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Title: |
Purchase Agreement |
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Entities: |
Advisors Disciplined Trust Series 12; Zila, Inc.; Nasdaq Stock Market Inc.; Lowenstein Sandler PC; Snell & Wilmer |
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Date: |
2006 |
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$99 |
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#2629851 |
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Exhibit-10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 13th day of
November, 2006 by and among Zila, Inc., a Delaware corporation (the "Company"),
and the Investors set forth on the signature pages affixed hereto (each an
"Investor" and collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended.
B. The Investors wish to purchase from the Company, and the Company
wishes to sell and issue to the Investors, upon the terms and conditions stated
in this Agreement, (i) an aggregate of 9,100,000 shares of the Company's Common
Stock, par value $0.001 per share (together with any securities into which such
shares may be reclassified the "Common Stock") at a purchase price of $1.75 per
share; (ii) an aggregate of $12,075,000 in principal amount of the Company's 12%
Convertible Notes in the form attached hereto as Exhibit A (the "Notes"), which
Notes, only upon the satisfaction of certain conditions, shall automatically
convert into shares of Common Stock, at a conversion price of $1.75 per share
(subject to adjustment); (iii) warrants to purchase an aggregate of up to
5,403,000 shares of Common Stock (subject to adjustment) at an exercise price
equal to $2.21 per share (subject to adjustment) in the form attached hereto as
Exhibit B (the "Initial Warrants"); and (iv) warrants to purchase an aggregate
of up to 3,105,000 shares of Common Stock (subject to adjustment) at an exercise
price equal to $2.21 per share (subject to adjustment) in the form attached
hereto as Exhibit C (the "Additional Warrants" and together with the Initial
Warrants, the "Warrants").
C. Contemporaneous with the sale of the Common Stock, the Notes and
the Warrants, the parties hereto will execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit D (the "Registration Rights
Agreement"), pursuant to which the Company will agree to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, and applicable state securities laws.
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Additional Warrant Shares" means the shares of Common Stock issuable
upon the exercise of the Additional Warrants.
{PAGE}
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.
"Amendment" means an amendment to the Company's Certificate of
Incorporation increasing the authorized Common Stock of the Company to
147,500,000 shares.
"Automatic Conversion Date" means the date the principal amount of the
Notes and any accrued and unpaid interest due thereon automatically convert into
fully paid and nonassessable shares of Common Stock in accordance with the terms
and conditions of the Notes.
"Business Day" means a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
"Company's Knowledge" means the actual knowledge of the executive
officers (as defined in Rule 405 under the 1933 Act) of the Company, after due
inquiry.
"Confidential Information" means trade secrets, confidential
information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development
information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans,
and customer and supplier lists and related information).
"Control" (including the terms "controlling", "controlled by" or
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Conversion Shares" means the shares of Common Stock issuable upon the
conversion of the Notes.
"Initial Warrant Shares" means the shares of Common Stock issuable
upon the exercise of the Initial Warrants.
"Intellectual Property" means all of the following: (i) patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
"Material Adverse Effect" means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or other),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.
2
{PAGE}
"Nasdaq" means The Nasdaq Stock Market, Inc.
"Permitted Acquisition" means the acquisition contemplated by the
non-binding letter of intent described in the Company's definitive proxy
statement, dated September 6, 2006 (the "September Proxy Statement"), of all of
the equity interests of an entity in the dental products industry; provided,
that the acquisition is consummated on substantially the terms described in the
September Proxy Statement.
"Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
"Proposals" has the meaning set forth in Section 7.9.
"Purchase Price" means Twenty Eight Million Dollars ($28,000,000).
"Registration Statement" has the meaning set forth in the Registration
Rights Agreement.
"SEC Filings" has the meaning set forth in Section 4.6.
"Securities" means the Shares, the Notes, the Warrants, the Conversion
Shares and the Warrant Shares.
"Senior Secured Convertible Note Transaction" means the transactions
contemplated by that certain Purchase Agreement, by and between the Company and
Balyasny Asset Management L.P., relating to the sale and issuance of (i) an
aggregate of $12,000,000 in principal amount of the Company's 6% Senior Secured
Convertible Notes, which Notes, only upon the satisfaction of certain
conditions, shall, at the option of each holder, be convertible into shares of
Common Stock and (ii) warrants to purchase an aggregate of up to 1,909,091
shares of Common Stock.
"Shares" means the shares of Common Stock being purchased by the
Investors hereunder but, for the avoidance of doubt, shall not include the
Warrant Shares.
