EXHIBIT 10.38
MOTIENT CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
April 7, 2004 and is by and among (i) MOTIENT CORPORATION, a Delaware
corporation, with its principal office at 300 Knightsbridge Pkwy., Lincolnshire,
IL 60069 (the "Company") (ii) The Raptor Global Portfolio, Ltd., The Tudor BVI
Global Portfolio, Ltd., The Altar Rock Fund L.P. and Tudor Proprietary Trading,
L.L.C., (collectively, "Tudor"), each of which is listed on Schedule 1 hereto,
and (iii) each other investor listed on Schedule 1 hereto (each of the persons
or entities described in clauses (ii) and (iii), individually, a "Purchaser"
and, collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to purchase from the Company, an aggregate of 4,215,910
shares (the "Shares") of the authorized but unissued shares of common stock,
$0.01 par value per share, of the Company (including any securities into which
or for which such shares may be exchanged for, or converted into, pursuant to
any stock dividend, stock split, stock combination, recapitalization,
reclassification, reorganization or other similar event the "Common Stock"), at
an aggregate purchase price of $23,187,505, all upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, simultaneously with entering in this Agreement, the Company
and the Purchasers are entering into that certain Registration Rights Agreement,
dated as of the date hereof (the "Registration Rights Agreement"), pursuant to
which the Company shall register for resale the Shares and the Warrant Shares
(as defined below) on the terms set forth therein;
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) "Affiliate" means any Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, a Person, as such terms are used and construed under Rule
144 (as defined below), and with respect to Tudor, in addition to the foregoing,
the term "Affiliate" shall also include the Related Entities.
(b) "Board" means the board of directors of the Company.
(c) "Closing Date" means the date hereof.
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(d) "Effective Date" means the earlier to occur of (i) date
that occurs ninety (90) days after the initial filing by the Company with the
SEC of a registration statement covering the resale of the Shares, and (ii)
September 30, 2004.
(e) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all of the rules and regulations promulgated thereunder.
(f) "Fully Diluted Common Stock" means the outstanding Common
Stock and shares of Common Stock issued or issuable upon exercise of Warrants.
(g) "Majority Purchasers" has the meaning set forth in Section
8.9.
(h) "Material Adverse Effect" has the meaning set forth in
Section 3.1 of this Agreement.
(i) "Person" (whether or not capitalized) means an individual,
entity, partnership, limited liability company, corporation, association, trust,
joint venture, unincorporated organization, and any government, governmental
department or agency or political subdivision thereof.
(j) "Related Entities" includes, with respect to Tudor, any
entities for which any of the Tudor Entities or any its affiliates serve as
general partner and/or investment adviser or in a similar capacity, and all
mutual funds or other pooled investment vehicles or entities under the control
or management of any of the Tudor Entities or the general partner or investment
adviser thereof, or an any affiliate of any of them. For purposes of this
Agreement, (a) "Tudor Entities" means each of the following: any entity for
which Tudor Investment Corporation or an Affiliate thereof acts as general
partner and/or investment adviser, Tudor Investment Corporation, Tudor Group
Holdings LLC, their respective Affiliates, or any Affiliate or Affiliated Group
of Tudor Investment Corporation and/or Tudor Group Holdings LLC, and (b) with
respect to the Tudor Entities, "Affiliated Group" has the meaning given to it in
Section 1504 of the Internal Revenue Code of 1986, as amended, and in addition
includes any analogous combined, consolidated, or unitary group, as defined
under any applicable state, local or foreign income tax law.
(k) "Rule 144" means Rule 144 promulgated under the Securities
Act and any successor or substitute rule, law or provision.
(l) "SEC" means the Securities and Exchange Commission.
(m) "Securities Act" means the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
(n) "Transfer Agent Instructions" means the Irrevocable
Transfer Agent Instructions, in substantially the form of Exhibit B, executed by
the Company and delivered to and acknowledged in writing by the Company's
transfer agent.
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(o) "Transaction Documents" means, collectively, the
Registration Rights Agreement and the Warrants.
(p) "Warrants" means the warrants to purchase Common Stock,
dated as of the date hereof, issued by the Company to the Purchasers, in
substantially the form attached hereto as Exhibit C.
(q) "Warrant Shares" means the shares of Common Stock issued
or issuable upon the exercise of the Warrants.
2. Purchase and Sale of Shares.
2.1 Purchase and Sale. Subject to and upon the terms and
conditions set forth in this Agreement, the Company agrees to issue and sell to
each Purchaser, and each Purchaser hereby agrees, severally and not jointly, to
purchase from the Company, at the Closing, the number of Shares set forth
opposite such Purchaser's name on Schedule 1 hereto, at a purchase price equal
to $5.50 per share. The aggregate purchase price payable by the Purchasers to
the Company for all of the Shares shall be $23,187,505.
2.2 Closing. The closing of the transactions contemplated
under this Agreement (the "Closing") shall take place at 5:00 pm (Eastern Time)
at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston,
Massachusetts 02110 on the Closing Date, or on such other date and at such time
as may be agreed upon between the Purchasers, on the one hand, and the Company,
on the other hand. At the Closing, the Company shall deliver to each Purchaser a
single stock certificate, registered in the name of such Purchaser, representing
the number of Shares purchased by such Purchaser, against payment of the
purchase price by wire transfer of immediately available funds to such account
as the Company shall designate in writing.
2.3 Tejas Securities Group, Inc. Fee. Upon the Closing or as
otherwise required by any agreement between the Company and Tejas Securities
Group, Inc. ("Tejas"), the Company shall pay to Tejas a broker fee in connection
with the transactions contemplated hereunder in the amount of $350,000, by wire
transfer of immediately available funds to such account as Tejas shall designate
in writing.
2.4 Tejas Securities Group, Inc. Warrants. Upon the Closing or
as otherwise required by any agreement between the Company and Tejas, the
Company shall issue to Tejas in connection with the transactions contemplated
hereunder, warrants to purchase One Million (1,000,000) shares of Common Stock
at an exercise price of $5.50 per share.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Purchaser, as of the date hereof and except as
set forth on the disclosure schedule furnished by the Company to each Purchaser
(the "Disclosure Schedule") attached hereto as Schedule 2, as follows:
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3.1 Incorporation. Each of the Company and the Subsidiaries
(as defined in Section 3.18 below) is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the State of
Delaware (or such other applicable jurisdiction of incorporation or formation),
and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or the character of
the 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, would not
result in a material adverse effect on the assets, liabilities (contingent or
otherwise), business, affairs, operations, prospects or condition (financial or
otherwise) of the Company ("Material Adverse Effect"). Each of the Company and
the Subsidiaries has all requisite corporate power and authority to carry on its
business as now conducted and to carry out the transactions contemplated hereby.
Neither the Company nor any of the Subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation (or other charter document) or
By-laws.
3.2 Capitalization. The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock, of which 25,246,682
shares were outstanding as of the date hereof, and (ii) 5,000,000 shares of
preferred stock, of which no shares are outstanding as of the date hereof. All
shares of the Company's issued and outstanding capital stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. Except as set forth in Schedule 3.2 to the Disclosure Schedule,
there are no existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character obligating the Company to issue, transfer or sell, or cause to be
issued, transferred or sold, any shares of the capital stock of the Company or
other equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests,
including the Shares, the Warrants and the Warrant Shares, and there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of its capital stock or other equity interests. The
issue and sale of the Shares, the Warrants and the Warrant Shares will not
obligate the Company to issue or sell, pursuant to any pre-emptive right or
otherwise, 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.
