events: (i) the SEC
notifies the Company whether there will be a "review" of any Registration
Statement; (ii) the SEC comments in writing on any Registration Statement
(in which case the Company shall deliver to each Purchaser a copy of such
comments and of all written responses thereto); (iii) any Registration
Statement or any post-effective amendment is declared effective; (iv) the
SEC or any other Federal or state governmental authority requests any
amendment or supplement to any Registration Statement or Prospectus or
requests additional information related thereto; (v) the SEC issues any
stop order suspending the effectiveness of any Registration Statement or
initiates any Proceedings for that purpose; (vi) the Company receives
notice of any suspension of the qualification or exemption from
qualification of any Registrable Securities for sale in any jurisdiction,
or the initiation or threat of any Proceeding for such purpose; or (vii)
the financial statements included in any Registration Statement become
ineligible for inclusion therein or any statement made in any Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference is untrue in any material respect or any
revision to a Registration Statement, Prospectus or other document is
required so that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Use its reasonable efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment.
(e) Furnish to each Purchaser and each Purchaser Counsel,
without charge, at least one conformed copy of each Registration Statement
and each amendment thereto, including financial statements and schedules,
all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) as
promptly as practicable after the filing of such documents with the SEC.
(f) Promptly deliver to each Purchaser and each Purchaser
Counsel, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request within two Business Days of
such request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Purchasers
in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(g) (i) In the time and manner required by each Trading
Market, prepare and file with such Trading Market an additional shares
listing application covering all of the Registrable Securities; (ii) take
all steps necessary to cause such Registrable Securities to be approved
for listing on each Trading Market as soon as practicable thereafter;
(iii) provide to the Purchasers evidence of such listing; and (iv)
maintain the listing of such Registrable Securities on each such Trading
Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Purchasers and each applicable Purchaser Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States
as any Purchaser requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject.
25
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
this Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
such Purchasers may request.
(j) Upon the occurrence of any event described in Section
6.2(c)(vii), as promptly as reasonably practicable, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) Reasonably cooperate with any due diligence investigation
undertaken by the Purchasers in connection with the sale of Registrable
Securities, including without limitation by making available any documents
and information; provided that the Company will not deliver or make
available to any Purchaser material, nonpublic information unless such
Purchaser specifically requests in advance to receive material, nonpublic
information in writing.
(l) If Holders of a majority of the Registrable Securities
being offered pursuant to a Registration Statement select underwriters for
the offering, the Company shall enter into and perform its obligations
under an underwriting agreement, in usual and customary form reasonably
acceptable to the Company, including, without limitation, by providing
customary legal opinions, comfort letters and indemnification and
contribution obligations; provided, that no such agreement shall obligate
the Company to pay any amount not otherwise contemplated by this Article
VI.
(m) Comply with all applicable rules and regulations of the
SEC.
26
6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection with
applicable state securities or Blue Sky laws, (b) printing expenses (including
without limitation expenses of printing certificates for Registrable Securities
and of printing prospectuses requested by the Purchasers), (c) messenger,
telephone and delivery expenses incurred by the Company, (d) fees and
disbursements of counsel for the Company and up to $5,000 in the aggregate for
the Purchaser Counsels (incurred in preparing the initial filing of the
registration statement for the Registrable Securities and all amendments thereto
prior to it being declared effective), (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading Market. In all events, the Purchasers shall be
solely responsible for paying all brokerage fees, underwriter commissions or
similar compensation relating to their sale of Registrable Securities and any
income taxes resulting from any such sale of Registrable Securities.
