Exhibit 10.1
First Amendment to Exchange Agreement
THIS FIRST AMENDMENT TO EXCHANGE AGREEMENT (this "Amendment") is dated as
of October __, 2002 among Level 8 Systems, Inc., a Delaware corporation (the
"Company"), and the various stockholders identified and listed on Schedule I
(each referred to herein as a "Holder" and, collectively, the "Holders") to that
certain Exchange Agreement, dated as of August 29, 2002 (the "2002 Exchange
Agreement").
WHEREAS, the Company and the Holders are parties to that certain 2002
Exchange Agreement providing for the exchange of the Company's Series A1
Convertible Redeemable Preferred Stock, par value $0.001 per share, liquidation
value $1,000 per share, initial conversion price $8.333 (the "Series A1
Preferred Stock") and related warrants to purchase the Company's common stock
(the "Series A1 Warrants") and the Series B1 Convertible Redeemable Preferred
Stock, par value $0.001 per share, liquidation value $1,000 per share, initial
conversion price $12.531 (the "Series B1 Preferred Stock") and related warrants
to purchase the Company's common stock (the "Series B1 Warrants") for,
respectively, a series of newly created Series A2 Convertible Redeemable
Preferred Stock (the "Series A2 Preferred Stock") and related warrants to
purchase the Company's common stock (the "Series A2 Warrants") and/or a series
of newly created Series B2 Convertible Redeemable Preferred Stock (the "Series
B2 Preferred Stock") and related warrants to purchase the Common Stock of the
Company (the "Series B2 Warrants");
WHEREAS, the Company and the Holders are also parties to either (i) that
certain Securities Purchase Agreement dated as of June 28, 1999 (the "Series A
Purchase Agreement") relating to the purchase and sale of the Company's Series A
4% Convertible Redeemable Preferred Stock and related warrants to purchase the
Company's common stock or (ii) that certain Securities Purchase Agreement dated
as of July 20, 2000 (the "Series B Purchase Agreement") relating to the purchase
and sale of the Company's Series B 4% Convertible Redeemable Preferred Stock and
related warrants to purchase the Company's common stock, or (iii) both the
Series A Purchase Agreement and the Series B Purchase Agreement (collectively,
the "Purchase Agreements");
WHEREAS, subject to the terms and conditions set forth in this Amendment
and the 2002 Exchange Agreement, the Company desires to issue to the Holders,
and the Holders desire to acquire by exchange, as applicable: (i) shares of the
Company's Series A3 Convertible Redeemable Preferred Stock, par value $0.001 per
share, liquidation value $1,000 per share, initial conversion price $8.333 (the
"Series A3 Preferred Stock") in the form of Exhibit A annexed hereto; (ii)
shares of the Company's Series B3 Convertible Redeemable Preferred Stock, par
value $0.001 per share, liquidation value $1,000 per share, initial conversion
price $12.531 (the "Series B3 Preferred Stock", and, together with the Series A3
Preferred Stock, the "Preferred Stock") in the form of Annex B annexed hereto;
(iii) a stock purchase warrant or warrants (each, a "Series A3 Warrant"), in the
form of Exhibit C annexed hereto, to purchase an aggregate amount of 753,640
shares of the Company's common stock, par value $0.001 per share (the "Common
Stock"); and/or (iv) a stock purchase warrant or warrants (each, a "Series X0
Xxxxxxx", and, collectively with the Series A3 Warrant, the "Warrants"), in the
form of Exhibit D annexed hereto, to purchase an aggregate amount of 1,047,382
shares of the Common Stock;
WHEREAS, as consideration for the issuance of the Series A3 Preferred
Stock, the Company desires to accept from the applicable Holders, and the
applicable Holders desire to tender and exchange 11,570 shares of Series A2
Preferred Stock; and as consideration for the issuance of the Series B3
Preferred Stock, the Company desires to accept from the applicable Holders, and
the applicable Holders desire to tender and exchange 30,000 shares of Series B2
Preferred Stock; and as consideration for the issuance of the Series A2
Warrants, the Company desires to accept from the applicable Holders, and the
applicable Holders desire to tender and exchange Series A2 Warrants to purchase
an aggregate amount of 753,640 shares of Common Stock, representing the
unexercised warrants remaining from the original issuances of warrants issued by
the Company in connection with the 2002 Exchange Agreement; and as consideration
for the issuance of the Series B3 Warrants, the Company desires to accept from
the applicable Holders, and the applicable Holders desire to tender and exchange
Series B3 Warrants to purchase an aggregate amount of 1,047,382 shares of Common
Stock, representing the unexercised warrants remaining from the original
issuances of warrants issued by the Company in connection with the 2002 Exchange
Agreement; and
WHEREAS, contemporaneously with the execution and delivery of this
Amendment, the parties hereto are executing and delivering an amendment to the
Registration Rights Agreement dated as of August 29, 2002 (the "Registration
Rights Agreement") substantially in the form of Exhibit E attached hereto (the
"First Amendment to Registration Rights Agreement") pursuant to which the
Company has agreed to provide certain registration rights under the Securities
Act and the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter, the Company and the Holders hereby agree as follows:
ARTICLE I.