3.3 Registration Rights. Except as set forth on Schedule 3.3
to the Disclosure Schedule, the Company has not granted or agreed to grant to
any Person any right (including "piggy-back" and demand registration rights) to
have any capital stock or other securities of the Company registered with the
SEC or any other government authority.
3.4 Authorization. All corporate action on the part of the
Company, its officers and directors necessary for the authorization, execution,
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delivery and performance of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated herein and therein has been taken.
When executed and delivered by the Company, each of this Agreement and the
Transaction Documents shall constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and by general equitable principles.
The Company has all requisite corporate power and authority to enter into this
Agreement and the Transaction Documents and to carry out and perform its
obligations under their respective terms.
3.5 Valid Issuance of the Shares. The Shares, the Warrants and
the Warrant Shares have been duly authorized, and the Shares and the Warrant
Shares, upon issuance pursuant to the terms hereof and the terms of the
Warrants, respectively, will be validly issued, fully paid and nonassessable and
not subject to any encumbrances, preemptive rights or any other similar
contractual rights of the stockholders of the Company or any other Person. The
Company has reserved from its duly authorized capital stock the number of shares
of Common Stock issuable upon execution of this Agreement and upon the exercise
in full of the Warrants (assuming such Warrants vest in full).
3.6 Financial Statements. The Company has furnished to the
Purchasers, and attached as Schedule 3.6 to the Disclosure Schedule, true and
complete copies of (i) the audited consolidated balance sheet of the Company and
the Subsidiaries as of the fiscal year ended December 31, 2002, and the related
audited consolidated income statement, audited consolidated statement of cash
flows and audited consolidated statement of stockholders' equity of the Company
and the Subsidiaries for the year then ended (the "Audited Financial
Statements"), (ii) a draft of the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of the fiscal year ended December 31, 2003, and
the related audited consolidated income statement, audited consolidated
statement of cash flows and audited consolidated statement of stockholders'
equity of the Company and the Subsidiaries for the year then ended, and (iii)
the unaudited consolidated balance sheet of the Company and the Subsidiaries as
of February 29, 2004 (the "Balance Sheet") and the related consolidated income
statement, consolidated statement of cash flows and consolidated statement of
stockholders' equity of the Company for the two (2) months then ended (the
financial statements in clause (ii) and this clause (iii) are hereinafter
referred to, collectively, as the "Unaudited Financial Statements"). All of the
financial statements described in clauses (i)-(iii) above are hereinafter
referred to, collectively, as the "Financial Statements". The Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
covered thereby, subject, in the case of the Unaudited Financial Statements, to
normal year-end adjustments (which individually and in the aggregate are not
material) and to the absence of footnotes thereto, and present fairly, in all
material respects, the financial position of the Company and the Subsidiaries
and the results of operations as of the date and for the periods indicated
therein.
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3.7 SEC Documents. The Company has furnished to the Purchasers
true and complete copies of the following reports of the Company (collectively,
the "SEC Documents"): (i) the annual report on Form 10-K for the year ended
December 31, 2002 (the "Annual Report") and (ii) quarterly reports on Form 10-Q
for the periods ended March 31, 2002, June 30, 2002 and September 30, 2002. As
of their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act, and the rules and
regulations promulgated thereunder, and none of the SEC Documents contain 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 made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto in effect at the time of filing. All
material agreements to which the Company is a party or to which the property or
assets of the Company are subject are included as part of or specifically
identified in the SEC Documents to the extent required by the rules and
regulations of the SEC as in effect at the time of filing. The Company has
prepared and filed with the SEC all filings and reports required by the
Securities Act and the Exchange Act to make the Company's filings and reports
current in all respects, except for the Company's periodic reports under the
Exchange Act required to be filed for fiscal year 2003 and any filings made
pursuant to the Securities Act which rely on such reports for their continued
effectiveness.
3.8 Consents. Except for (a) the filing and effectiveness of
any registration statement required to be filed by the Company under the
Securities Act pursuant to the terms of the Registration Rights Agreement and
(b) any required state "blue sky" law filings in connection with the
transactions contemplated hereunder or under the Transaction Documents, all
consents, approvals, orders and authorizations required on the part of the
Company in connection with the execution or delivery of, or the performance of
the obligations under, this Agreement and the Transaction Documents, and the
consummation of the transactions contemplated herein and therein, have been
obtained and will be effective as of the date hereof. The execution and delivery
by the Company of this Agreement and the Transaction Documents, the consummation
of the transactions contemplated herein and therein, and the issuance of the
Shares, the Warrants and the Warrant Shares, do not require the consent or
approval of the stockholders of, or any lender to, the Company.
3.9 No Conflict; Compliance With Laws.
(a) The execution, delivery and performance by the Company of
this Agreement and the Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby, including the issuance of the
Shares, the Warrants and the Warrant Shares, do not and will not (i) conflict
with or violate any provision of the Certificate of Incorporation (or other
charter documents) or By-laws of the Company or any of the Subsidiaries, (ii)
breach, conflict with or result in any violation of or default (or an event that
with notice or lapse of time or both would become a default) under, or give rise
to a right of termination, amendment, acceleration or cancellation (with or
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without notice or lapse of time, or both) of any obligation, contract,
commitment, lease, agreement, mortgage, note, bond, indenture or other
instrument or obligation to which the Company or any of the Subsidiaries is a
party or by which they or any of their properties or assets are bound, except in
each case to the extent such breach, conflict, violation, default, termination,
amendment, acceleration or cancellation does not, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
or (iii) result in a violation of any statute, law, rule, regulation, order,
ordinance or restriction applicable to the Company, the Subsidiaries or any of
their properties or assets, or any judgment, writ, injunction or decree of any
court, judicial or quasi-judicial tribunal applicable to the Company, the
Subsidiaries or any of their properties or assets.
(b) Neither the Company nor any of the Subsidiaries (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 of the Subsidiaries), nor has the Company or any of the
Subsidiaries received written 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 or assets is bound (whether or not such default or violation has been
waived), (ii) is 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 does not, and could not, reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.10 Brokers or Finders. Other than as described in Sections
2.3 and 2.4 above, neither the Company nor any of the Subsidiaries has dealt
with any broker or finder in connection with the transactions contemplated by
this Agreement or the Transaction Documents, and neither the Company nor any of
the Subsidiaries has incurred, or shall incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or the Transaction Documents,
or any transaction contemplated hereby or thereby.
3.11 OTC Bulletin Board. The Company's Common Stock is
currently actively traded, and thus quoted, on the over-the-counter bulletin
board.
3.12 Absence of Litigation. Except as set forth on Schedule
3.12 to the Disclosure Schedule, there are no pending or, to the Company's
knowledge, threatened actions, suits, claims, proceedings or investigations
against or involving the Company or any of the Subsidiaries except to the extent
described in the SEC Documents.
3.13 No Undisclosed Liabilities; Indebtedness. Since the date
of the Balance Sheet, the Company and the Subsidiaries have incurred no
liabilities or obligations, whether known or unknown, asserted or unasserted,
fixed or contingent, accrued or unaccrued, matured or unmatured, liquidated or
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unliquidated, or otherwise, except for liabilities or obligations that,
individually or in the aggregate, do not or would not have a Material Adverse
Effect and other than (a) liabilities and obligations arising in the ordinary
course of business and (b) the liabilities and obligations set forth on Schedule
3.13 to the Disclosure Schedule. Except for indebtedness reflected in the
Balance Sheet, the Company has no indebtedness outstanding as of the date
hereof. The Company is not in default with respect to any outstanding
indebtedness or any instrument relating thereto.