6.4 Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Purchaser, the officers, directors, partners, members,
agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform
under a margin call of Common Stock), investment advisors and employees of
each of them, each Person who controls any such Purchaser (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees
of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any Prospectus or any form
of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (i) such untrue statements, alleged
untrue statements, omissions or alleged omissions are based solely upon
information regarding such Purchaser furnished in writing to the Company
by such Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser's proposed method
of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (ii) in the case of an occurrence
of an event of the type specified in Section 6.2(c)(v)-(vii), the use by
such Purchaser of an outdated or defective Prospectus after the Company
has notified such Purchaser in writing that the Prospectus is outdated or
defective and prior to the receipt by such Purchaser of the Advice
contemplated in Section 6.5. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Purchasers. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely
out of any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading to the extent,
but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser to
the Company specifically for inclusion in such Registration Statement or
such Prospectus or to the extent that (i) such untrue statements or
omissions are based solely upon information regarding such Purchaser
furnished in writing to the Company by such Purchaser expressly for use
therein, or to the extent that such information relates to such Purchaser
or such Purchaser's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such
Purchaser expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or
(ii) in the case of an occurrence of an event of the type specified in
Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Purchaser of the Advice contemplated in Section 6.5. In no
event shall the liability of any selling Purchaser hereunder be greater in
amount than the dollar amount of the net proceeds received by such
Purchaser upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
27
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly
notify the Person from whom indemnity is sought (the "INDEMNIFYING PARTY")
in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
28
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
6.4(a) or (b) is unavailable to an Indemnified Party (by reasons other
than the specified exclusions to indemnification), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by such Indemnified Party as a result of such
Losses, in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as
any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in Section 6.4(c),
any reasonable attorneys' or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such party
would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party
in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
29
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.6 No Piggyback on Registrations. Except as set forth on Schedule 6.6,
neither the Company nor any of its security holders (other than the Purchasers
in such capacity pursuant hereto) may include securities of the Company in the
Registration Statement other than the Registrable Securities. In addition, the
Company shall not after the date hereof enter into any agreement providing any
such right to any of its security holders.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the SEC a registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Purchaser written notice of such
determination and if, within fifteen days after receipt of such notice, any such
Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Lead Purchaser,
by written notice to the other parties, if the Closing has not been consummated
by the fourth Trading Day following the date of this Agreement; provided that no
such termination will affect the right of any party to sue for any breach by the
other party (or parties).
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7.2 Fees and Expenses. At the Closing, and only upon Closing, the Company
shall pay the reasonable fees and expenses of legal counsel to the Lead
Purchaser incurred in connection with the preparation and negotiation of the
Transaction Documents. In lieu of the foregoing payment, Lead Purchaser may
retain such amount at the Closing or require the Company to pay such amount
directly to Schulte Roth & Zabel LLP. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of the Securities.
7.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Purchasers such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents. Notwithstanding anything to the contrary
herein, the Securities may be assigned to any Person in connection with a bona
fide margin account or other loan or financing arrangement secured by such
Securities.
7.4 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
(a) If to the Company:
Cadence Resources Corporation
6 East Rose Street
P.O. Box 2056
Walla Walla, WA 99362
Facsimile No.: (509) 526-3492
Telephone No.: (509) 526-3491
Attn: Howard Crosby
With a copy to:
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
New York, New York 10174
Facsimile No.: (212) 704-6288
Telephone No.: (212)704-6000
Attn: Henry I Rothman, Esq.
31
If to a Purchaser, to its address and facsimile number set
forth on the Schedule of Purchasers, with copies to such
Purchaser's representatives as set forth on the Schedule
of Purchasers,
With a copy (for informational purposes only) to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Peter Halasz, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
7.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly affect the rights of other Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.
7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights (except those of indemnification or reimbursement) under this
Agreement to any Person to whom such Purchaser assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with respect
to the transferred Securities, by the provisions hereof that apply to the
"Purchasers." Notwithstanding anything to the contrary herein, Securities may be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Securities.
32
7.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver Of Jury Trail. all questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the state of new york. THE COMPANY AND PURCHASERS Hereby Irrevocably Submit To
The Exclusive Jurisdiction Of The State And Federal Courts Sitting In The CITY
OF NEW YORK, BOROUGH OF MANHATTAN For The Adjudication Of Any Dispute BROUGHT BY
THE COMPANY OR ANY PURCHASER Hereunder, In Connection Herewith Or With Any
Transaction Contemplated Hereby Or Discussed Herein (Including With Respect To
The Enforcement Of Any Of The Transaction Documents), And Hereby Irrevocably
Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG BROUGHT BY THE
COMPANY OR ANY PURCHASER, Any Claim That It Is Not Personally Subject To The
Jurisdiction Of Any Such Court, OR That Such Suit, Action Or Proceeding Is
Improper. Each party Hereby Irrevocably Waives Personal Service Of Process And
Consents To Process Being Served In Any Such Suit, Action Or Proceeding By
Mailing A Copy Thereof Via Registered Or Certified Mail Or Overnight Delivery
(With Evidence Of Delivery) To Such Party At The Address In Effect For Notices
To It Under This Agreement And Agrees That Such Service Shall Constitute Good
And Sufficient Service Of Process And Notice Thereof. Nothing Contained Herein
Shall Be Deemed To Limit In Any Way Any Right To Serve Process In Any Manner
Permitted By Law. The Company AND PURCHASERS Hereby Waive All Rights To A Trial
By Jury.
