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EXHIBIT 4.1
UNIT PURCHASE AGREEMENT
This Unit Purchase Agreement (the "Agreement") is made and
entered into as of December 19, 1997, by and among Silicon Valley Research,
Inc., a California corporation (the "Company"), and those parties listed on the
signature pages hereof as "Investors" (who are referred to individually as an
"Investor" and collectively as the "Investors").
WHEREAS, the Company requires additional cash to fund its
current operations and for working capital and, therefore, is offering to sell
the Units (as defined below) to investors who qualify as purchasers in a private
placement transaction under federal and state securities laws; and
WHEREAS, each of such investors will have the right to
subscribe for any or all of the Maximum Amount (as defined below) of the Units
at the Unit Purchase Price (as defined below), subject to pro ration as
described herein.
In consideration of the above recitals and the mutual
covenants made herein, the parties hereby agree as follows:
1. Sale of Units; Closing; Delivery.
(a) Purchase and Sale of Units. Subject to the terms and
conditions hereof, the Company will issue and sell to each Investor, and each
Investor will purchase from the Company, on the Closing Date (as defined below)
the number of Units subscribed for by such Investor as set forth on such
Investor's signature page hereof (the "Subscription Amount"), subject to
reduction as specified in Section 1(b) hereof. A "Unit" shall be composed of a
share of common stock ("Share"), no par value, of the Company ("Common Stock"),
and a warrant (the "Warrant") to purchase a share of Common Stock ("Warrant
Share"). The purchase price per Unit (the "Unit Purchase Price") shall be
determined at the close of business on December 17, 1997 (the "Pricing Date"),
and shall be based upon the sum of (i) a purchase price per Share (the "Share
Purchase Price") equal to the average of the closing bid prices of the Common
Stock on the Nasdaq National Market (the "NNM") for the five consecutive trading
days ending on the Pricing Date and (ii) a purchase price per Warrant of $0.125.
The exercise price per Warrant Share (the "Exercise Price") shall be 85% of the
Share Purchase Price; provided, however, that if the difference between the
Share Purchase Price and the Exercise Price is greater than $0.125, then the
Exercise Price shall be the sum of the Share Purchase Price less $0.125. A form
of the Warrant is attached as Exhibit A.
(b) Pro Ration of Units. The Company shall sell
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up to a maximum of 3,811,974 Units (the "Maximum Amount"). In the event that the
aggregate of the Subscription Amounts of all Investors (the "Aggregate
Subscription Amount") shall exceed the Maximum Amount, Units shall be allocated,
pro rata, among the Investors based on the relation that an Investor's
Subscription Amount bears to the Aggregate Subscription Amount.
(c) Closing Notice. As soon as practicable following the close
of the NNM on the Pricing Date, but in no event later than 3:00 p.m. Pacific
Time on such Date, the Company shall give each Investor written notice of the
total payment due from such Investor at the Closing (as defined below) based
upon the number of Units allocated to such Investor hereunder at the Unit
Purchase Price as determined pursuant to Section 1(a). In addition, such notice
shall specify the Exercise Price per Warrant as determined pursuant to Section
1(a). Such notice shall also contain computations as to the allocation of Units
among Investors based upon the Aggregate Subscription Amount pursuant to Section
1(b) hereof and as to the Unit Purchase Price.
(d) Closing. The closing of the purchase and sale of the Units
(the "Closing") shall take place on December 23, 1997 (the "Closing Date");
provided, however, that the Company shall have the option to extend the Closing
Date for up to fifteen (15) days. The Company shall provide the Investors with
written notice, prior to the close of business on December 19, 1997, of any such
extension of the Closing Date.
(e) Delivery. At the Closing, the Company will deliver to each
Investor (or its agent, as hereinafter described) the Warrants and a stock
certificate representing the Shares included in the Units to be purchased by
such Investor, against payment of the purchase price therefor by check, payable
to the order of the Company, or by wire transfer of immediately available funds
to the bank account of the Company. For purposes of the Closing, the Company
shall deliver the Shares and Warrants included in the Units purchased hereunder
by each of the Investors to Xxxxxxx, Calamari & Xxxxxxx, as agent of the
Investors, unless the Company shall receive other written instructions from an
Investor at least two (2) business days prior to the Closing.