3.14 Contracts. All contracts, agreements, instruments and
other documents required to be filed as exhibits to any of the periodic reports
required to be filed by the Exchange Act are legal, valid, binding and in full
force and effect and are enforceable by the Company in accordance with their
respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and by
general equitable principles.
3.15 Title to Assets. Each of the Company and the Subsidiaries
has good and marketable title to all real and personal property owned by it that
is material to the business of the Company or such Subsidiaries, in each case
free and clear of all liens and encumbrances, except those, if any, reflected in
the Financial Statements or incurred in the ordinary course of business
consistent with past practice. Any real property and facilities held under lease
by the Company or the Subsidiaries are held by it or them under valid,
subsisting and enforceable leases (subject to laws of general application
relating to bankruptcy, insolvency, reorganization, or other similar laws
affecting creditors' rights generally and other equitable remedies) with which
the Company and the Subsidiaries are in compliance in all material respects.
3.16 Labor Relations. Except as set forth on Schedule 3.16 to
the Disclosure Schedule, no labor or employment dispute exists or, to the
knowledge of the Company, is imminent or threatened, with respect to any of the
employees or consultants of the Company that has, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
3.17 Intellectual Property. The Company is the sole and
exclusive owner of, or has the exclusive right to use, all right, title and
interest in and to all material foreign and domestic patents, patent rights,
trademarks, service marks, trade names, brands, copyrights (whether or not
registered and, if applicable, including pending applications for registration)
and other proprietary rights or information, owned or used by the Company
(collectively, the "Rights"), and in and to each material invention, software,
trade secret, and technology used by the Company or any of the Subsidiaries (the
Rights and such other items, the "Intellectual Property"), and, to the Company's
knowledge, the Company owns and has the right to use the same, free and clear of
any claim or conflict with the rights of others (subject to the provisions of
any applicable license agreement). Except as set forth on Schedule 3.17 to the
Disclosure Schedule, there have been no written claims made against the Company
or any of the Subsidiaries asserting the invalidity, abuse, misuse, or
unenforceability of any of the Intellectual Property, and, to the Company's
knowledge, there are no reasonable grounds for any such claims.
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3.18 Subsidiaries; Joint Ventures. Except for the subsidiaries
listed on Schedule 3.18 to the Disclosure Schedule (the "Subsidiaries"), the
Company has no subsidiaries and does not otherwise own or control, directly or
indirectly, any other Person. Except as described in the SEC Documents, the
Company is not a participant in any joint venture, partnership, or similar
arrangement material to its business.
3.19 Taxes. The Company and each of the Subsidiaries has filed
(or has had filed on its behalf), will timely file or will cause to be timely
filed, or has timely filed for an extension of the time to file, all material
Tax Returns (as defined below) required by applicable law to be filed by it or
them prior to or as of the date hereof, and such Tax Returns are, or will be at
the time of filing, true, correct and complete in all material respects. Each of
the Company and the Subsidiaries has paid (or has had paid on its behalf) or,
where payment is not yet due, has established (or has had established on its
behalf and for its sole benefit and recourse) or will establish or cause to be
established in accordance with United States generally accepted accounting
principles on or before the date of hereof an adequate accrual for the payment
of, all material Taxes (as defined below) due with respect to any period ending
prior to or as of the date hereof. "Taxes" shall mean any and all taxes,
charges, fees, levies or other assessments, including income, gross receipts,
excise, real or personal property, sales, withholding, social security,
retirement, unemployment, occupation, use, goods and services, license, value
added, capital, net worth, payroll, profits, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessment or similar charges
imposed by the Internal Revenue Service or any taxing authority (whether state,
county, local or foreign) (each, a "Taxing Authority"), including any interest,
fines, penalties or additional amounts attributable to or imposed upon any such
taxes or other assessments. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any Taxing Authority, including information returns, any documents with respect
to accompanying payments of estimated Taxes, or with respect to or accompanying
requests for extensions of time in which to file any such return, report,
document, declaration or other information. There are no claims or assessments
pending against the Company or any of the Subsidiaries for any material alleged
deficiency in any Tax, and neither the Company nor any of the Subsidiaries has
been notified in writing of any material proposed Tax claims or assessments
against the Company or any of the Subsidiaries. No Tax Return of the Company or
any of the Subsidiaries is or has been the subject of an examination by a Taxing
Authority. Each of the Company and the Subsidiaries has withheld from each
payment made to any of its past or present employees, officers and directors,
and any other person, the amount of all material Taxes and other deductions
required to be withheld therefrom and paid the same to the proper Taxing
Authority within the time required by law.
3.20 Pensions and Benefits.
(a) Schedule 3.20(a) to the Disclosure Schedule contains a
true and complete list of each "employee benefit plan" within the meaning of
Section 3(3) of the United States Employee Retirement Income Security Act of
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1974, as amended ("ERISA"), including, without limitation, multiemployer plans
within the meaning of Section 3(37) of ERISA, and all retirement, profit
sharing, stock option, stock bonus, stock purchase, severance, fringe benefit,
deferred compensation, and other employee benefit programs, plans, or
arrangements, whether or not subject to ERISA, under which (i) any current or
former directors, officers, employees or consultants of the Company has any
present or future right to benefits and which are contributed to, sponsored by
or maintained by the Company or any of the Subsidiaries, or (ii) the Company or
any of the Subsidiaries has any present or future liability. All such programs,
plans, or arrangements shall be collectively referred to as the "Company Plans."
Each Company Plan is included as part of or specifically identified in the SEC
Documents to the extent required by the rules and regulations of the SEC as in
effect at the time of filing.
(b) (i) Each Company Plan has been established and
administered in all material respects in accordance with its terms and in
compliance with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), and other applicable laws, rules and regulations;
(ii) each Company Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code is so qualified and has received a favorable
determination letter as to its qualification (or if maintained pursuant to a
prototype form of instrument the sponsor thereof has received a favorable
opinion letter as to its qualification), and to the Company's knowledge nothing
has occurred, whether by action or failure to act, that could reasonably be
expected to cause the loss of such qualification; and (iii) no Company Plan
provides retiree health or life insurance benefits (whether or not insured), and
neither the Company nor the Subsidiaries have any obligations to provide any
such retiree benefits other than as required pursuant to Section 4980B of the
Code or other applicable law.
(c) No Company Plan is a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA) or a plan subject to the minimum funding
requirements of Section 302 or ERISA or Section 412 of the Code or Title IV of
ERISA, and neither the Company, the Subsidiaries, nor any member of their
Controlled Group has any liability or obligation in respect of, any such
multiemployer plan or plan. With respect to any Company Plan and to the
Company's knowledge, (i) no actions, suits or claims (other than routine claims
for benefits in the ordinary course) are pending or threatened, and (ii) no
administrative investigation, audit or other administrative proceeding by the
Department of Labor, the Pension Benefit Guaranty Corporation, the Internal
Revenue Service or other governmental agencies are pending, threatened or in
progress.
3.21 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 Shares, the Warrants or the Warrant Shares by means of any form
of general solicitation or advertising. Neither the Company nor any of its
Affiliates nor any person acting on the Company's behalf has, directly or
indirectly, at any time within the past six (6) months, made any offer or sale
of any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
sale or issuance of the Shares, the Warrants and the Warrant Shares as
contemplated hereby or (ii) cause the offering or issuance of the Shares, the
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Warrants or the Warrant Shares pursuant to this Agreement or any of the
Transaction Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions.