7.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery and/or exercise of
the Securities, as applicable.
7.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
33
7.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
7.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. The Purchaser
agrees that the loss, mutilation, theft, or destruction of any certificate shall
not trigger the occurrence of an Event as defined in Section 6.1 (e) sections
i-iv, unless such loss, mutilation, theft, or destruction is directly caused by
the negligence of the Company. The phrase "directly" specifically excludes any
persons or parties who are agents of the Company.
7.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
7.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or any Purchaser 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
by 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), 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 setoff had not occurred.
34
7.17 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase the Securities pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of the Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to or
arising from any such information, materials, statements or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[Signature pages to follow]
35
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
CADENCE RESOURCES CORPORATION
By: ____________________________________
Name: John P. Ryan
Title: Vice President
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
RUBICON MASTER FUND
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Crestview Capital Master, LLC
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Union Spring Fund Ltd.
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Nathan A. Low Family Trust dated 4/12/96
By: ____________________________________
Name:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Bear Stearns as Custodian
For Nathan A. Low Roth IRA
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Ruth Low
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Zinc Partners, LP
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Zinc Partners Offshore, Ltd.
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Cordillera Fund L.P.
By: ____________________________________
Name: James P. Andrew
Title: Co-CEO of ANdrew Carter Capital,
Inc., the General Partner of ACCF
GenPar, L.P., the General Partner of
the Cordillera Fund L.P.
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Enable Growth Partners LP
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Michael Weiss
By: ____________________________________
Name: Michael Weiss
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Don Sanders
By: ____________________________________
Name: Don Sanders
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Sanders Opportunity Fund (INST) LP
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Sanders Opportunity Fund LP
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Sanders 1998 Children's Trust
By: ____________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Don Weir AND JULIE E. WEIR
By: ____________________ By:_____________________
Name: Don Weir Name: Julie E. Weir
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Ben Morris
By: ____________________________________
Name: Ben Morris
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
George K. Ball
By: ____________________________________
Name: George K. Ball
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Fredrick Saalwachter
By: ____________________________________
Name: Fredrick Saalwachter
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
John Malanga AND JODI MALANGA
By: ____________________ By: _____________________
Name: John Malanga Name: Jodi Malanga
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Bruce McMaken
By: ____________________________________
Name: Bruce McMaken
IN WITNESS WHEREOF, each of the parties hereto have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
Mike Chadwick
By: ____________________________________
Name: Mike Chadwick
SCHEDULE OF PURCHASERS
(1) (2) (3) (4) (5) (6)
NUMBER OF NUMBER LEGAL
SHARES OF OF REPRESENTATIVE'S
ADDRESS AND NEW COMMON WARRANT PURCHASE ADDRESS AND
PURCHASER FAX NUMBER STOCK SHARES PRICE FAX NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
c/o Rubicon Fund Management LLP
Rubicon Master 103 Mount St. Schulte Roth & Zabel LLP
Fund London W1K2TJ 919 Third Avenue
United Kingdom New York, New York 10022
Facsimile No.: +44 207-074 4280 Attention: Peter Halasz, Esq.
Telephone No.: +44 207 074 4299 Facsimile No.: (212) 593-5955
Attn: William Callanan 2,800,000 8,000,000 $3,500,000 Telephone No.: (212) 756-2238
95 RevereDrive
Crestview Suite A
Capital Master, Northbrook, Illinois 60062
LLC Facsimile No.: (847) 559-5807
Telephone No.: (847) 418-8302
Attn: Stuart Flink 1,840,000 1,840,000 $2,300,000 N/A
Union Spring c/o Dundee Leeds Management Mayer, Brown, Rowe & Maw LLP
Fund Ltd. 129 Front Street 190 South LaSalle Street
Services Ltd. Chicago, Illinois 60603
Hamilton HM 12, Bermuda Attention: Deborah A. Monson, Esq.