2. Representations and Warranties of Investors. Each Investor
represents and warrants, severally, to the Company that:
(a) Authorization. This Agreement constitutes the valid and
legally binding obligation of such Investor, enforceable in accordance with its
terms, except as such
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enforcement may be limited by bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally and equitable remedies, and
except as indemnity provisions in the enforcement of Section 4 of this Agreement
(relating to registration rights) may be limited by law, and such Investor (if
an individual) is over eighteen (18) years of age, and such Investor has full
legal capacity, power and authority to enter into and be bound by this
Agreement.
(b) Purchase for Own Account for Investment. Such Investor is
purchasing the Units (including, for this purpose, the Shares and the Warrants)
for investment purposes only and not with a view to, or for sale in connection
with, a distribution of the Units within the meaning of the Securities Act of
1933, as amended (the "1933 Act"). Such Investor has no present intention of
selling or otherwise disposing of all or any portion of the Units.
(c) Access to Information. Such Investor has had an
opportunity to ask questions of the Company's representatives concerning the
Company, its present and prospective business, assets, liabilities and financial
condition that such Investor reasonably considers important in making the
decision to purchase the Units. The foregoing, however, does not limit or modify
the representations and warranties of the Company in Section 3 of this Agreement
or the rights of the Investors to rely thereon.
(d) Understanding of Risks. Such Investor is fully aware of:
(i) the highly speculative nature of the investment in the Units; (ii) the
financial hazards involved; (iii) the lack of liquidity of the Shares and
Warrant Shares and the restrictions on the transferability of the Shares and
Warrant Shares (e.g., that such Investor may not be able to sell or dispose of
the Shares and Warrant Shares); and (iv) the tax consequences of an investment
in the Units. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement and
the rights of the Investors to rely thereon.
(e) Investor's Qualifications. Such Investor is an
"accredited" investor as defined under Regulation D under the 1933 Act. Such
Investor is aware of the general business and financial circumstances of the
Company and, by reason of such Investor's business or financial experience, such
Investor is capable of evaluating the merits and risks of this investment and is
financially capable of bearing a total loss of this investment.
(f) Compliance with Securities Laws. Such Investor understands
and acknowledges that, in reliance upon
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the representations and warranties made by such Investor herein, the Shares and
Warrant Shares are not currently registered with the U.S. Securities and
Exchange Commission (the "SEC") under the 1933 Act or being qualified under the
California Corporate Securities Law of 1968, as amended (the "Law"), but instead
are being issued under an exemption or exemptions from the registration and
qualification requirements of the 1933 Act and the Law or other applicable state
securities laws which impose certain restrictions on such Investor's ability to
transfer the Shares and Warrant Shares.
(g) Restrictions on Transfer. Such Investor understands that
such Investor may not transfer any of the Shares or Warrant Shares unless such
Shares or Warrant Shares are registered under the 1933 Act or unless, in the
opinion of counsel to the Company, exemptions from such registration and
qualification requirements are available. Such Investor understands that only
the Company may file a registration statement with the SEC. Such Investor has
also been advised that exemptions from registration and qualification may not be
available or may not permit such Investor to transfer all or any of the Shares
or Warrant Shares in the amounts or at the times proposed by such Investor.
(h) Rule 144. In addition, such Investor has been advised that
SEC Rule 144 ("Rule 144") promulgated under the 1933 Act, which permits certain
limited sales of unregistered securities, is not presently available with
respect to the Shares and Warrant Shares solely due to the holding periods
required thereunder and, in any event, requires that the Shares and Warrant
Shares be held for a minimum of one year, and in certain cases two years, after
they have been purchased and paid for (within the meaning of Rule 144), before
they may be resold under Rule 144. Such Investor understands that Rule 144 may
indefinitely restrict transfer of the Shares and Warrant Shares if such Investor
is an "affiliate" of the Company and "current public information" about the
Company (as defined in Rule 144) is not publicly available.
(i) Legends and Stop-Transfer Orders. Such Investor
understands that certificates or other instruments representing any of the
Shares and Warrant Shares acquired by such Investor may bear legends
substantially similar to the following, in addition to any other legends
required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
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SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO
THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT.