None of the Company or any of the Subsidiaries is, or is an Affiliate of, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. None of the Company or any of the Subsidiaries is a United States
real property holding corporation within the meaning of the Foreign Investment
in Real Property Tax Act of 1980. No consent, license, permit, waiver approval
or authorization of, or designation, declaration, registration or filing with,
the SEC or any state securities regulatory authority is required in connection
with the offer, sale, issuance or delivery of the Shares, the Warrants or the
Warrant Shares other than the possible filing of Form D with the SEC.
3.22 Material Changes. Except as set forth on Schedule 3.22 to
the Disclosure Schedule, since the date of the Balance Sheet, the Company has
conducted its business only in the ordinary course, consistent with past
practice, and since such date there has not occurred: (i) any event, occurrence
or development that has had, or that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
any of the Subsidiaries; (ii) any amendments or changes in the charter documents
or by-laws of the Company or the Subsidiaries; (iii) any: (A) incurrence,
assumption or guarantee by the Company or the Subsidiaries of any debt for
borrowed money other than (1) equipment leases made in the ordinary course of
business, consistent with past practice and (2) any such incurrence, assumption
or guarantee with respect to an amount of $25,000 or less that has been
disclosed in the SEC Documents; (B) issuance or sale of any securities
convertible into or exchangeable for securities of the Company other than to
directors, employees and consultants pursuant to existing equity compensation or
stock purchase plans of the Company; (C) issuance or sale of options or other
rights to acquire from the Company or the Subsidiaries, directly or indirectly,
securities of the Company or any securities convertible into or exchangeable for
any such securities, other than options issued to directors, employees and
consultants in the ordinary course of business, consistent with past practice;
(D) issuance or sale of any stock, bond or other corporate security other than
to directors, employees and consultants pursuant to existing equity compensation
or stock purchase plans of the Company; (E) declaration or making of any payment
or distribution to stockholders or purchase or redemption of any share of its
capital stock or other security other than to or from directors, officers and
employees of the Company or the Subsidiaries as compensation for or in
connection with services rendered to the Company or the Subsidiaries (as
applicable) or for reimbursement of expenses incurred on behalf of the Company
or the Subsidiaries (as applicable); (F) sale, assignment or transfer of any of
its intangible assets except in the ordinary course of business, consistent with
past practice, or cancellation of any debt or claim except in the ordinary
course of business, consistent with past practice; (G) waiver of any right of
substantial value whether or not in the ordinary course of business; (H)
material change in officer compensation, except in the ordinary course of
business and consistent with past practice; or (I) other commitment (contingent
or otherwise) to do any of the foregoing; (iv) any creation, sufferance or
11
assumption by the Company or any of the Subsidiaries of any lien on any asset or
any making of any loan, advance or capital contribution to or investment in any
Person, in an aggregate amount which exceeds $25,000 outstanding at any time;
(v) any entry into, amendment of, relinquishment, termination or non-renewal by
the Company or the Subsidiaries of any material contract, license, lease,
transaction, commitment or other right or obligation, other than in the ordinary
course of business, consistent with past practice; or (vi) any transfer or grant
of a right with respect to the Intellectual Property Rights owned or licensed by
the Company or the Subsidiaries, except as among the Company and the
Subsidiaries.
3.23 Regulatory Permits. The Company and the Subsidiaries
possess all certificates, approvals, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to
conduct their businesses as described in the SEC Documents, except where the
failure to possess such permits does not, and could not have, individually or in
the aggregate, a Material Adverse Effect (the "Material Permits"), and the
Company has not received any written notice of proceedings relating to the
revocation or modification of any Material Permits except as described in the
SEC Documents.
3.24 Transactions with Affiliates and Employees. Except as set
forth in the SEC Documents or on Schedule 3.24 to the Disclosure Schedule, 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 or agreement with the Company (other than for services as employees,
officers and directors) exceeding $60,000, 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.
3.25 Insurance. The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary for the business in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it will not be able to renew existing insurance coverage for itself and the
Subsidiaries as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary or appropriate to continue business.
3.26 Solvency. Based on the consolidated financial condition
of the Company and the Subsidiaries as of the date hereof, (i) the fair saleable
value of the Company's 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 and 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, projected capital
requirements and capital availability thereof; and (iii) the current cash flow
12
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 debts
when such amounts are required to be paid. The Company has no present intention
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).
3.27 Internal Accounting Controls. Except as disclosed in the
SEC Filings, the Company maintains 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 United States generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or specific
authorizations, (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, and (v) the Company is otherwise in compliance with
the Securities Act, the Exchange Act and all other rules and regulations
promulgated by the SEC and applicable to the Company, including the
Sarbanes-Oxley Act of 2002, as amended.
3.28 Disclosure. Neither the Company nor, to the Company's
knowledge, any other Person acting on its behalf and at the direction of the
Company, has provided to any Purchaser or its agents or counsel any information
that in the Company's reasonable judgment, at the time such information was
furnished, constitutes material, non-public information, except such information
as may have been disclosed to certain Board members, who are affiliated with
certain Purchasers (other than Tudor and its Affiliates), in their capacity as
directors of the Company. The Company understands and confirms that each
Purchaser will rely on the representations and covenants contained herein in
effecting the transactions contemplated by this Agreement and the Transaction
Documents, and in the securities of the Company after the Closing. 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, taken as a whole is true and correct
and does not contain any untrue statement of 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 the 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 4.
4. Representations and Warranties of the Purchasers. Each Purchaser
represents and warrants, severally and not jointly, to the Company as follows:
13
4.1 Authorization. All action on the part of such Purchaser
and, if applicable, its officers, directors, managers, members, shareholders
and/or partners necessary for the authorization, execution, delivery and
performance of this Agreement and the Registration Rights Agreement, and the
consummation of the transactions contemplated herein and therein, has been
taken. When executed and delivered, each of this Agreement and the Registration
Rights Agreement will constitute the legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally and by general equitable principles.
Each Purchaser has all requisite corporate power and authority to enter into
each of this Agreement and the Registration Rights Agreement, and to carry out
and perform its obligations under the terms of hereof and thereof.
4.2 Purchase Entirely for Own Account. Each Purchaser is
acquiring the Shares, Warrants and Warrant Shares for its own account for
investment and not for resale or with a view to distribution thereof in
violation of the Securities Act.
4.3 Investor Status; Etc. Each Purchaser certifies and
represents to the Company that it is an "accredited investor" as defined in Rule
501 of Regulation D promulgated under the Securities Act and was not organized
for the purpose of acquiring any of the Shares, the Warrants or the Warrant
Shares. Each Purchaser's financial condition is such that it is able to bear the
risk of holding the Shares for an indefinite period of time and the risk of loss
of its entire investment. Each Purchaser has sufficient knowledge and experience
in investing in companies similar to the Company so as to be able to evaluate
the risks and merits of its investment in the Company.
4.4 Securities Not Registered. Each Purchaser understands that
the Shares, the Warrants and the Warrant Shares have not been registered under
the Securities Act, by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act, and that the
Shares, the Warrants and the Warrant Shares must continue to be held by such
Purchaser unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration. Each Purchaser understands
that the exemptions from registration afforded by Rule 144 (the provisions of
which are known to it) promulgated under the Securities Act depend on the
satisfaction of various conditions, and that, if applicable, Rule 144 may afford
the basis for sales only in limited amounts.