EXCHANGE
1.1 Exchange
On the Closing Date (as defined below), subject to the terms and conditions
set forth herein, the Company shall issue and deliver to each Holder and each
Holder, severally and not jointly, shall acquire from the Company the shares of
Preferred Stock as set forth on Schedule I and a Warrant or Warrants exercisable
for the amount of Common Stock as set forth on Schedule I for such Holder. In
exchange for the Preferred Stock and/or Warrants set forth on Schedule I, the
Holders shall tender to the Company for cancellation the certificates
representing the shares of Series A2 Preferred Stock, Series B2 Preferred Stock,
Series A2 Warrants and/or Series B2 Warrants as set forth on Schedule II.
1.2 Closing.
The Closing. The closing of the exchange of the Preferred Stock and
Warrants (the "Closing") shall take place at the offices of Powell, Goldstein,
Xxxxxx & Xxxxxx XXX, 000 Xxxxxxxxx Xx.; 00xx Xxxxx, Xxxxxxx, Xxxxxxx, 00000, or
by transmission by facsimile and overnight courier, immediately following the
execution hereof or such later date or different location as the parties shall
agree, but not prior to the date that the conditions set forth in Section 4.1
have been satisfied or waived by the appropriate party (the "Closing Date"). At
the Closing:
(i) Each Holder shall deliver and tender, as directed by the
Company, all certificates and documents representing the Series A2 Preferred
Stock, the Series B2 Preferred Stock, the Series A2 Warrants and/or the Series
B2 Warrants as set forth next to its name on Schedule II;
(ii) The Company shall deliver to each Holder a certificate
evidencing the number of shares of Preferred Stock received by such Holder as
set forth on Schedule I hereto, the Series A3 Preferred Stock shall have the
respective rights, preferences, limitations and privileges set forth in Exhibit
A attached hereto, which shall be incorporated into a Certificate of Designation
of Rights, Preferences and Limitations to be approved by the Holders and the
Company's Board of Directors and filed on or before the Closing with the
Secretary of State of Delaware (the "Series A3 Certificate of Designation") and
the Series B3 Preferred Stock shall have the respective rights, preferences,
limitations and privileges set forth in Exhibit B attached hereto, which shall
be incorporated into a Certificate of Designation of Rights, Preferences and
Limitations to be approved by the Holders and the Company's Board of Directors
and filed on or before the Closing with the Secretary of State of Delaware (the
"Series B3 Certificate of Designation" and together with the Series A3
Certificate of Designation, the "Certificates of Designation"); and
(iii) The Company shall deliver to each Holder a Series A3
Warrant, in the form of Exhibit C hereto with respect to the Series A2 Warrants
tendered, and/or a Series B3 Warrant, in the form of Exhibit D hereto with
respect to the Series B2 Warrants tendered, representing the right to acquire
the number of shares of Common Stock purchased by such Holder as set forth on
Schedule II hereto; and
(iv) The parties shall execute and deliver each of the documents
referred to in Section 4.1.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the representations and warranties contained in Section 2.1
of the 2002 Exchange Agreement to each of the Holders as of the date thereof
unless such representation or warranty is made of another date. In each case,
the defined terms Series A2 Preferred Stock, Series B2 Preferred Stock, Series
A2 Warrants, Series B2 Warrants, Warrants and Preferred Stock shall be replaced
by the defined terms Series A3 Preferred Stock, Series B3 Preferred Stock,
Series A3 Warrants, Series B3 Warrants, Warrants and Preferred Stock,
respectively and as defined in this Amendment.