"Subsidiary" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Trading Day" means (i) if the relevant stock or security is listed or
admitted for trading on The New York Stock Exchange, Inc., the Nasdaq Global
Market, the Nasdaq Capital Market or any other national securities exchange, a
day on which such exchange is open for business; (ii) if the relevant stock or
security is quoted on a system of automated dissemination of quotations of
securities prices, a day on which trades may be effected through such system; or
(iii) if the relevant stock or security is not listed or admitted for trading on
any national securities
3
{PAGE}
exchange or quoted on any system of automated dissemination of quotation of
securities prices, a day on which the relevant stock or security is traded in a
regular way in the over-the-counter market and for which a closing bid and a
closing asked price for such stock or security are available, shall mean a day,
other than a Saturday or Sunday, on which The New York Stock Exchange, Inc. is
open for trading.
"Transaction Documents" means this Agreement, the Notes, the Warrants
and the Registration Rights Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
"1933 Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares, the Notes and the Warrants. Subject to
the terms and conditions of this Agreement, on the Closing Date (as defined
below), each of the Investors shall severally, and not jointly, purchase, and
the Company shall sell and issue to the Investors, the Shares, the Notes and the
Initial Warrants in the respective amounts set forth opposite the Investors'
names on the signature pages attached hereto in exchange for the Purchase Price
as specified in Section 3 below. No later than the close of business on the
Trading Day immediately following the date the Proposals are approved by the
Company's stockholders at the Stockholders Meeting (as defined below) in
accordance with Section 7.9, the Company shall issue to the Investors entitled
thereto the Additional Warrants for no additional consideration in accordance
with Section 7.10.
3. Closing. Upon confirmation that the other conditions to closing
specified herein have been satisfied or duly waived by the Investors, the
Company shall deliver to Lowenstein Sandler PC, in trust, a certificate or
certificates representing the Shares, the Notes and the Initial Warrants, each
registered in such name or names as the Investors may designate, with
instructions that such certificates, Notes or Initial Warrants are to be held
for release to the Investors only upon payment in full of the Purchase Price to
the Company by all the Investors. Upon such receipt by Lowenstein Sandler PC of
the certificates, the Notes and the Initial Warrants, each Investor shall
promptly, but no more than one Business Day thereafter, cause a wire transfer in
same day funds to be sent to the account of the Company as instructed in writing
by the Company, in an amount representing such Investor's pro rata portion of
the Purchase Price as set forth on the signature pages to this Agreement. On the
date (the "Closing Date") the Company receives the Purchase Price, the
certificates evidencing the Shares, the Notes and the Initial Warrants shall be
released to the Investors (the "Closing"). The Closing shall take place at the
offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, 18th Floor, New
York, New York 10020, or at such other location and on such other date as the
Company and the Investors shall mutually agree.
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{PAGE}
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):
4.1 Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification or leasing necessary unless the
failure to so qualify has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company's Subsidiaries are listed on Schedule 4.1
hereto.
4.2 Authorization. The Company has full power and authority and,
except for approval of the Proposals by its stockholders as contemplated by
Section 7.9, has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization,
execution and delivery of the Transaction Documents, (ii) the authorization of
the performance of all obligations of the Company hereunder or thereunder and
(iii) the authorization, issuance (or reservation for issuance) and delivery of
the Securities. The Transaction Documents constitute, or upon delivery or
issuance, as applicable, will constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally.
4.3 Capitalization. Schedule 4.3 sets forth (a) the authorized capital
stock of the Company as of July 31, 2006; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company's stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Securities) exercisable for, or convertible into or exchangeable for any shares
of capital stock of the Company. All of the issued and outstanding shares of the
Company's capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in
compliance in all material respects with applicable state and federal securities
law and any rights of third parties. Except as described on Schedule 4.3, all of
the issued and outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid, nonassessable and free of
pre-emptive rights, were issued in compliance in all material respects with
applicable state and federal securities law and any rights of third parties and
are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. Except as described in the SEC Filings or on
Schedule 4.3, no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company. Except as
described in the SEC Filings or on Schedule 4.3, there are no outstanding
warrants, options, convertible securities or other rights, agreements or
arrangements of any character under which the Company or any of its Subsidiaries
is or may be obligated to issue any equity securities of any kind and except as
contemplated by this Agreement and the Senior Secured Convertible Note
Transaction, neither the Company nor any of its Subsidiaries is currently in
negotiations for
5
{PAGE}
the issuance of any equity securities of any kind. Except as described in the
SEC Filings or on Schedule 4.3, except for the Registration Rights Agreement and
the registration rights agreement contemplated by the Senior Secured Convertible
Note Transaction, there are no voting agreements, buy-sell agreements, option or
right of first purchase agreements or other agreements of any kind among the
Company and any of the securityholders of the Company relating to the securities
of the Company held by them. Except as described in the SEC Filings or on
Schedule 4.3 and except as provided in the Registration Rights Agreement and the
registration rights agreement contemplated by the Senior Secured Convertible
Note Transaction, no Person has the right to require the Company to register any
securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person.