4.5 No Conflict. The execution and delivery of this Agreement
and the Registration Rights Agreement by each Purchaser, and the consummation of
the transactions contemplated hereby and thereby, will not conflict with or
result in any violation of or default by such Purchaser (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents of such
Purchaser or (ii) any agreement or instrument, permit, franchise, license,
judgment, order, statute, law, ordinance, rule or regulations, applicable to
such Purchaser.
14
4.6 Brokers. Such Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.7 Consents. All consents, approvals, orders and
authorizations required on the part of such Purchaser in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and are effective as of the
date hereof.
4.8 Disclosure of Information. Such Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Shares, Warrants and
Warrant Shares and the business, properties, prospects and financial condition
of the Company.
5. Conditions Precedent.
5.1. Conditions to the Obligation of the Purchasers to
Consummate the Closing. The obligation of each Purchaser to consummate the
Closing and to purchase and pay for the Shares is subject to the satisfaction of
the following conditions precedent:
(a) The representations and warranties of the Company
contained herein shall be true and correct on and as of the date hereof with the
same force and effect as though made on and as of the Closing Date. The Company
shall have performed all obligations and conditions herein required to be
performed or complied with by the Company on or prior to the Closing Date.
(b) There shall have been no material adverse change (actual
or threatened) in the assets, liabilities (contingent or otherwise), affairs,
business, operations, prospects, or condition (financial or otherwise) of the
Company prior to the Closing Date; and the Company shall have performed all
obligations and conditions herein required to be performed or observed by the
Company on or prior to the Closing Date.
(c) No proceeding challenging this Agreement or the
Transaction Documents, or the transactions contemplated hereby or thereby, or
seeking to prohibit, alter, prevent or materially delay the Closing, shall have
been instituted before any court, arbitrator or governmental body, agency or
official or shall be pending against or involving the Company.
(d) The sale of the Shares and the issuance of the Warrants
(and the Warrant Shares) to the Purchasers shall not be prohibited by any law,
rule, governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of or with any
other Person with respect to any of the transactions contemplated hereby shall
have been duly obtained or made and shall be in full force and effect.
15
(e) All instruments and corporate proceedings of the Company
in connection with the transactions contemplated by this Agreement and the
Transaction Documents shall be satisfactory in form and substance to each
Purchaser, and each Purchaser shall have received copies (executed or certified,
as may be appropriate) of all documents which the Purchasers may have reasonably
requested in connection with such transactions.
(f) Each Purchaser shall have received from Andrews Kurth LLP,
outside counsel to the Company, an opinion addressed to such Purchaser, dated
the Closing Date and substantially in the form of Exhibit A hereto.
(g) The Registration Rights Agreement shall have been
executed and delivered by the Company.
(h) Each Purchaser shall have received from the Company an
original stock certificate evidencing the purchase of the Shares and an original
Warrant, in each case for the number of shares of Common Stock and the number of
Warrant Shares, respectively, set forth opposite such Purchaser's name on
Schedule 1 hereto.
(i) Each Purchaser shall have received duly executed Transfer
Agent Instructions acknowledged by the Company's transfer agent.
(j) The Company shall pay up to an additional aggregate of
$25,000 for the Purchasers' expenses incurred in connection with the
preparation, execution and delivery of this Agreement and the Transaction
Documents, in accordance with Section 8.8 hereof.
(k) The Company shall have delivered, in form and substance
satisfactory to each Purchaser, a certificate dated the Closing Date and signed
by the secretary or another officer of the Company, certifying (i) that attached
copies of the Certificate of Incorporation, the By-Laws and resolutions of the
Board approving this Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
in full force and effect as of the date hereof, and (ii) as to the incumbency
and specimen signature of each officer of the Company executing this Agreement,
the Transaction Documents and any other document delivered in connection
herewith on behalf of the Company.
(l) The Company shall deliver to each Purchaser, a certificate
in form and substance satisfactory to each Purchaser, dated the Closing Date and
signed by the Company's chief financial officer, certifying that (i) the
representations and warranties of the Company contained in Section 3 hereof are
true and correct in all respects on the Closing Date and (ii) the Company has
performed and complied with all of the agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Company on or before the Closing Date.
16
5.2. Conditions to the Obligation of the Company to Consummate
the Closing. The obligation of the Company to consummate the Closing and to
issue and sell the Shares to each Purchaser at the Closing is subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties of the Purchasers
contained herein shall be true and correct in all respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Registration Rights Agreement shall have been executed
and delivered by the Purchasers.
(c) The Purchasers shall have performed all obligations and
conditions herein required to be performed or complied with by the Purchasers on
or prior to the Closing Date.
(d) No proceeding challenging this Agreement or the
Transaction Documents, or the transactions contemplated hereby or thereby, or
seeking to prohibit, alter, prevent or materially delay the Closing, shall have
been instituted before any court, arbitrator or governmental body, agency or
official or shall be pending against or involving such Purchaser.
(e) The sale of the Shares and the issuance of the Warrants
(and the Warrant Shares) by the Company shall not be prohibited by any law,
rule, governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of any other
Person with respect to any of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection
with the transactions contemplated by this Agreement to be consummated at the
Closing shall be satisfactory in form and substance to the Company, and the
Company shall have received counterpart originals, or certified or other copies
of all documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
6. Certain Covenants and Agreements.
6.1. Transfer of Securities. Each Purchaser shall not sell,
assign, pledge, transfer or otherwise dispose of or encumber any of the Shares,
the Warrants or the Warrant Shares, except (i) pursuant to an effective
17
registration statement under the Securities Act, (ii) to an Affiliate (so long
as such Affiliate agrees to be bound by the terms and provisions of this
Agreement as if, and to the fullest extent as, such Purchaser), or (iii)
pursuant to an available exemption from registration under the Securities Act
(including sales permitted pursuant to Rule 144) and applicable state securities
laws and, if requested by the Company, upon delivery by such Purchaser of either
an opinion of counsel of such Purchaser reasonably satisfactory to the Company
to the effect that the proposed transfer is exempt from or does not require
registration under the Securities Act and applicable state securities laws or a
representation letter of such Purchaser reasonably satisfactory to the Company
setting forth a factual basis for concluding that such proposed transfer is
exempt from or does not require registration under the Securities Act and
applicable state securities laws. Any transfer or purported transfer of the
Shares in violation of this Section 6.1 shall be void. The Company shall not
register any transfer of the Shares in violation of this Section 6.1. The
Company may, and may instruct any transfer agent for the Company, to place such
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 6.1.
6.2. Legends.
(a) To the extent applicable, each certificate or other
document evidencing the Shares and the Warrant Shares shall be endorsed with the
legend set forth below, and each Purchaser covenants that, except to the extent
such restrictions are waived by the Company, it shall not transfer the shares
represented by any such certificate without complying with the restrictions on
transfer described in this Agreement and the legends endorsed on such
certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR
SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, or in a transaction not
subject to, REGISTRATION UNDER SAID ACT."