2.2 Representations and Warranties of the Holders. Each of the Holders,
severally and not jointly, hereby makes the representations and warranties
contained in Section 2.2 of the 2002 Exchange Agreement to the Company as of the
date thereof unless such representation or warranty is made of another date. In
each case, the defined terms Series A2 Preferred Stock, Series B2 Preferred
Stock, Series A2 Warrants, Series B2 Warrants, Warrants and Preferred Stock
shall be replaced by the defined terms Series A3 Preferred Stock, Series B3
Preferred Stock, Series A3 Warrants, Series B3 Warrants, Warrants and Preferred
Stock, respectively and as defined in this Amendment.
ARTICLE III.
OTHER AGREEMENTS
The contents of Article III of the 2002 Exchange Agreement are incorporated
by reference in their entirety, in each case, the defined terms Series A2
Preferred Stock, Series B2 Preferred Stock, Series A2 Warrants, Series B2
Warrants, Warrants and Preferred Stock shall be replaced by the defined terms
Series A3 Preferred Stock, Series B3 Preferred Stock, Series A3 Warrants, Series
B3 Warrants, Warrants and Preferred Stock, respectively as defined in this
Amendment.
ARTICLE IV.
CONDITIONS
4.1 Closing.
a. Conditions Precedent to the Obligation of the Company to Deliver
the Shares of Preferred Stock and Warrants. The obligation of the Company
to deliver the shares of Preferred Stock and Warrants is subject to the
satisfaction or waiver (with prior written notice to each Holder) by the
Company, at or before the Closing Date of each of the following conditions:
(i) Accuracy of the Holders' Representations and Warranties. The
representations and warranties of each Holder in this Amendment and the 2002
Exchange Agreement shall be true and correct in all material respects as of the
date when made;
(ii) Performance by the Holders. Each Holder shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Amendment and the 2002 Exchange
Agreement to be performed, satisfied or complied with by such Holder at or
before the Closing; and
(iii) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Amendment, the 2002 Exchange Agreement or the Transaction
Documents.
b. Conditions Precedent to the Obligation of the Holders to Exchange the
Shares of Series A2 Preferred Stock, the Series B2 Preferred Stock and Warrants
at the Closing. The obligation of each Holder hereunder to exchange its Series
A1 Preferred Stock and/or Series A1 Warrants and/or Series B2 Preferred Stock
and/or Series B2 Warrants for the shares of Preferred Stock and Warrants at the
Closing is subject to the satisfaction or waiver by such Holder, at or before
the Closing Date, of each of the following conditions:
(i) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company set forth in this
Amendment and the 2002 Exchange Agreement shall be true and correct in all
respects as of the date when made;
(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or before the Closing Date;
(iii) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Amendment, the 2002 Exchange Agreement and the Transaction
Documents;
(iv) No Suspensions of Trading in Common Stock. The trading
in the Common Stock shall not have been suspended by the Commission, on Nasdaq
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(v) Listing of Common Stock. The Common Stock shall have
been at all times since the date of this Amendment, the 2002 Exchange Agreement
and on the Closing Date listed for trading on the Nasdaq;
(vi) Xxxxxxx Xxxxx Consent. The consent of Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated shall have been obtained and a copy thereof
delivered to the Holders;
(vii) Required Filing. The Company shall have filed the
Certificates of Designation with the Secretary of State of Delaware and they
shall have become effective;
(viii) Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares issuable upon the exercise of the
Warrants or the conversion of the shares of Preferred Stock acquired by the
Holder on the Closing Date;
(ix) Adverse Changes. Since the date of the financial
statements included in the Company's Quarterly Report on Form 10-Q or Annual
Report on Form 10-K, whichever is more recent, last filed prior to the date of
this Amendment, no event which had a Material Adverse Effect shall have occurred
(for purposes hereof, changes in the market price of the Common Stock as
compared to the market generally may be considered as a factor in determining
whether there has occurred an event which has had a Material Adverse Effect);
(x) Litigation. No litigation shall have been instituted or
threatened against the Company which would reasonably be expected to,
individually or in the aggregate, have had a Material Adverse Effect;
(xi) Change of Control. No Change of Control shall have
occurred between the date hereof and the Closing Date. "Change of Control" means
the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Holders or any of their
Affiliates, of in excess of 25% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's Board of
Directors that is not approved by those individuals who are members of the Board
of Directors on the date hereof in one or a series of related transactions,
(iii) the merger of the Company with or into another entity, (iv) the
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions or (v) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii), (iii) or (iv); and
(xii) Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in a form acceptable to the Holders, shall have been
delivered to and acknowledged in writing by the Company's transfer agent with a
copy forwarded to each Holder.