In order to ensure and enforce compliance with the restrictions imposed by
applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing the Shares and Warrant Shares, or if the Company transfers its own
securities, it may make appropriate notations to the same effect in the
Company's records. Any legend endorsed on a certificate pursuant to this
Subsection (i) and the related stop transfer instructions with respect to such
securities shall be removed, and the Company shall issue a certificate without
such legend to the holder thereof, if such securities are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available, if such legend may be properly removed under the
terms of Rule 144 promulgated under the Securities Act or if such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without registration.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Investor that, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit B:
(a) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Company has all necessary corporate power and
authority to own its assets and to carry on its business as now being conducted
and presently proposed to be conducted. The Company is duly qualified to do
business as a foreign
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corporation and is in good standing in each jurisdiction in which its ownership
or leasing of assets, or the conduct of its business, makes such qualification
necessary.
(b) Requisite Power and Authorization. The Company has all
necessary corporate power and authority under the laws of the State of
California and all other applicable provisions of law to execute and deliver
this Agreement, to issue the Shares, the Warrants and the Warrant Shares and to
carry out the provisions of this Agreement and the Warrants. All corporate
action on the part of the Company required for the lawful execution and delivery
of this Agreement, and issuance and delivery of the Shares, the Warrants and the
Warrant Shares has been duly and effectively taken. Upon execution and delivery,
this Agreement and the Warrants constitute valid and binding obligations of the
Company enforceable in accordance with their respective terms, except as
enforcement may be limited by insolvency and similar laws affecting the
enforcement of creditors' rights generally and equitable remedies and except as
the indemnity provisions of Section 4 of this Agreement (relating to
registration rights) may be limited by law. The Shares and the Warrant Shares
when issued in compliance with the provisions of this Agreement or the Warrants,
as the case may be, will be duly authorized and validly issued, fully paid,
non-assessable and issued in compliance with federal securities laws and all
applicable state securities laws. No shareholder of the Company or other person
has any preemptive right of subscription or purchase or contractual right of
first refusal or similar right with respect to the Shares, Warrants or Warrant
Shares. The Company has reserved such number of shares of its Common Stock
necessary for issuance of the Warrant Shares.
(c) SEC Documents. The Company has furnished to each Investor:
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1997, and all documents that the Company was required to file, which it
represents and warrants it did timely file, with the SEC under Sections 13 or
14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since March 31, 1997 (collectively, the "SEC Documents"). As of their respective
filing dates, or such later date on which such reports were amended, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act. The SEC Documents as of their respective dates, or such later date
on which such reports were amended, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements included in
the SEC Documents (the "Financial Statements") comply as to
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form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. Except as
may be indicated in the notes to the Financial Statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, the Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the consolidated financial
position of the Company and any subsidiaries at the dates thereof and the
consolidated results of their operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).
(d) Capital Stock. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, without par value, and 1,000,000
shares of Preferred Stock, without par value. As of December 1, 1997, there were
16,789,699 shares of Common Stock issued and outstanding, and there are no
issued and outstanding shares of Preferred Stock.
(e) Compliance with Other Agreements. Neither the execution
and delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by, this Agreement, nor the issuance of the Shares, the
Warrants and the Warrant Shares, has constituted or resulted in, or will
constitute or result in, a default under or breach or violation of any term or
provision of the Company's Bylaws, Articles of Incorporation, or material
contracts with third parties, state or federal laws, rules or regulations,
writs, orders or judgments or decrees which are applicable to the Company or its
properties.
(f) No Material Adverse Change. Since September 30, 1997,
there has not been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the
Company's Form 10Q for the quarter ended September 30, 1997, except
changes in the ordinary course of business which have not been, either
in any individual case or in the aggregate, materially adverse;
(ii) any material change, except in the ordinary course of
business, in the contingent obligations of the Company whether by way
of guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely
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affecting the properties or business of the Company;
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company;
(v) any labor organization activity; or
(vi) any other event or condition of any character which has
materially and adversely affected the Company's business, assets,
liabilities, financial condition, operations or prospects.