(b) The legend set forth in Section 6.2(a) shall be removed
from the certificates evidencing the Shares and the Warrant Shares, (i)
following any sale of such Shares or Warrant Shares pursuant to Rule 144 or any
effective registration statement, or (ii) if such Shares or Warrant Shares are
eligible for sale under Rule 144(k) (and the holder of such Shares or Warrant
Shares has submitted a written request for removal of the legend indicating that
the holder has complied with the applicable provisions of Rule 144 or such
judicial interpretation or pronouncement), or (iii) if such legend is not
18
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission) (and
the holder of such Shares or Warrant Shares has submitted a written request for
removal of the legend indicating that the holder has complied with the
applicable provisions of Rule 144). The Company shall cause its counsel to issue
a legal opinion to the Company's transfer agent promptly upon the occurrence of
any of the events in clauses (i), (ii) or (iii) above to effect the removal of
the legend on certificates evidencing the Shares or the Warrant Shares and shall
also cause its counsel to issue a "blanket" legal opinion to the Company's
transfer agent promptly after the Effective Date (provided that there is an
effective registration statement covering the resale of the Shares or the
Warrant Shares, as the case may be), if required by the Company's transfer
agent, to allow sales without restriction pursuant to an effective registration
statement. The Company agrees that at such time as such legend is no longer
required under this Section 6.2(b), it will, no later than three (3) business
days following the delivery by a Purchaser to the Company or the Company's
transfer agent of a certificate representing the Shares or Warrant Shares issued
with a restrictive legend, deliver or cause to be delivered to such Purchaser a
certificate representing such Shares or Warrant Shares that is free from all
restrictive and other legends; provided that in the case of removal of the
legend for reasons set forth in clause (ii) above, the holder of such Shares or
Warrant Shares has submitted a written request for removal of the legend
indicating that the holder has complied with the applicable provisions of Rule
144. 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.
6.3 Publicity. Except to the extent required by applicable
laws, rules, regulations or stock exchange requirements, neither (i) the
Company, the Subsidiaries or any of their Affiliates nor (ii) any Purchaser or
any of its Affiliates shall, without the written consent of the other, make any
public announcement or issue any press release with respect to the transactions
contemplated by this Agreement. In no event will either (i) the Company, the
Subsidiaries or any of their Affiliates or (ii) any Purchaser or any of its
Affiliates make any public announcement or issue any press release with respect
to the transactions contemplated by this Agreement without consulting with the
other party, to the extent feasible, as to the content of such public
announcement or press release.
6.4 Material, Nonpublic Information. Except as required by
law, the Company and its directors, officers, employees and agents shall not
provide any Purchaser with any material non-public information regarding the
Company or any of the Subsidiaries at any time after the Closing, except such
information as may be required to be disclosed to certain Board members, who are
affiliated with certain Purchasers (other than Tudor and its Affiliates), in
their capacity as directors of the Company. In the event of a breach of the
foregoing covenant following the Effective Date, or in the event that Company is
legally required to make certain disclosures to any Purchaser (and does so)
following the Effective Date, then in addition to any other remedy provided for
herein, in the Transaction Documents or in equity or at law, each Purchaser to
whom information has been disclosed (whether as a result of breach or as
required by law) may request, in writing, that the Company promptly (but in no
event more than five (5) business days after the date of such writing) publicly
disclose, by press release, SEC filing, or otherwise, an appropriate summary of
the information that, in such Purchaser's reasonable judgment, constitutes the
then material non-public information. After such five (5) business-day period,
the Purchaser(s) who was or were in receipt of such material non-public
information shall be automatically authorized to make all of the information, or
any portion thereof, available to the public generally, without incurring any
liability to the Company for such disclosure.
19
6.5 Filing of Information. The Company shall use best efforts
to, and shall, promptly after the date hereof and in any event on or prior to
June 30, 2004, make current in all respects all filings and reports required by
applicable securities laws, including the preparation and filing of all periodic
reports under the Exchange Act, the filing of audited financial statements for
fiscal year 2003, and the filing of any statements required by or pursuant to
the Securities Act. The Company covenants to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
(other than the periodic reports with respect to fiscal year 2003 and the first
quarter of 2004) required to be filed by the Company pursuant to all applicable
securities laws, including the Exchange Act. At any time 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 Shares
and the Warrant Shares under Rule 144. The Company further covenants that it
will take such further action as any holder of Shares or Warrant Shares 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.
6.6 Additional Issuance. The Company shall not issue any
capital stock or other securities in connection with the raising of additional
financing or capital until all of the Shares have been registered for resale
pursuant to an effective registration statement and otherwise in accordance with
the terms set forth in the Registration Rights Agreement; provided; however,
that the foregoing shall not prohibit the Company from issuing shares of Common
Stock or securities convertible into or exercisable for Common Stock: (i) upon
conversion of the Warrants or other securities issuable upon conversion of
securities outstanding as of the date hereof, (ii) to employees, consultants,
officers or directors of the Company pursuant to stock option, stock purchase or
stock bonus plans or agreements or other stock incentive plans or arrangements
approved by the Board, which are in existence as of the date hereof, (iii)
pursuant to the acquisition of another business entity or business segment of
any such entity by the Company by merger, purchase of substantially all the
assets or other reorganization or corporate partnering agreement if such
issuance is approved by the Board, (iv) in connection with any stock split,
stock dividend or recapitalization of the Company, (v) with respect to warrants
to purchase Common Stock issued to Tejas and as described in Section 2.4 hereof,
and (vi) in connection with lease lines, bank loans, corporate partnering or
other similar transactions, provided such issuances described in this clause
(vi) are not primarily for the purpose of equity financing and are approved by
the Board.
6.7 Use of Proceeds. The Company covenants and agrees that the
proceeds from the sale of the Shares shall be used by the Company for working
capital and general corporate purposes or any other purpose approved by the
Company's board of director, including, without limitation, growth initiatives,
capital expenditures and potential acquisitions; under no circumstances shall
any portion of the proceeds be applied to: (i) the payment of dividends or other
20
distributions on any capital stock or other securities of the Company; (ii) the
purchase of debt or equity securities of any Person for cash, including the
Company, except in connection with investment of excess cash in high quality
(A1/P1 or better) money market instruments having maturities of one year or
less; (iii) any expenditure not directly related to the business of the Company;
or (iv) the call, repurchase or redemption of any Company equity or
equity-equivalent securities.
6.8 Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares or the issuance of the
Warrants or the Warrant Shares to the Purchasers.
6.9 Pre-Emptive Right. Each Purchaser shall have the right to
purchase a pro rata share of New Securities (as defined in this Section 6.9)
that the Company may, from time to time, propose to sell and issue. Each
Purchaser's pro rata share, for purposes of this right, is the ratio of the
number of shares of Fully Diluted Common Stock owned by such holder immediately
prior to the issuance of New Securities to the total number of shares of Fully
Diluted Common Stock outstanding immediately prior to the issuance of New
Securities. Each Purchaser shall also have the right of over-allotment to
purchase additional New Securities set forth in paragraph (b) of this Section
6.9. This pre-emptive right shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including
Common Stock) of the Company whether now authorized or not, and any rights,
options or warrants to purchase such capital stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for capital
stock; provided that the term "New Securities" does not include securities
issued: (i) upon conversion of the Warrants or other securities issuable upon
conversion of securities outstanding as of the date hereof, (ii) to employees,
consultants, officers or directors of the Company pursuant to stock option,
stock purchase or stock bonus plans or agreements or other stock incentive plans
or arrangements approved by the Board, which are in existence as of the date
hereof, (iii) pursuant to the acquisition of another business entity or business
segment of any such entity by the Company by merger, purchase of substantially
all the assets or other reorganization or corporate partnering agreement if such
issuance is approved by the Board, (iv) in connection with any stock split,
stock dividend or recapitalization of the Company, (v) in connection with lease
lines, bank loans, corporate partnering or other similar transactions, provided
such issuances described in this clause (v) are not primarily for the purpose of
equity financing and are approved by the Board, and (vii) to directors of the
Company as compensation for their service as directors pursuant to a restricted
stock plan to be implemented and approved by the stockholders of the Company;
provided that such issuance of restricted stock shall not exceed 100,000 shares
per year.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Purchaser certified written notice of its
intention, describing the type of New Securities, their price and the general
21
terms upon which the Company proposes to issue the same. Each Purchaser shall
have thirty (30) days after any such notice is mailed or delivered to agree to
purchase all or any portion of such Purchaser's pro rata share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased. Each Purchaser shall have the right of over-allotment such that
if any Purchaser fails to exercise its right under this Section 6.9 to purchase
its full pro rata share of New Securities, the other Purchasers may purchase the
portion of such Purchaser's remaining portion on a pro rata share within ten
(10) days from the date such non-purchasing Purchaser fails to exercise its
right hereunder to purchase its full pro rata share of New Securities.