c. Documents and Certificates. At the Closing, the Holders shall have
delivered to the Company, the following in form and substance reasonably
satisfactory to the Company:
(i) Series A2 Preferred Stock Certificates. The certificates
representing all of the Series A2 Convertible Preferred Stock held by such
Holder as set forth next to such Holder's name on Schedule II.
(ii) Series B2 Preferred Stock Certificates. The
certificates representing all of the Series B2 Convertible Preferred Stock held
by such Holder as set forth next to such Holder's name on Schedule II.
(iii) Series A2 Warrants. The documentation representing all
of the unexercised warrants delivered pursuant to the 2002 Exchange Agreement
held by such Holder as set forth next to such Holder's name on Schedule II.
(iv) Series B2 Warrants. The documentation representing all
of the unexercised warrants delivered pursuant to the 2002 Exchange Purchase
Agreement held by such Holder as set forth next to such Holder's name on
Schedule II.
d. Documents and Certificates. At the Closing, the Company shall have
delivered to the Holders, the following in form and substance reasonably
satisfactory to the Holders:
(i) Series A3 Preferred Stock Certificate. A Preferred Stock
Certificate(s) representing the number of shares of Series A3 Preferred Stock
exchanged for by such Holder as set forth next to such Holder's name on Schedule
I, registered in the name of such Holder, each in form satisfactory to the
Holder;
(ii) Series B3 Preferred Stock Certificate. A Preferred
Stock Certificate(s) representing the number of shares of Series B3 Preferred
Stock exchanged for by such Holder as set forth next to such Holder's name on
Schedule I, registered in the name of such Holder, each in form satisfactory to
the Holder;
(iii) Series A3 Warrant. A Warrant(s) representing the
Series A3 Warrants exchanged for by such Holder as set forth next to such
Holder's name on Schedule I, registered in the name of such Holder;
(iv) Series B3 Warrant. A Warrant(s) representing the Series
B3 Warrants exchanged for by such Holder as set forth next to such Holder's name
on Schedule I, registered in the name of such Holder;
(v) Registration Rights. The Company shall have executed and
delivered the First Amendment to Registration Rights Agreement;
(vi) Secretary's Certificate. A Secretary's Certificate
dated the Closing Date and signed by the Secretary or Assistant Secretary of the
Company certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the Resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Amendment and of the Transaction Documents, and that such Resolutions have not
been modified, rescinded or revoked; and
(vii) Other Documents. The Company shall have delivered to
each Holder such other documents relating to the transactions contemplated by
the Transaction Documents as the Holder or its counsel may reasonably request.
ARTICLE V.
INDEMNIFICATION
The contents of Article V of the 2002 Exchange Agreement are incorporated
by reference in their entirety, in each case, the defined terms Series A2
Preferred Stock, Series B2 Preferred Stock, Series A2 Warrants, Series B2
Warrants, Warrants and Preferred Stock shall be replaced by the defined terms
Series A3 Preferred Stock, Series B3 Preferred Stock, Series A3 Warrants, Series
B3 Warrants, Warrants and Preferred Stock, respectively, as defined in this
Amendment.