(g) Nasdaq. The Common Stock has been designated for inclusion
in the NNM upon prior application. The issuance and sale of the Shares and the
Warrants, when issued and sold in accordance with this Agreement, and the
issuance and sale of the Warrant Shares when issued and sold in accordance with
the Warrants, will not violate any applicable rule of The Nasdaq Stock Market
("Nasdaq"), including, without limitation, Nasdaq Marketplace Rule 4460(i) which
requires shareholder approval prior to the issuance of designated securities.
(h) Registration Statement. To the best of the Company's
knowledge, there exist no facts or circumstances that would inhibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Registrable Securities (as defined below) in accordance with Section 4(b)
hereof.
(i) No Misrepresentation. No representation or warranty by the
Company in this Agreement and no statements in the SEC Documents, as amended, or
any other document, statement, certificate or schedule furnished or to be
furnished by or on behalf of the Company pursuant to this Agreement, when taken
together with the foregoing, contains or shall contain any untrue statement of
material fact or omits or shall omit to state a material fact required to be
stated therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading. The Company has
delivered true and complete copies of all documents requested by the Investors.
(j) Anti-dilution Shares. Issuance of the Shares and the
Warrants under this Agreement, and the issuance of the Warrant Shares under the
Warrants, will not trigger any anti-dilution, preemptive or similar rights
contained in any options, warrants or other agreements or commitments of the
Company or otherwise result in the issuance of any additional shares of Common
Stock.
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4. Registration Rights.
(a) Definitions. For purposes of this Section 4:
(i) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement
in compliance with the 1933 Act, and the declaration or ordering of
effectiveness of such registration statement.
(ii) "Registrable Securities" means all shares of Common Stock of
the Company issued under this Agreement, including all shares of Common
Stock issued or issuable pursuant to the exercise of the Warrants,
excluding in all cases, however, all Registrable Securities sold
pursuant to Rule 144.
(iii) "Holder" means any person owning of record Registrable
Securities that have not been sold to the public or any assignee of
record of such Registrable Securities to whom rights under this Section
4 have been assigned in accordance with this Agreement.
(b) Shelf Registration.
(i) Within sixty (60) days following the Closing Date, the
Company will file a registration statement or amend a currently
effective registration statement (in either event, a "registration
statement") under the 1933 Act for, and all such qualifications and
compliances as may be so required and as would permit the sale and
distribution of, all of the Holders' Registrable Securities, and
thereafter shall use its best efforts to secure the effectiveness of
such registration statement within ninety (90) days following the
Closing Date.
(ii) The Company will pay all expenses incurred in connection with
any registration, qualification and compliance requested hereunder
(excluding underwriters' or brokers' discounts and commissions),
including, without limitation, all filing, registration and
qualification, printers' and accounting fees and the reasonable fees
and disbursements of one counsel for the selling Holder or Holders and
counsel for the Company.
(iii) The Company will use its best efforts to cause the
registration statement to remain effective until the earlier of (A) the
date ending three years after the effective date of the registration
statement filed pursuant to this Section 4(b) or (B) the date on
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which each Holder of Registrable Securities is able to sell all of such
Holder's Registrable Securities in any single three (3) month period
without registration under the 1933 Act pursuant to Rule 144, provided
that if the Company determines that it may terminate the effectiveness
of the registration statement under (B), the Company shall prior to
such termination provide each Holder an opinion of counsel, based on
factual representations of the Holder, that such Holder is able to sell
all of the Registrable Securities held by such Holder and its
affiliates in any single three (3) month period without registration
under the 1933 Act pursuant to Rule 144.
(c) Piggyback Registrations.