Except as described in the SEC Filings or on Schedule 4.3, the issuance and
sale of the Securities hereunder will not obligate the Company to issue shares
of Common Stock or other securities to any other Person (other than the
Investors) and will not result in the adjustment of the exercise, conversion,
exchange or reset price of any outstanding security.
Except as described in the SEC Filings or on Schedule 4.3, the Company does
not have outstanding stockholder purchase rights or "poison pill" or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.
4.4 Valid Issuance. The Shares have been duly and validly authorized
and, when issued and paid for pursuant to this Agreement, will be validly
issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances and restrictions (other than those created by the Investors),
except for restrictions on transfer set forth in the Transaction Documents or
imposed by applicable securities laws. The Notes and the Warrants have been duly
and validly authorized. Subject to the approval of the Proposals by the
Company's stockholders as contemplated by Section 7.9, the Conversion Shares
have been duly and validly authorized and, when issued upon the due conversion
of the Notes, will be validly issued, fully paid and nonassessable, and shall be
free and clear of all encumbrances and restrictions (other than those created by
the Investors), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. Upon the due exercise of the
Initial Warrants, the Initial Warrant Shares will be validly issued, fully paid
and non-assessable free and clear of all encumbrances and restrictions, except
for restrictions on transfer set forth in the Transaction Documents or imposed
by applicable securities laws and except for those created by the Investors, and
subject to the approval of the Proposals by the Company's stockholders as
contemplated by Section 7.9, upon the due exercise of the Additional Warrants,
the Additional Warrant Shares will be validly issued, fully paid and
non-assessable free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the Investors. The
Company has reserved a sufficient number of shares of Common Stock for issuance
upon the exercise of the Initial Warrants and subject to the approval of the
Proposals by the Company's stockholders as contemplated by Section 7.9, shall
have reserved a sufficient number of shares of Common Stock for issuance upon
the conversion of the Notes and the exercise of the Additional Warrants, free
and clear of all encumbrances and restrictions, except
6
{PAGE}
for restrictions on transfer set forth in the Transaction Documents or imposed
by applicable securities laws and except for those created by the Investors.
4.5 Consents. Except for approval of the Proposals by its stockholders
as contemplated by Section 7.9, the execution, delivery and performance by the
Company of the Transaction Documents and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than filings that have
been made pursuant to applicable state securities laws and post-sale filings
pursuant to applicable state and federal securities laws which the Company
undertakes to file within the applicable time periods. Subject to the accuracy
of the representations and warranties of each Investor set forth in Section 5
hereof, the Company has taken all action necessary to exempt (i) the issuance
and sale of the Securities, (ii) the issuance of the Conversion Shares upon due
conversion of the Notes, (iii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iv) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or
other "poison pill" arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company's Certificate of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to the Investors as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.
4.6 Delivery of SEC Filings; Business. The Company has filed on the
EDGAR system, true and complete copies of the Company's most recent Annual
Report on Form 10-K for the fiscal year ended July 31, 2006 (the "10-K"), and
all other reports filed by the Company pursuant to the 1934 Act since the filing
of the 10-K and prior to the date hereof (collectively, the "SEC Filings"). The
SEC Filings are the only filings required of the Company pursuant to the 1934
Act for such period. The Company and its Subsidiaries are engaged in all
material respects only in the business described in the SEC Filings and the SEC
Filings contain a complete and accurate description in all material respects of
the business of the Company and its Subsidiaries, taken as a whole.
4.7 Use of Proceeds. The net proceeds of the sale of the Shares, the
Notes and the Warrants hereunder shall be used by the Company for working
capital and general corporate purposes; provided, however, that the Company
shall have the right to use the net proceeds from the sale of the Notes only to
fund all or a portion of the purchase price of the Permitted Acquisition (as
defined in the Notes).