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Amendment, together with the 2002 Exchange
Agreement and the Exhibits and Schedules hereto and thereto, the Purchase
Agreements and the Transaction Documents contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
6.2 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Amendment or the 2002
Exchange Agreement shall be made pursuant to the provisions contained in Section
6.2 of the 2002 Exchange Agreement.
6.3 Amendments; Waivers. No provision of this Amendment may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Holders or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Amendment or the 2002 Exchange Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. Notwithstanding the foregoing, no such amendment shall be
effective to the extent that it applies to less than all of the holders of the
shares of Preferred Stock outstanding. The Company shall not offer or pay any
consideration to a Holder for consenting to such an amendment or waiver unless
the same consideration is offered to each Holder and the same consideration is
paid to each Holder which consents to such amendment or waiver.
6.4 Headings. The headings herein are for convenience only, do not
constitute a part of this Amendment or the 2002 Exchange Agreement and shall not
be deemed to limit or affect any of the provisions hereof.
6.5 References. References herein to Sections are to Sections of this
Amendment, unless otherwise expressly provided.
6.6 Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Amendment or any rights or obligations hereunder
without the prior written consent of each of the Holders. The Holders may assign
this Amendment or any rights or obligations hereunder without the prior written
consent of the Holder, provided, that any assignees must execute and deliver to
the company an instrument expressly making the representations and warranties
set forth in Section 2.2 and agrees to become a party hereto; further that,
prior to the Closing Date, the Holders may assign this Amendment its rights and
rights or obligations hereunder only to an Affiliate of such Holder. This
provision shall not limit a Holder's right to transfer securities in accordance
with all of the terms of this Amendment or the Transaction Documents.
6.7 No Third-Party Beneficiaries. This Amendment is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
6.8 Governing Law. This Amendment shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Amendment and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AMENDMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.9 Survival. The representations and warranties of the Company and the
Holders contained in Sections 2.1 and 2.2, the agreements and covenants set
forth in Section 3, and the indemnification provisions set forth in Section 5,
shall survive the Closing and any conversion of the shares of Preferred Stock or
exercise of the Warrants regardless of any investigation made by or on behalf of
the such Holder or by or on behalf of the Company, except that, in the case of
representations and warranties such survival shall be limited to the period of
four (4) years following the Closing Date on which they were made or deemed to
have been made (other than with respect to any claim by a third party against
the party to this Amendment who seeks to assert a claim based on such
representations and warranties). This section shall have no effect on the
survival of the indemnification provisions of the Registration Rights Agreement
and the First Amendment to Registration Rights Agreement.
6.10 Counterparts. This Amendment may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
6.11 Publicity. The Company and the Holders shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement. The Company
shall not publicly or otherwise disclose the names of any of the Holders without
each such Holder's prior consent, except to the extent required by law and in
the initial press release with respect to the transactions contemplated hereby.
The Holders and their affiliated companies shall, without further cost, have the
right to use in its advertising, marketing or other similar materials all or
parts of the Company's press releases that focus on the transactions forming the
subject matter of this Amendment or which make reference to such transactions.
The Holder understand that this grant by the Company only waives objections that
the Company might have to the use of such materials by the Holders and in no way
constitutes a representation by the Company that references in such materials to
the activities of third-parties have been cleared or constitute a fair use.
6.12 Severability. In case any one or more of the provisions of this
Amendment shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Amendment shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Amendment.
6.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Holders
will be entitled to specific performance of the obligations of the Company under
this Amendment, the 2002 Exchange Agreement or the Transaction Documents without
the showing of economic loss and without any bond or other security being
required. Each of the Company and the Holders (severally and not jointly) agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of any breach of its obligations described in the foregoing sentence
and hereby agree to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
6.14 Independent Nature of Holders' Obligations and Rights. The
obligations of each Holder hereunder is several and not joint with the
obligations of the other Holders hereunder, and no Holder shall be responsible
in any way for the performance of the obligations of any other Holder hereunder.
Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be
deemed to constitute the Holder as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Amendment and the 2002 Exchange Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Amendment, the 2002 Exchange
Agreement or out of the Transaction Documents, and it shall not be necessary for
any other Holder to be joined as an additional party in any proceeding for such
purpose.
6.15 Payment Set Aside. To the extent that the Company makes a payment
or payments to the Holders hereunder or pursuant to the Transaction Documents or
the Holders enforce or exercise their rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other Person under
any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
6.16 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Amendment, the 2002 Exchange Agreement and the
consummation of the transactions contemplated hereby.
6.17 Fees and Expenses. Except as set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Amendment; provided, however, that the Company shall
reimburse Xxxxx Xxxxxxx Partners I, Ltd. within 60 days of the Closing for
actual fees and expenses of its counsel, such amount not to exceed $10,000.
6.18 Understanding Among the Holders. It is acknowledged by each Holder
that no Holder has acted as an agent of any other Holder in connection with
making its investment hereunder and that no Holder shall be acting as an agent
of any other Holder in connection with monitoring its investment hereunder. It
is further acknowledged by each of the other Holders that Xxxxx Xxxxxxx Partners
I, Ltd. has retained Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P. ("Akin Gump") to
act as its counsel in connection with the transactions contemplated hereby and
under the other Transaction Documents and that Akin Gump has not acted as
counsel for any of the other Holders in connection therewith and that none of
the other Holders have the status of a client of Akin Gump for conflict of
interest or other purposes as a result thereof.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Exchange Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
XXXXX 0 SYSTEMS, INC.
By:
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Xxxx X. Xxxxxxxxx,
Chief Operating and Financial Officer,
Corporate Secretary
XXXXX XXXXXXX PARTNERS I, LTD.
By:
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Name:
Title: Authorized Signatory
SENECA CAPITAL, L.P.
By: Seneca Capital Advisors, LLC, its
general partner
By:
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Name:
Title:
SENECA CAPITAL INTERNATIONAL, LTD.
By:
--------------------------------------
Name:
Title:
ADVANCED SYSTEMS EUROPE B.V.
By:
--------------------------------------
Name:
Title:
Schedule I
-----------------------------------------------------------------------------------------------------------------------------------
Number of shares of Number of shares Number of Shares Number of Shares
Series A3 Preferred of Series B3 Preferred Underlying Underlying
Name of Holder Stock at Closing Date Stock at Closing Date Series A3 Warrants Series B3Warrants
-------------- --------------------- --------------------- ------------------ -----------------
Xxxxx Xxxxxxx Partners I, Ltd. 15,000 700,000 523,691
Seneca Capital, L.P. 1,570 5,228 53,640 182,506
Seneca Capital International, Ltd. 9,772 341,185
Advanced Systems Europe B.V. 10,000
TOTAL 11,570 30,000 753,640 1,047,382
Schedule II
Number of Shares Number of Shares
Series A2 Preferred Series B2 Preferred Underlying Exchanged Underlying Exchanged
Name of and Address of Holder Stock Exchanged Stock Exchanged Series A2 Warrants Series B2 Warrants
----------------------------- --------------- --------------- ------------------ ------------------
Xxxxx Xxxxxxx Partners I, Ltd.: 15,000 700,000 523,691
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
Residence: Grand Cayman, Cayman
Islands
Seneca Capital, L.P.: 1,570 5,228 53,640 182,506
c/o Seneca Capital Advisors, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxx Xxxx
Fax: (000) 000-0000
Residence:
Seneca Capital International, Ltd.: 9,772 341,185
c/o Seneca Capital Advisors, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxx Xxxx
Fax: (000) 000-0000
Residence:
Advanced Systems Europe B.V.: 10,000
Azrieli Xxxxxx 0, Xxxxxxxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx 00000 Israel
Attention: Xx. Xxxxx Xxxxxxx
Fax:
Residence: Israel
Exhibit A
[Form of Series A3 Certificate of Designation]
Exhibit B
[Form of Series B3 Certificate of Designation]
Exhibit C
[Form of Series A3 Warrant]
Exhibit D
[Form of Series B3 Warrant]
Exhibit E
[Form of Registration Rights Agreement]