(i) At such time(s) as a registration statement pursuant to
Section 4(b) herein is unavailable to the Holders, the Company will be
required to notify all Holders of Registrable Securities in writing at
least thirty (30) days prior to the Company filing any registration
statement after the ninetieth (90th) day following the Closing Date
under the 1933 Act for purposes of effecting a public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to any employee
benefit plan or a corporate reorganization), and will afford each such
Holder after the ninetieth (90th) day following the Closing Date an
opportunity to include in such registration statement (and any related
qualification under or compliance with "blue sky" or other state
securities laws) all or any part of the Registrable Securities then
held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities
held by such Holder will, within thirty (30) days after receipt of the
above-described notice from the Company, so notify the Company in
writing, and in such notice will inform the Company of the number of
Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of such
Holder's Registrable Securities in any registration statement
thereafter filed by the Company, such Holder will nevertheless continue
to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
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(ii) If the registration statement under which the Company gives
notice under this Section 4(c) is for an underwritten offering, the
Company will so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be
included in a registration pursuant to this Section 4(c) will be
conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting will
enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting will be allocated (A)
first, to the Company, (B) second, to any (1) Holders or (2) other
persons who have piggyback registration rights granted by the Company
that are at parity with the rights of the Holders under this Section
4(c) and, in each case, who request the inclusion of their securities
in the registration statement, and (C) third, to any persons with
piggyback rights subordinate to those of the Holders who request the
inclusion of their securities in the registration statement; provided,
however, that the number of Registrable Securities proposed to be
registered by the Holders hereunder may not be reduced to less than
twenty percent (20%) of the total value of the securities to be
distributed through the underwriting. If not all securities of Holders
or other persons described in clause (B) above can be included in a
registration, the allocation among such Holders and other persons will
be on a pro rata basis according to the relation that the number of
securities which each such Holder or other person owns bears to the
total number of shares outstanding. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter,
delivered at least five (5) business days prior to the effective date
of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting will be excluded and withdrawn from
the registration. For any Holder which is a partnership or corporation,
the partners, retired partners and shareholders of such Holder, or the
estates and family members of any such partners, retired partners and
shareholders, and any trusts for the benefit of any of the foregoing
persons
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will be deemed to be a single "Holder", and any pro rata reduction with
respect to such "Holder" will be based upon the aggregate amount of
shares owned by all entities and individuals included in such "Holder",
as defined in this sentence.
(iii) All reasonable expenses incurred in connection with a
piggyback registration pursuant to this Section 4(c) (excluding
underwriters' and brokers' discounts and commissions), including,
without limitation, all federal and "blue sky" or other state
securities registration and qualification fees, printers' and
accounting fees, fees and disbursements of one counsel for the selling
Holder or Holders and counsel for the Company will be borne by the
Company.
(d) Obligations of the Company. Whenever required to effect
the registration of any Registrable Securities under this Agreement, the Company
will, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective, and deliver such
registration statement, at the time of such filing, to each Holder.
(ii) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities covered by such registration statement.
(iii) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the 1933 Act, and such other documents as they may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(iv) Use its best efforts to register and qualify the Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as will be
reasonably requested by the Holders, provided that the Company will not
be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of
process in any such
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states or jurisdictions.
(v) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter(s) of such
offering. Each Holder of Registrable Securities participating in such
underwriting will also enter into and perform its obligations under
such an agreement.
(vi) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and upon such notice the
Company shall use its best efforts to promptly correct such
misstatement or omission and deliver to each Holder copies of such
corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such
registration statement from the date of notice until the date of such
correction. The period during which the Company is required to keep any
registration statement filed pursuant to Section 4(b) or 4(c) effective
shall be extended for the amount of time required to amend such
registration statement and deliver such prospectus relating thereto.
(vii) Furnish, at the request of any Holder requesting registration
of Registrable Securities, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are
being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering
and reasonably satisfactory to each of the Holders requesting
registration, addressed to the underwriters and to the Holders
requesting registration of Registrable Securities and (ii) a "comfort"
letter, dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
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underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters and to the Holders requesting registration of Registrable
Securities.
(viii) Use its best efforts promptly to secure the designation and
quotation of all Registrable Securities covered by a registration
statement on the NNM (or such other principal market or exchange on
which the Common Stock is listed, or, if not so listed, to secure
trading of the Common Stock on the Nasdaq OTC Bulletin Board),
including, without limitation, the filing of any notification,
application or other information and the payment of any fees relating
thereto.
(e) Furnish Information. It will be a condition precedent to
the obligations of the Company to take any action pursuant to Sections 4(b) and
4(c) hereof that the selling Holders will furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as will be required to
effect the registration of their Registrable Securities.
(f) Delay of Registration. No Holder will have any right to
obtain or seek an injunction restraining or otherwise delaying any registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 4.