4.8 No Material Adverse Change. Since July 31, 2006, except for the
Amendment and except as identified and described in the SEC Filings or as
described on Schedule 4.8, there has not been:
(i) any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the 10-K, except for changes in the
ordinary course of business which have not had
7
{PAGE}
and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether or
not covered by insurance to any assets or properties of the Company or its
Subsidiaries;
(iv) any waiver, not in the ordinary course of business, by
the Company or any Subsidiary of a material right or of a material debt owed to
it;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or a Subsidiary, except
in the ordinary course of business and which is not material to the assets,
properties, financial condition, operating results or business of the Company
and its Subsidiaries taken as a whole (as such business is presently conducted
and as it is proposed to be conducted);
(vi) any change or amendment to the Company's Certificate of
Incorporation or Bylaws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company or any
Subsidiary;
(viii) any material transaction entered into by the Company
or a Subsidiary other than in the ordinary course of business;
(ix) the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the
Company or any Subsidiary;
(x) the loss or threatened loss of any customer which has
had or could reasonably be expected to have a Material Adverse Effect; or
(xi) any other event or condition of any character that has
had or could reasonably be expected to have a Material Adverse Effect.
4.9 SEC Filings; S-3 Eligibility.
(a) At the time of filing thereof, the SEC Filings complied as to
form in all material respects with the requirements of the 1934 Act and did 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.
8
{PAGE}
(b) Each registration statement and any amendment thereto filed
by the Company since January 1, 2003 pursuant to the 1933 Act and the rules and
regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein not misleading; and each prospectus filed pursuant to
Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of
any sale of securities pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Company is eligible to use Form S-3 to register the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) for sale by the Investors as contemplated by the Registration Rights
Agreement.
4.10 No Conflict, Breach, Violation or Default. Subject to the
approval of the Proposals by the Company's stockholders as contemplated by
Section 7.9, the execution, delivery and performance of the Transaction
Documents by the Company and the issuance and sale of the Securities, will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under (i) the Company's Certificate of
Incorporation or the Company's Bylaws, both as in effect on the date hereof, but
after giving effect to the Amendment, (true and complete copies of which have
been made available to the Investors through the EDGAR system), or (ii)(a) any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company, any Subsidiary
or any of their respective assets or properties, or (b) any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary is bound or to which any of their respective assets or
properties is subject, except, in the case of clause (ii) for such conflicts,
breaches or violations as could not reasonably be expected to have a Material
Adverse Effect.
4.11 Tax Matters. The Company and each Subsidiary has timely prepared
and filed all tax returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and timely paid all taxes
shown to be due thereon. The charges, accruals and reserves on the books of the
Company in respect of taxes for all fiscal periods are adequate in all material
respects, and there are no material unpaid assessments against the Company or
any Subsidiary nor, to the Company's Knowledge, any basis for the assessment of
any additional taxes, penalties or interest for any fiscal period or audits by
any federal, state or local taxing authority except for any assessment which is
not material to the Company and its Subsidiaries, taken as a whole. All material
taxes and other assessments and levies that the Company or any Subsidiary is
required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when due.
There are no tax liens or claims pending or, to the Company's Knowledge,
threatened against the Company or any Subsidiary or any of their respective
assets or property. Except as described in the SEC Filings or on Schedule 4.11,
there are no outstanding tax sharing agreements or other such arrangements
between the Company and any Subsidiary or other corporation or entity.
9
{PAGE}
4.12 Title to Properties. Except as disclosed in the SEC Filings and
for liens contemplated by the Senior Secured Convertible Note Transaction, the
Company and each Subsidiary has good and marketable title to all real properties
and all other material properties and assets owned by it, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or currently planned to be made
thereof by them; and except as disclosed in the SEC Filings, the Company and
each Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Certificates, Authorities and Permits. The Company and each
Subsidiary possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it, and neither the Company nor any Subsidiary has received any
written notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit that, if determined adversely to the
Company or such Subsidiary, could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
4.14 Labor Matters.
(a) Except as described in the SEC Filings or on Schedule 4.14,
the Company is not a party to or bound by any collective bargaining agreements
or other agreements with labor organizations. The Company has not violated in
any material respect any laws, regulations, orders or contract terms, affecting
the collective bargaining rights of employees, labor organizations or any laws,
regulations or orders affecting employment discrimination, equal opportunity
employment, or employees' health, safety, welfare, wages and hours.
(b) (i) There are no labor disputes existing, or to the Company's
Knowledge, threatened, involving strikes, slow-downs, work stoppages, job
actions, disputes, lockouts or any other disruptions of or by the Company's
employees, (ii) there are no unfair labor practices or petitions for election
pending or, to the Company's Knowledge, threatened before the National Labor
Relations Board or any other federal, state or local labor commission relating
to the Company's employees, (iii) to the Company's Knowledge, no demand for
recognition or certification heretofore made by any labor organization or group
of employees is pending with respect to the Company and (iv) to the Company's
Knowledge, the Company enjoys good labor and employee relations with its
employees and labor organizations.