Attention: Robin J. Bedford Facsimile No.: 312-706-9103
Facsimile No.: 441-292-2239 Telephone No.: 312-701-8356
Telephone No.: 441-495-8617 560,000 1,600,000 $700,000
Nathan A. Low c/o Nathan A. Low
Family Trust Sunrise Securities Corp.
dated 4/12/96 641 Lexington Avenue
25th Floor
New York, NY 10022
Facsimile No.: (212) 750-7277
Telephone No.: (212) 421-1616
Ext. 135 360,000 360,000 $450,000* N/A
Bear Stearns as c/o Nathan A. Low
Custodian For Sunrise Securities Corp.
Nathan A. Low 641 Lexington Avenue
Roth IRA 25th Floor
New York, NY 10022
Facsimile No.: (212) 750-7277
Telephone No.: (212) 421-1616
Ext. 135 200,000 200,000 $250,000* N/A
Ruth Low c/o Nathan A. Low
Sunrise Securities Corp.
641 Lexington Avenue
25th Floor
New York, NY 10022
Facsimile No.: (212) 750-7277
Telephone No.: (212) 421-1616
Ext. 135 240,000 240,000 $300,000* N/A
Zinc Partners LP c/o Zinc Capital Management LLC
711 Fifth Avenue, 5th floor
New York, NY 10022
Facsimile No.: (212) 813-2825
Telephone No.: (212) 813-2820 88,256 88,256 $110,320 N/A
Zinc Partners c/o Zinc Capital Management LLC
Offshore, Ltd. 711 Fifth Avenue, 5th floor
New York, NY 10022
Facsimile No.: (212) 813-2825
Telephone No.: (212) 813-2820 231,744 231,744 $289,680 N/A
Cordillera Fund C/o Andrew Carter Capital, Inc.
L.P. 8201 Preston Road
Suite 400
Dallas, TX 75225
Facsimile No.: 214-722-1360
Telephone No.: 214-969-5700
Attn: James Andrew 400,000 400,000 $500,000 N/A
Enable Growth One Ferry Building, Suite 255
Partners LP San Francisco, CA 94111
Facsimile No.: 415-677-1580
Telephone No.: 415-677-1578
Attn: Brendan O'Neil 240,000 240,000 $300,000 N/A
Michael Weiss 25 Briarwood Land
Lawrence, NY 11559
Telephone No.: 212-838-7200 50,000 50,000 $62,500 N/A
Don Sanders 600 Travis
Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 160,000 160,000 $200,000 N/A
Sanders 600 Travis
Opportunity Fund Suite 3100
(Inst) LP Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 246,823 246,823 $308,529 N/A
Sanders 600 Travis
Opportunity Fund Suite 3100
LP Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 77,177 77,177 $96,471 N/A
Sanders 1998 600 Travis
Children's Trust Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 120,000 120,000 $150,000 N/A
Don Weir and 600 Travis
Julie E. Weir Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 80,000 80,000 $100,000 N/A
Ben T. Morris 600 Travis
Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 20,000 20,000 $25,000 N/A
George K. Ball 600 Travis
Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 20,000 20,000 $25,000 N/A
Fredrick 600 Travis
Saalwachter Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 20,000 20,000 $25,000 N/A
John Malanga and 600 Travis
Jodi Malanga Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 16,000 16,000 $20,000 N/A
Bruce McMaken 600 Travis
Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 20,000 20,000 $25,000 N/A
Mike Chadwick 600 Travis
Suite 3100
Houston, TX 77002
Facsimile No.: 713-250-4298
Telephone No.: 713-250-4215
Attn: Don Weir 20,000 20,000 $25,000 N/A
====================================================================================================================================
TOTAL $2,262,500
* Purchase price paid through debt conversion.
Exhibits:
A Form of Warrant
B Form of Transfer Agent Instructions
C Form of Opinion of Company Counsel
D Company Officer's Certificate
E Aurora Officer's Certificate
F Plan of Distribution