(g) Indemnification. In the event any Registrable Securities
are included in a registration statement under Sections 4(b) or 4(c) hereof:
(i) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, shareholders, officers and
directors of each Holder, any underwriter (as defined in the 0000 Xxx)
for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the 1933 Act or the Exchange Act
(each, an "Indemnified Person") against any losses, claims, damages or
liabilities (joint or several) to which an Indemnified Person may
become subject under the 1933 Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a
"Violation"):
(A) any untrue statement or alleged untrue
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statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto:
(B) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or
(C) any violation or alleged violation by the Company
of the 1933 Act, the Exchange Act, any federal or state
securities law or any rule or regulation promulgated under the
1933 Act, the Exchange Act or any federal or state securities
law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Indemnified Person for any
legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 4(g)(i) will not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the prior written consent of the
Company (which consent will not be unreasonably withheld), nor will the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such Indemnified Person.
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement, each person,
if any, who controls the Company within the meaning of the 1933 Act or
the Exchange Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other
Holder's partners, shareholders, directors, officers or shareholders or
any person who controls such Holder within the meaning of the 1933 Act
or the Exchange Act (each, an "Indemnified Party"), against any losses,
claims, damages or liabilities (joint or several) to which an
Indemnified Party may become subject under the 1933 Act, the Exchange
Act or other federal or state law, insofar as such losses, claims,
damages or liabilities
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(or actions in respect thereto) arise out of or are based upon any
Violation that arises solely as a result of and in conformity with
written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, underwriter or other
Holder, partner, officer, director, shareholder or controlling person
of such other Holder in connection with investigating or defending any
such loss, claim, damage, liability or action: provided, however, that
the indemnity agreement contained in this Section 4(g)(ii) will not
apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the prior
written consent of the Holder, which consent will not be unreasonably
withheld; and provided, further, that the total amounts payable in
indemnity by a Holder under this Section 4(g)(ii) in respect of any
Violation will not exceed the lesser of (A) the aggregate proceeds (net
of discounts and commissions) received by such Holder upon the sale of
the Shares or Warrant Shares and (B) that proportion of aggregate
losses, claims, damages, liabilities or expenses indemnified against
which equals the proportion which the number of Shares and Warrant
Shares being sold by such Holder bears to the total number of Shares
and Warrant Shares being sold under such registration statement by the
Company and all Holders.
(iii) Promptly after receipt by an Indemnified Person or an
Indemnified Party (the "Indemnitee") under this Section 4(g) of notice
of the commencement of any action (including any governmental action),
such Indemnitee will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 4(g), deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly given notice, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee will have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying
party, if the indemnifying party fails to assume the defense of an
action within a reasonable time or if representation of such Indemnitee
by the counsel retained by the indemnifying party, in such counsel's
reasonable opinion, would be inappropriate due to actual or potential
differing
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interests between such Indemnitee and any other party represented by
such counsel in such proceeding. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement
of any such action, if the indemnifying party is materially prejudiced
thereby, will relieve such indemnifying party of liability, but only to
the extent that such indemnifying party is prejudiced with respect to a
specific claim.