(c) In the event the Purchasers fail to exercise the
pre-emptive right within such thirty (30) day period and after the expiration of
the ten (10) day period for the exercise of the over-allotment provisions of
this Section 6.9, the Company shall have ninety (90) days thereafter to sell the
New Securities respecting which the Purchasers' pre-emptive right set forth in
this Section 6.9 was not exercised, at a price and upon terms no more favorable
to the purchasers thereof or to the Company than specified in the Company's
notice to the Purchasers pursuant to Section 6.9(b) above. In the event the
Company has not sold the New Securities respecting which the Purchasers'
preemptive right set forth in the Section 6.9 was not exercised within such
ninety (90) day period, the Company shall not thereafter issue or sell any New
Securities, without first again offering such securities to the Purchasers in
the manner provided in Section 6.9(b) above.
6.10 Reservation of Common Stock for Issuance; Listing of
Shares. The Company agrees to reserve from its duly authorized capital stock the
total number of shares of Common Stock issuable upon execution of this Agreement
and upon the exercise in full of the Warrants. The Company agrees that at any
time, if and when its shares of Common Stock are listed on NASDAQ, that it will
use reasonable efforts to promptly list and qualify the Shares and the Warrant
Shares for trading on NASDAQ.
7. Indemnification.
7.1 By the Company. The Company agrees to indemnify, defend
and hold harmless each Purchaser and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (collectively, the "Purchaser Indemnitees") to the fullest
extent permitted by law from and against any and all claims, losses,
liabilities, damages, deficiencies, judgments, assessments, fines, settlements,
costs or expenses (including interest, penalties and reasonable fees,
disbursements and other charges of counsel) (collectively, "Losses") based upon,
arising out of or otherwise in respect of any breach by the Company of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement or in the Transaction Documents, or for any Losses claimed by Tejas or
any other broker or placement agent.
7.2 Claims All claims for indemnification by a Purchaser
Indemnitee pursuant to this Section 7 shall be made as follows:
22
(a) If a Purchaser Indemnitee has incurred or suffered Losses
for which it is entitled to indemnification under this Section 7, then such
Purchaser Indemnitee shall give prompt written notice of such claim (a "Claim
Notice") to the Company. Each Claim Notice shall state the amount of claimed
Losses (the "Claimed Amount"), if known, and the basis for such claim.
(b) Within 30 days after delivery of a Claim Notice, the
Company (the "Indemnifying Party") shall provide to each Purchaser Indemnitee
(the "Indemnified Party"), a written response (the "Response Notice") in which
the Indemnifying Party shall: (i) agree that all of the Claimed Amount is owed
to the Indemnified Party, (ii) agree that part, but not all, of the Claimed
Amount (the "Agreed Amount") is owed to the Indemnified Party, or (iii) contest
that any of the Claimed Amount is owed to the Indemnified Party. The
Indemnifying Party may contest the payment of all or a portion of the Claimed
Amount only based upon a good faith belief that all or such portion of the
Claimed Amount does not constitute Losses for which the Indemnified Party is
entitled to indemnification under this Section 7. If no Response Notice is
delivered by the Indemnifying Party within such 30-day period, then the
Indemnifying Party shall be deemed to have agreed that all of the Claimed Amount
is owed to the Indemnified Party.
(c) If the Indemnifying Party in the Response Notice agrees
(or is deemed to have agreed) that all of the Claimed Amount is owed to the
Indemnified Party, then the Indemnifying Party shall owe to the Indemnified
Party an amount equal to the Claimed Amount to be paid in the manner set forth
in this Section 7. If the Indemnifying Party in the Response Notice agrees that
part, but not all, of the Claimed Amount is owed to the Indemnified Party, then
the Indemnifying Party shall owe to the Indemnified Party an amount equal to the
agreed amount set forth in such Response Notice to be paid in the manner set
forth in this Section 7.
(d) No delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party of any liability or
obligation hereunder except to the extent of any actual prejudice caused by or
arising out of such delay.
7.3. Payment of Claims. An Indemnifying Party shall make
payment of any portion of any Claimed Amount that such Indemnifying Party has
agreed in a Response Notice that it owes to an Indemnified Party, or that such
Indemnifying Party is deemed to have agreed it owes to such Indemnifying Party,
said payment to be made within thirty (30) days after such Response Notice is
delivered by such Indemnifying Party or should have been delivered by such
Indemnifying Party, as the case may be.
7.4. Limitations.
(a) Time for Claims. No Indemnifying Party will be liable for
any Losses hereunder arising out of a breach of representation or warranty
unless a written claim for indemnification is given by the Indemnified Party to
23
the Indemnifying Party on or prior to the third anniversary of the date on which
the registration statement covering the resale of the Shares initially became
effective.
(b) Maximum Amount. Notwithstanding anything contained herein
to the contrary, no Indemnifying Party will be liable for any Losses hereunder
in excess of $23,187,505.
7.5 Applicability; Exclusivity. Notwithstanding any term to
the contrary in this Section 7, the indemnification and contribution provisions
of the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder. The
parties hereby acknowledge and agree that in addition to remedies of the parties
hereto in respect of any and all claims relating to any breach or purported
breach of any representation, warranty, covenant or agreement that is contained
in this Agreement pursuant to the indemnification provisions of this Section 7,
all parties shall always retain the right to pursue and obtain injunctive relief
in addition to any other rights or remedies hereunder.
8. Miscellaneous Provisions.
8.1 Rights Cumulative. Each and all of the various rights,
powers and remedies of the parties shall be considered to be cumulative with and
in addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
8.2 Pronouns. All pronouns or any variation thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
8.3 Notices.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, overnight courier
or telecopy, or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder. The date of giving any notice shall
be the date of its actual receipt.
24
(b) All correspondence to the Company shall be addressed as
follows:
Motient Corporation
300 Knightsbridge Parkway
Lincolnshire, IL 60069
Attention: Christopher Downie,
Executive Vice President
and Chief Financial Officer
Telecopier: (847) 478-4810
with copies to:
Motient Corporation
300 Knightsbridge Parkway
Lincolnshire, IL 60069
Attention: Robert Macklin, Esq.
Telecopier: (847) 478-4810
Andrews Kurth LLP
450 Lexington Avenue
New York, NY 10017
Attention: Paul Silverstein, Esq.