(c) The Company is, and at all times has been, in compliance in
all material respects with all applicable laws respecting employment (including
laws relating to classification of employees and independent contractors) and
employment practices, terms and conditions of employment, wages and hours, and
immigration and naturalization. There are no claims pending against the Company
before the Equal Employment Opportunity Commission or any other administrative
body or in any court asserting any violation of Title VII of the Civil Rights
Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. Sections 1981 or 1983
or any other federal, state or local law, statute or ordinance barring
discrimination in employment.
10
{PAGE}
(d) Except as disclosed in the SEC Filings or as described on
Schedule 4.14, the Company is not a party to, or bound by, any employment or
other contract or agreement that contains any severance, termination pay or
change of control liability or obligation, including, without limitation, any
"excess parachute payment," as defined in Section 2806(b) of the Internal
Revenue Code.
(e) Except as specified in Schedule 4.14, each of the Company's
employees is a Person who is either a United States citizen or a permanent
resident entitled to work in the United States. To the Company's Knowledge, the
Company has no liability for the improper classification by the Company of such
employees as independent contractors or leased employees prior to the Closing.
4.15 Intellectual Property.
(a) All Intellectual Property of the Company and its Subsidiaries
is currently in compliance in all material respects with all legal requirements
(including timely filings, proofs and payments of fees) and, to the Company's
Knowledge, is valid and enforceable. Except as described in Schedule 4.15, no
Intellectual Property of the Company or its Subsidiaries which is necessary for
the conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted has been or is now the subject of any cancellation, dispute
or litigation. To the Company's Knowledge, no such action is threatened except
as described in Schedule 4.15. No patent of the Company or its Subsidiaries has
been or is now the subject of any interference, reissue, re-examination or
opposition proceeding.
(b) All of the licenses and sublicenses and consent, royalty or
other agreements concerning Intellectual Property which are necessary for the
conduct of the Company's and each of its Subsidiaries' respective businesses as
currently conducted to which the Company or any Subsidiary is a party or by
which any of their assets are bound (other than generally commercially
available, non-custom, off-the-shelf software application programs having a
retail acquisition price of less than $10,000 per license) (collectively,
"License Agreements") are valid and binding obligations of the Company or its
Subsidiaries that are parties thereto and, to the Company's Knowledge, the other
parties thereto, enforceable in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally, and there exists no
event or condition which will result in a material violation or breach of or
constitute (with or without due notice or lapse of time or both) a material
default by the Company or any of its Subsidiaries under any such License
Agreement.
(c) The Company and its Subsidiaries own or have the valid right
to use all of the Intellectual Property that is necessary for the conduct of the
Company's and each of its Subsidiaries' respective businesses as currently
conducted and for the ownership, maintenance and operation of the Company's and
its Subsidiaries' properties and assets, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property and Confidential Information, other than licenses entered
into in the ordinary course of the Company's and its Subsidiaries' businesses.
To the Company's Knowledge, the Company and its Subsidiaries have a valid and
enforceable right to use all third
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party Intellectual Property and Confidential Information used or held for use in
the respective businesses of the Company and its Subsidiaries.
(d) To the Company's Knowledge, the conduct of the Company's and
its Subsidiaries' businesses as currently conducted does not infringe or
otherwise impair or conflict with (collectively, "Infringe") any Intellectual
Property rights of any third party or any confidentiality obligation owed to a
third party, and, to the Company's Knowledge, the Intellectual Property and
Confidential Information of the Company and its Subsidiaries which are necessary
for the conduct of Company's and each of its Subsidiaries' respective businesses
as currently conducted are not being Infringed by any third party. There is no
litigation or order pending or outstanding or, to the Company's Knowledge,
threatened or imminent, that seeks to limit or challenge or that concerns the
ownership, use, validity or enforceability of any Intellectual Property or
Confidential Information of the Company and its Subsidiaries and the Company's
and its Subsidiaries' use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company's Knowledge, there is no
valid basis for the same.
(e) The consummation of the transactions contemplated hereby and
by the other Transaction Documents will not result in the alteration, loss,
impairment of or restriction on the Company's or any of its Subsidiaries'
ownership or right to use any of the Intellectual Property or Confidential
Information which is necessary for the conduct of Company's and each of its
Subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted.