(iv) The foregoing indemnity agreement with respect to any
prospectus shall not inure to the benefit of any Holder or underwriter,
or any person controlling such Holder or underwriter, from whom the
person asserting any losses, claims, damages or liabilities purchased
shares, if a copy of the prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto)
provided by the Company was not sent or given by or on behalf of such
Holder or underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of
the purchased shares to such person, and if the prospectus (as so
amended or supplemented) would have cured the defect giving rise to
such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections 4(g)(i) or
4(g)(ii) hereof shall be unavailable to hold harmless an Indemnitee in
respect of any liability under the 1933 Act, then, and in each such
case, the indemnifying party, in lieu of indemnifying such Indemnitee
hereunder, shall contribute to the amount paid or payable by such
Indemnitee as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the Indemnitee
on the other in connection with the statement or omissions that
resulted in such loss, liability, claim, damage or expense as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Indemnitee shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
Indemnitee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission; provided that in no event shall any contribution under this
subsection (v) by any Holder exceed the gross proceeds
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from the offering received by such Holder. No person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under this Section
4(g) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
(h) "Market Stand-Off" Agreement. In connection with a public
offering of securities by the Company pursuant to Section 4(c), each Holder who
participates in the registration statement filed under the 1933 Act for such
offering will not, to the extent requested in good faith by an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities included in such registration statement (other than to
donees or partners of the Holder who agree to be similarly bound) for up to that
period of time, not to exceed ninety (90) days, following the effective date of
such registration statement of the Company filed under the 1933 Act as is
requested by the managing underwriter(s) of such offering; provided that the
officers and directors of the Company who own stock of the Company and any
shareholder holding more than five percent (5%) of the outstanding voting
securities of the Company also agree to such restrictions. In order to enforce
the foregoing covenant, the Company may impose stop transfer instructions with
respect to the Registrable Securities of each such Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
(i) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the 1933 Act, at all times
while the Company is reporting under the 1934 Act;
(ii) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the 1933 Act and the 1934 Act (at any time it is subject to such
reporting requirements); and
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(iii) So long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule
144, and of the 1933 Act and the Exchange Act (at any time it is
subject to the reporting requirements of the Exchange Act), a copy of
the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration (at
any time the Company is subject to the reporting requirements of the
Exchange Act).
(j) Termination of the Company's Obligations. The Company will
have no obligations pursuant to Section 4(c) hereof with respect to: (A) any
request or requests for registration made by any Holder on a date more than six
(6) years after the date of this Agreement or (B) Registrable Securities held by
a Holder if in the opinion of counsel to the Company at the time of filing a
registration statement such Holder may sell all of such Holder's Registrable
Securities in any single three (3) month period without registration under the
1933 Act pursuant to Rule 144, provided that if the Company shall determine that
it may terminate its obligations to any Holder under (B), the Company shall
prior to such termination provide the Holder as to which it shall have
determined to terminate its obligations under (B) an opinion of counsel, based
on factual representations of the Holder, that such Holder is able to sell all
of the Registrable Securities held by such Holder and its affiliates in any
single three (3) month period without registration under the 1933 Act pursuant
to Rule 144.
5. Covenants.
(a) Reserved Shares. The Company shall, from and at all times
after the Closing, maintain a reserve of authorized shares of Common Stock
sufficient to cover the exercise in full of the outstanding Warrants until the
expiration or earlier exercise of all Warrants.
(b) Nasdaq Requirements. The Company shall use its best effort
to meet all requirements necessary for the inclusion of the Common Stock in the
NNM, including, without limitation, the quantitative maintenance criteria set
forth in Nasdaq Marketplace Rule 4450 (Quantitative Maintenance Criteria) and
Nasdaq Marketplace Rule 4460 (Quantitative Designation Criteria), as long as the
Company shall have an obligation to maintain the effectiveness of the
registration
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statement filed pursuant to Section 4(b).
(c) Exchange Act Filings. The Company shall continue to file
with the SEC all reports and other filings required under the rules of the SEC
and such documents shall comply in all material respects with the requirements
of the Exchange Act or the 1933 Act, as applicable, as long as the Company
continues to be subject to reporting requirements under Section 13 or 15(d) of
the Exchange Act.
6. Conditions to Obligations of the Investors. The obligation
of each Investor to purchase the Units at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by such Investor:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of said date, except for representations and warranties made as of a specific
date which shall be true and correct as of such date; the Company's business and
assets shall not have been adversely affected in any material way prior to the
Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it under this
Agreement on or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement.
(c) Compliance Certificate. The Company shall have delivered
to the Investors a certificate, executed by the Chairman of the Board and Chief
Executive Officer of the Company, dated the Closing Date, certifying to the
fulfillment of the conditions specified in subsection (a) of this Section 6.
(d) Opinion of Company's Counsel. Investors shall have
received from Xxxx Xxxx Xxxx & Freidenrich, counsel to the Company, an opinion
addressed to the Investors, dated the Closing Date, which shall relate to the
valid issuance of the Shares and the Warrant Shares and to the due
authorization, execution and delivery of the Warrants.
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(e) Aggregate Subscription Amount. The purchase price of all
Units purchased under this Agreement shall not be less than $1,500,000.