Telecopier: (212) 850-2929
(c) All correspondence to the Purchasers shall be
addressed as follows:
Tudor Investment Corporation
15303 Ventura Boulevard, Suite 900
Sherman Oaks, CA 91403
Attention: Darryl L. Schall
Telecopier: (203) 552-6248
with copies to:
Tudor Investment Corporation
1275 King Street
Greenwich, CT 06831
Attention: Stephen N. Waldman, Esq.
Telecopier: (203) 861-5144
Bingham McCutchen, LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Victor J. Paci, Esq.
Meerie M. Joung, Esq.
Telecopier: (617) 951-8736
25
(d) Any entity may change the address to which correspondence
to it is to be addressed by notification as provided for herein.
8.4 Captions. The captions and paragraph headings of this
Agreement are solely for the convenience of reference and shall not affect its
interpretation.
8.5 Severability. Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions
shall be replaced with a provision which accomplishes, to the extent possible,
the original business purpose of such part or provision in a valid and
enforceable manner, and the remainder of this Agreement shall remain binding
upon the parties hereto.
8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal and substantive laws of the State of
New York and without regard to any conflicts of laws concepts which would apply
the substantive law of some other jurisdiction.
8.7 Waiver. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or be construed as, a further or continuing waiver of any
such term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
8.8 Expenses. The Company shall pay its expenses incurred in
connection with the preparation, execution and delivery of this Agreement and
the Transaction Documents. The Company shall also pay the fees and expenses of
the Purchasers reasonably incurred in connection with the preparation, execution
and delivery of this Agreement and the Transaction Documents (including the
legal fees and expenses of outside counsel to Tudor), in an amount up to
$75,000, of which $50,000 was paid prior to the Closing (and which shall be
non-refundable whether or not the transactions contemplated by this Agreement
close) and up to an additional $25,000 shall be paid upon the Closing. The
Purchasers will pay their expenses exceeding $75,000 incurred in connection with
the preparation, execution and delivery of this Agreement and the Transaction
Documents.
8.9 Assignment. The rights and obligations of any party hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of such party. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of Purchasers who hold a majority of the outstanding Shares (the
"Majority Purchasers"). Each Purchaser may assign or transfer any or all of its
rights under this Agreement to any Person provided that such assignee or
transferee agrees in writing to be bound, with respect to the transferred Shares
and the Warrant Shares, by the provisions hereof that apply to such assigning or
transferring Purchaser; whereupon such assignee or transferee shall be deemed to
be a "Purchaser" (and "Tudor" as may be appropriate) for all purposes of this
Agreement.
26
8.10 Survival. The respective representations and warranties
given by the parties hereto shall survive the Closing Date and the consummation
of the transactions contemplated herein for a period of time equal to the time
for which indemnification may be sought hereunder, without regard to any
investigation made by any party. The respective covenants and agreements agreed
to by a party hereto shall survive the Closing Date and the consummation of the
transactions contemplated herein in accordance with their respective terms and
conditions.
8.11 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the parties hereto.
8.12 Amendments. Any amendment, supplement or modification of
or to any provision of this Agreement, any waiver of any provisions of this
Agreement shall be effective only if made or given in writing and signed by the
Company and the Majority Purchasers; provided, that with respect to any
amendment, supplement, modification or waiver relating to Tudor, the consent or
waiver of Tudor shall also be required.
8.13 No Third Party Rights. This Agreement is intended solely
for the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any Person (including, without
limitation, any stockholder or debt holder of the Company) other than the
parties hereto.
8.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document. The parties hereto
confirm that any facsimile copy of another party's executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.
[signature pages to follow]
27
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement under seal as of the day and year first above written.
MOTIENT CORPORATION
By: /s/ Chris Downie
-----------------------------------------------
Name: Christopher Downie
Title: Executive VP & CFO
THE RAPTOR GLOBAL PORTFOLIO LTD.
By: Tudor Investment Corporation,
Investment Advisor
By: /s/ William T. Flaherty
----------------------------------------------
Name: William T. Flaherty
Title: Managing Director
THE TUDOR BVI GLOBAL PORTFOLIO, LTD.
By: Tudor Investment Corporation, Trading Advisor
By: /s/ William T. Flaherty
-----------------------------------------------
Name: William T. Flaherty
Title: Managing Director
THE ALTAR ROCK FUND L.P.
By: Tudor Investment Corporation, General Partner
By: /s/ William T. Flaherty
----------------------------------------------
Name: William T. Flaherty
Title: Managing Director
TUDOR PROPRIETARY TRADING, L.L.C.
By: /s/ William T. Flaherty
----------------------------------------------
Name: William T. Flaherty
Title: Managing Director
28
HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.
By: Highland Capital Management, L.P.
as General Partner
By: /s/ Todd Travers
----------------------------------------------
Name: Todd Travers
Title: Senior Portfolio Manager
YORK DISTRESSED OPPORTUNITIES FUND, L.P.
By: /s/ Adam J. Semler
-----------------------------------------------
Name: Adam J. Semler
Title: CFO
YORK SELECT, L.P.
By: /s/ Adam J. Semler
----------------------------------------------
Name: Adam J. Semler
Title: CFO
YORK SELECT UNIT TRUST
By: /s/ Adam J. Semler
----------------------------------------------
Name: Adam J. Semler
Title: CFO of its Investment Manager
M&E ADVISORS LLC
By: /s/ Philip Mandelbaum
----------------------------------------------
Name: Philip Mandelbaum
Title: CFO
29
CATALYST CREDIT OPPORTUNITY FUND
By Catalyst Investment Management, LLC,
its managing member
By: /s/ Francis X. Gallagher
-----------------------------------------------
Name: Francis X. Gallagher
Title: Principal
CATALYST CREDIT OPPORTUNITY FUND
OFFSHORE
By Catalyst Investment Management, LLC,
its managing member
By: /s/ Francis X. Gallagher
----------------------------------------------
Name: Francis X. Gallagher
Title: Principal
DCM LTD.
By Catalyst Investment Management, LLC,
its managing member
By: /s/ Francis X. Gallagher
-----------------------------------------------
Name: Francis X. Gallagher
Title: Principal
GREYWOLF CAPITAL II L.P.
By: /s/ William Troy
-----------------------------------------------
Name: William Troy
Title: COO
GREYWOLF CAPITAL OVERSEAS FUND
By: /s/ William Troy
-----------------------------------------------
Name: William Troy
Title: COO
30
LC CAPITAL MASTER FUND
By: /s/ Richard F. Conway
-----------------------------------------------
Name: Richard F. Conway
Title: Director
31
Schedule 1
----------
Schedule of Purchasers
----------------------
No. of Shares of No.of
Name Common Stock Warrant Shares
---- ------------ --------------
The Raptor Global Portfolio Ltd. 1,882,115 470,529
The Tudor BVI Global Portfolio Ltd. 418,437 104,609
Tudor Proprietary Trading, L.L.C. 224,221 56,055
The Altar Rock Fund L.P. 20,682 5,171
Highland Crusader Offshore Partners, L.P. 545,455 136,364
York Distressed Opportunities Fund, L.P. 150,000 37,500
York Select, L.P. 45,000 11,250
York Select Unit Trust 30,000 7,500
M&E Advisors LLC 100,000 25,000
Catalyst Credit Opportunity Fund 14,000 3,500
Catalyst Credit Opportunity Fund Offshore 34,800 8,700
DCM Ltd. 1,200 300
Greywolf Capital II L.P. 175,000 43,750
Greywolf Capital Overseas Fund 325,000 81,250
LC Capital Master Fund 250,000 62,500
Total: 4,215,910 1,053,978
------ --------- ---------