(f) The Company and its Subsidiaries have taken reasonable steps
to protect the Company's and its Subsidiaries' rights in their Intellectual
Property and Confidential Information. Each employee, consultant and contractor
who has had access to Confidential Information which is necessary for the
conduct of Company's and each of its Subsidiaries' respective businesses as
currently conducted has executed an agreement to maintain the confidentiality of
such Confidential Information and has executed appropriate agreements that are
substantially consistent with the Company's standard forms thereof. To the
Company's Knowledge, except under confidentiality obligations, there has been no
material disclosure of any of the Company's or its Subsidiaries' Confidential
Information to any third party.
4.16 Environmental Matters. Neither the Company nor any Subsidiary is
in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "Environmental Laws"), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and, to the Company's Knowledge, there is no pending or threatened
investigation that might lead to such a claim.
4.17 Litigation. Except as described in the SEC Filings or on Schedule
4.17, there are no pending actions, suits or proceedings against or affecting
the Company, its
12
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Subsidiaries or any of its or their properties; and to the Company's Knowledge,
no such actions, suits or proceedings are threatened or contemplated.
4.18 Financial Statements. The financial statements included in each
SEC Filing present fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles, applied on a consistent basis ("GAAP") (except as may be
disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934 Act). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof or as described on Schedule 4.18, neither the
Company nor any of its Subsidiaries has incurred any liabilities, contingent or
otherwise, except those incurred in the ordinary course of business, consistent
(as to amount and nature) with past practices since the date of such financial
statements, none of which, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.
4.19 Insurance Coverage. The Company and each Subsidiary maintains in
full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or
leased by the Company and each Subsidiary, and the Company reasonably believes
such insurance coverage to be adequate against all liabilities, claims and risks
against which it is customary for comparably situated companies to insure.
4.20 Compliance with Nasdaq Continued Listing Requirements. The
Company is in compliance with applicable Nasdaq continued listing requirements.
There are no proceedings pending or, to the Company's Knowledge, threatened
against the Company relating to the continued listing of the Common Stock on
Nasdaq and the Company has not received any notice of, nor to the Company's
Knowledge is there any basis for, the delisting of the Common Stock from Nasdaq.
4.21 No Manipulation. The Company has not taken and will not take any
action designed to or that might reasonably be expected to cause or result in an
unlawful manipulation of the price of the Common Stock.
4.22 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company, other than as
described in Schedule 4.22.
4.23 No Directed Selling Efforts or General Solicitation. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
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4.24 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any Company security or solicited any
offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the
Securities under the 1933 Act.
4.25 Private Placement. Assuming the accuracy of the representations
and warranties of the Investors contained in Section 5 hereof, the offer and
sale of the Securities to the Investors as contemplated hereby is exempt from
the registration requirements of the 1933 Act.
4.26 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former stockholders, directors, officers, employees, agents or other Persons
acting on behalf of the Company or any Subsidiary, has on behalf of the Company
or any Subsidiary or in connection with their respective businesses: (a) used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.
4.27 Transactions with Affiliates. Except as disclosed in the SEC
Filings or as disclosed on Schedule 4.27, none of the officers or directors of
the Company and, to the Company's Knowledge, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants, and 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
Company's Knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
4.28 Internal Controls. The Company is in compliance in all material
respects with the provisions of the Sarbanes-Oxley Act of 2002 currently
applicable to 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 GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, including the
14
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Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company's most recently
filed period report under the 1934 Act, as the case may be, is being prepared.
The Company's certifying officers have evaluated the effectiveness of the
Company's disclosure controls and procedures as of the end of the period covered
by the most recently filed periodic report under the 1934 Act (such date, the
"Evaluation Date"). The Company presented in its most recently filed periodic
report under the 1934 Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such term is
defined in Item 308 of Regulation S-K). The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with GAAP and the applicable requirements of the 1934 Act.
4.29 Disclosures. Neither the Company nor any Person acting on its
behalf has provided the Investors or their agents or counsel with any
information that constitutes or might constitute material, non-public
information. The written materials delivered to the Investors in connection with
the transactions contemplated by the Transaction Documents do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
5. Representations and Warranties of the Investors. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company that:
5.1 Organization and Existence. Such Investor is a validly existing
corporation, limited partnership or limited liability company and has all
requisite corporate, partnership or limited liability company power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and to perform its other obligations thereunder.
5.2 Authorization. The execution, delivery and performance by such
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and will each constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally.
5.3 Purchase Entirely for Own Account. The Securities to be received
by such Investor hereunder will be acquired for such Investor's own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of the 1933 Act, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the 1933 Act without prejudice, however, to such
Investor's right at all times to sell or otherwise dispose of all or any part of
such Securities in compliance with applicable federal and state securities laws.
Nothing contained herein shall be deemed a representation or warranty by such
Investor to hold the Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered. Such Investor is acquiring
15
{PAGE}
the Securities in the ordinary course of business and does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities in violation of the 1933 Act.
5.4 Investment Experience. Such Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
5.5 Disclosure of Information. Such Investor has had an opportunity to
receive all information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the Securities,
including the merits and risks of investing in the Securities. Such Investor
acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor
any other due diligence investigation conducted by such Investor shall modify,
limit or otherwise affect such Investor's right to rely on the Company's
representations and warranties contained in this Agreement.
5.6 Restricted Securities. Such Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. The Investor is familiar
with Rule 144 under the 1933 Act and understands the resale limitations imposed
thereunder.
5.7 Legends. It is understood that, except as provided below,
certificates evidencing the Securities may bear the following or any similar
legend:
(a) "The securities represented hereby may not be transferred
unless (i) such securities have been registered for sale pursuant to the
Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to
Rule 144(k), or (iii) the Company has received an opinion of counsel reasonably
satisfactory to it that such transfer may lawfully be made without registration
under the Securities Act of 1933 or qualification under applicable state
securities laws."
(b) If required by the authorities of any state in connection
with the issuance of sale of the Securities, the legend required by such state
authority.
5.8 Accredited Investor. Such Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.
5.9 No General Solicitation. Such Investor did not learn of the
investment in the Securities as a result of any general solicitation or general
advertising.
5.10 Brokers and Finders. No Person will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation
16
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pursuant to any agreement, arrangement or understanding entered into by or on
behalf of such Investor.
5.11 Prohibited Transactions. Such Investor does not currently have
any short position in the Common Stock. Since the earlier to occur of (i) the
last thirty (30) days prior to the date hereof and (ii) the time such Investor
was first contacted with respect to the transactions contemplated hereby,
neither such Investor nor any Affiliate of such Investor which (x) had knowledge
of the transactions contemplated hereby, (y) has or shares discretion relating
to such Investor's investments or trading or information concerning such
Investor's investments, including in respect of the Securities, or (z) is
subject to such Investor's review or input concerning such Affiliate's
investments or trading (collectively, "Trading Affiliates") has, directly or
indirectly, effected or agreed to effect any short sale (as defined in Rule
200(a) of Regulation SHO), whether or not against the box, established any "put
equivalent position" (as defined in Rule 16a-1(h) under the 1934 Act) with
respect to the Common Stock, borrowed or pre-borrowed any shares of Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Stock, entered into any direct or indirect stock pledge, forward sales
contract, swap, or similar arrangement (including on a total return basis),
sales or other transactions through non-U.S. broker dealers or foreign regulated
brokers, or otherwise sought to hedge its position in the Securities (each, a
"Prohibited Transaction"). Prior to the earlier to occur of (i) the termination
of this Agreement or, (ii) one-hundred twenty (120) days after the public
announcement of the transactions contemplated hereby, such Investor shall not,
and shall cause its Trading Affiliates not to, engage, directly or indirectly,
in a Prohibited Transaction nor any sale, assignment, pledge, hypothecation,
put, call, or other transfer of any of the Common Stock or other securities
acquired hereunder. Such Investor acknowledges that the representations,
warranties and covenants contained in this Section 5.11 are being made for the
benefit of the Investors as well as the Company and that each of the other
Investors shall have an independent right to assert any claims against such
Investor arising out of any breach or violation of the provisions of this
Section 5.11.
6. Conditions to Closing.
6.1 Conditions to the Investors' Obligations. The obligation of each
Investor to purchase the Shares, the Notes and the Initial Warrants at the
Closing is subject to the fulfillment to such Investor's satisfaction, on or
prior to the Closing Date, of the following conditions, any of which may be
waived by such Investor (as to itself only):
(a) The representations and warranties made by the Company in
Section 4 hereof qualified as to materiality shall be true and correct at all
times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date, and, the representations and warranties made by the Company in Section 4
hereof not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
17
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material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.
(b) The Company shall have obtained any and all consents,
permits, approvals, registrations and waivers (excluding approval of the
Proposals by its stockholders) necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.
(c) The Company shall have executed and delivered the
Registration Rights Agreement.
(d) The Company shall have received confirmation from Nasdaq to
the effect that (i) the issuance and sale of the Shares, the Notes and the
Initial Warrants as contemplated hereby will not require stockholder approval
pursuant to the requirements of Nasdaq Marketplace Rule 4350(i), and (ii) the
Shares and the Initial Warrant Shares have been approved for inclusion in The
Nasdaq Global Market upon official notice of issuance.
(e) No judgment, writ, order, injunction, award or decree of or
by any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, enjoining or preventing the consummation of the transactions
contemplated hereby or by the other Transaction Documents.
(f) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (b), (d), (e) and (i) of this Section
6.1.
(g) The Company shall have delivered a Certificate, executed on
behalf of the Company by its Secretary, dated as of the Closing Date, (i)
certifying the resolutions adopted by the Board of Directors of the Company (A)
approving the transactions contemplated by this Agreement and the other
Transaction Documents and, subject to Section 7.9(b) below, the issuance of the
Securities, (B) approving the Amendment and directing that the Amendment be
submitted to the Company's stockholders for approval and (C) calling the
Stockholders Meeting and setting the record and meeting dates therefor, (ii)
certifying the current versions of the Certificate of Incorporation and Bylaws
of the Company and (iii) certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the
Company.
(h) The Investors shall have received an opinion from Snell &
Wilmer L.L.P., the Company's counsel, dated as of the Closing Date, in form and
substance reasonably acceptable to the Investors and addressing such legal
matters as the Investors may reasonably request.
(i) No stop order or suspension of trading shall have been
imposed by Nasdaq, the SEC or any other governmental or regulatory body with
respect to public trading in the Common Stock.
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(j) The Permitted Acquisition will have closed or will close
simultaneous to the transactions contemplated by this Agreement.
6.2 Conditions to Obligations of the Company. The Company's obligation
to sell and issue the Shares, the Notes and the Initial Warrants at the Closing
is subject to the fulfillment to the satisfaction of the Company on or prior to
the Closing Date of the following conditions, any of which may be waived by the
Company:
(a) The representations and warranties made by the Investors in
Section 5 hereof, other than the representations and warranties contained in
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the "Investment
Representations"), shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on and as of said date. The
Investment Representations shall be true and correct in all respects when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date. The Investors
shall have performed in all material respects all obligations and covenants
herein required to be performed by them on or prior to the Closing Date.
(b) The Investors shall have executed and delivered the
Registration Rights Agreement.
(c) The Investors shall have delivered the Purchase Price to the
Company.
6.3 Termination of Obligations to Effect Closing; Effects.
(a) The obligations of the Company, on the one hand, and the
Investors, on the other hand, to effect the Closing shall terminate as follows:
(i) Upon the mutual written consent of the Company and the
Investors;
(ii) By the Company if any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment, and shall not have been
waived by the Company;
(iii) By an Investor (with respect to itself only) if any of
the conditions set forth in Section 6.1 shall have become incapable of
fulfillment, and shall not have been waived by the Investor; or
(iv) By either the Company or any Investor (with respect to
itself only) if the Closing has not occurred on or prior to December 15, 2006;
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction
19
{PAGE}
Documents if such breach has resulted in the circumstances giving rise to such
party's seeking to terminate its obligation to effect the Closing.
(b) In the event of termination by the Company or any Investor of
its obligations to effect the Closing pursuant to this Section 6.3, written
notice thereof shall forthwith be given to the other Investors and the other
Investors shall have the right to terminate their obligations to effect the
Closing upon written notice to the Company and the other Investors. Nothing in
this Section 6.3 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement or the
other Transaction Documents.
7. Covenants and Agreements of the Company.
7.1 Reservation of Common Stock. From and after the effectiveness of
the Amendment, the Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
providing for the conversion of the Notes and the exercise of the Warrants, such
number of shares of Common Stock as shall from time to time equal the Conversion
Shares issuable upon the due conversion of the Notes and the Warrant Shares
issuable upon the due exercise of the Warrants in accordance with their
respective terms.
7.2 Intentionally Omitted.
7.3 No Conflicting Agreements. The Company will not take any action,
enter into any agreement or make any commitment that would conflict or interfere
in any material respect with the Company's obligations to the Investors under
the Transaction Documents.
7.4 Insurance. The Company shall not materially reduce the insurance
coverages described in Section 4.19.
7.5 Compliance with Laws. The Company will comply in all material
respects with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.
7.6 Listing of Underlying Shares and Related Matters. Promptly
following the date hereof, the Company shall take all necessary action to cause
the Shares and the Initial Warrant Shares to be listed on the Nasdaq Global
Market no later than the Closing Date. Promptly following the Closing, the
Company shall take all necessary action to cause the Conversion Shares and the
Additional Warrant Shares to be listed on the Nasdaq Global Market no later than
the Automatic Conversion Date. Further, if the Company applies to have its
Common Stock or other securities traded on any other principal stock exchange or
market, it shall include in such application the Shares, the Conversion Shares
and the Warrant Shares and will take such other action as is necessary to cause
such Common Stock to be so listed. The Company will use commercially reasonable
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