7. Conditions to Obligations of the Company. The obligation of
the Company to sell and issue the Units to each Investor at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(a) Representations and Warranties. The representations and
warranties made by such Investor in Section 2 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
(b) Consents and Waivers. The conditions set forth in
subsections (b) and (e) of Section 6 hereof shall have been fulfilled.
8. Miscellaneous.
(a) Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among residents of, and wholly to be performed
within, the State of California, without regard to principles of conflict of
laws or choice of laws.
(b) Further Instruments. From time to time, each party hereto
will execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
(c) Successors; No Other Beneficiaries. This Agreement will be
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors and assigns of the parties hereto;
provided, however, that (i) rights of Investors hereunder may be transferred
only in connection with (and to the transferee of) Common Stock of the Company
purchased by an Investor hereunder, but the Company may prohibit such transfer
of rights (but not the transfer of stock) if the transfer to a particular
transferee would not, in the good faith judgment of the Company's Board of
Directors, be in the Company's best interests, and (ii) any transferee of any
shares of stock of the Company affected by this Agreement to whom rights are so
transferred (a "Permitted Transferee") will be required, as a condition
precedent to acquiring such shares, to agree in writing to be bound by all the
terms and conditions of this
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Agreement applicable to such Permitted Transferee's transferor, and (iii) upon
and after such transfer the Permitted Transferee will be deemed to be an
Investor for purposes of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(d) Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) Entire Agreement. This Agreement, including and
incorporating the Schedule of Exceptions and all other Exhibits attached hereto
and referred to herein, constitutes and contains the entire agreement and
understanding of the parties regarding the subject matter of this Agreement and
supersedes in its entirety any and all prior negotiations, correspondence,
understandings and agreements among the parties respecting the subject matter
hereof.
(f) Notices. Any notice required to be given or delivered to
the Company under the terms of this Agreement shall be addressed to the Chief
Financial Officer of the Company at its principal corporate offices. Any notice
required to be given or delivered to an Investor shall be addressed to the
Investor at the address set forth on the signature page hereof or to such other
address as such party may designate in writing from time to time to the Company.
Unless otherwise provided, notice required or permitted to be given to a party
pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed given under this Agreement on the earliest of (i) the date
of personal delivery, or (ii) the date of transmission by facsimile, or (iii)
the business day after deposit with a nationally-recognized courier or overnight
service, including Federal Express or Express Mail, for United States deliveries
or three (3) business days after such deposit for deliveries outside of the
United States, or (iv) five (5) business days after deposit in the United States
mail by registered or certified mail, postage prepaid, for United States
deliveries. All notices for delivery outside the United States will be sent by
facsimile, or by nationally recognized courier or overnight service, including
Express Mail. Any notice given hereunder to more than one person will be deemed
to have been given, for purposes of counting time periods hereunder, on the date
given to the last party required to be
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given such notice.
(g) Finders' Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Each party agrees to indemnify and to hold the other parties hereto
harmless from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which such party or any of its officers, partners,
employees or representatives is responsible.
(h) Amendments and Waivers. Except as otherwise specifically
provided in this Agreement, no term of this Agreement may be amended and the
observance of any term of the Agreement may not be waived (either generally or
in a particular instance and either retroactively or prospectively) except (i)
if prior to the Closing, with the written consent of the Company and each
Investor and (ii) if after the Closing, with the consent of the Company and
Investors holding at least seventy-five percent (75%) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section
8(h) will be binding upon the Company, each Investor, and their permitted
transferees and assigns.
(i) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of such
provisions, and of this Agreement, will be interpreted as if such provision or
part and hereof were so excluded and will be enforceable in accordance with its
terms.
(j) Aggregation of Stock. All shares of Common Stock held or
acquired by affiliated entities or persons will be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
TO BE COMPLETED INVESTOR
BY INVESTOR
Units Subscribed: ____ ------------------------------------
(Print Name of Individual or Entity)
By
----------------------------------
(Signature)
Name:
Title:
Address: ___________________________
____________________________________
____________________________________
____________________________________
TO BE COMPLETED COMPANY
BY COMPANY
SILICON VALLEY RESEARCH, INC.
Units Issued:__________
Unit Purchase Price:___
Aggregate Purchase
Price:________________ By
----------------------------------
(Signature)
Name:
Title:
