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ELECTRIC CITY CORP.
SECURITIES PURCHASE AGREEMENT
Dated as of November 29, 2001
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement, is entered into as
of November 29, 2001 (as it may be amended from time to time,
this "Agreement") between Electric City Corp., a Delaware
corporation (the "Company"), and Leaf Mountain Company, LLC, an
Illinois limited liability company (the "Purchaser").
WITNESSETH
WHEREAS, the Company desires to sell and issue to
Purchaser 300,000 shares of its Series A Convertible Preferred
Stock, $.01 par value per share ("Series A Preferred Stock"),
together with warrants to purchase 75,000 shares of Series A
Preferred Stock, 45,122 shares of its common stock, par value
$0.0001 ("Common Stock"), and warrants to purchase 421,875
shares of its Common Stock; and
WHEREAS, Purchaser desires to purchase such
securities, as set forth on Schedule I hereto, from the Company,
on the terms and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and
the mutual agreements contained herein, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms when used in this Agreement,
including its preamble and recitals, shall, except where the
context otherwise requires, have the following meanings, such
meanings to be equally applicable to the singular and plural
forms thereof:
"Affiliate" means, as applied to any Person, any other
Person that, directly or indirectly, controls, is controlled by
or is under common control with such Person. For the purposes
of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or
otherwise.
"Agreement" shall have the meaning set forth in the
preamble of this Agreement.
"Ancillary Agreements" means the Stockholders
Agreement, the Investor Rights Agreement, the Series A Preferred
Stock Warrants, the Common Stock Warrants and the Trading
Agreement.
"Assets" shall have the meaning set forth in Section
5.5 hereof.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New
York are authorized or required by law or executive order to
close.
"Certificate of Designations" means the Certificate of
Designations, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions Thereof of Series A Convertible
Preferred Stock of the Company, in the form attached hereto as
Exhibit "A".
"Certificate of Incorporation" means the Amended
Certificate of Incorporation of the Company, as amended or
restated from time to time.
"Closing" shall have the meaning set forth in Section
2.2 hereof.
"Closing Date" shall have the meaning set forth in
Section 2.2 hereof.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the United States Securities and
Exchange Commission or any other governmental authority at the
time administering the Securities Act or the Exchange Act.
"Commission Documents" shall have the meaning set
forth in Section 5.25 hereof.
"Common Shares" means the shares of Common Stock to be
issued by the Company to the Purchaser hereunder.
"Common Stock" shall have the meaning set forth in the
Recitals hereof.
"Common Stock Warrants" means the warrants to be
issued by the Company to Purchaser to purchase 421,875 shares of
Common Stock, as evidenced by the Warrant Certificate in the
form of Exhibit "E" attached hereto, as the same may be amended
from time to time in accordance with the terms thereof.
"Company" shall have the meaning set forth in the
preamble of this Agreement.
"Company IP" shall have the meaning set forth in
Section 5.13 hereof.
"Company Personnel" shall have the meaning set forth
in Section 5.15(a) hereof.
"Consent" means the Consent and Amendment of
Securities Purchase Agreement, Stock Trading Agreement,
Stockholders Agreement and Investor Rights Agreement by and
among the Company, the Purchaser and the holders of Series A
Convertible Preferred Stock in the form of Exhibit "I" attached
hereto.
"Conversion Price" shall have the meaning set forth in
Section 7(a) of the Certificate of Designations.
"Conversion Stock" shall have the meaning set forth in
Section 6.1 hereof.
"Customers" shall have the meaning set forth in
Section 5.20 hereof.
"Employee Plans" shall have the meaning set forth in
Section 5.15(a) hereof.
"Environmental Condition" shall have the meaning set
forth in Section 5.16(i) hereof.
"Environmental Law" shall have the meaning set forth
in Section 5.16(f) hereof.
"ERISA" shall have the meaning set forth in Section
5.15(a) hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar or successor federal statute,
and the rules and regulations of the Commission thereunder, all
as the same shall be in effect from time to time.
"Governmental Authority" means the government of any
nation, state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock
or capital ownership or otherwise, by any of the foregoing.
"Hazardous Substances" shall have the meaning set
forth in Section 5.16(g) hereof.
"Interim Financial Statements" shall have the meaning
set forth in Section 5.8 hereof.
"Investor Rights Agreement" means the Investor Rights
Agreement, substantially in the form of Exhibit "B" attached
hereto, as the same may be amended from time to time in
accordance with the terms thereof.
"Joinder Agreement" means the joinder agreement to be
entered into by each Additional Purchaser, substantially in the
form of Exhibit "H" attached hereto, as the same may be amended
from time to time in accordance with the terms thereof.
"Liquidation Amount" shall have the meaning set forth
in the Certificate of Designations.
"Litigation" shall have the meaning set forth in
Section 3.1(g) hereof.
"Losses" shall have the meaning set forth in Section
8.1 hereof.
"Officer's Certificate" means a certificate of the
Company signed by its President, Chief Executive Officer or
Chief Financial Officer.
"Person" means an individual, a corporation, a limited
liability company, an association, a partnership, a trust or
estate, a government or any department or agency thereof.
"Placement Agent" means Newcourt Capital Securities,
Inc., a Delaware corporation.
"PPM" means that certain Confidential Private
Placement Memorandum of the Company dated February 16, 2001,
including any supplements thereto issued prior to the Closing
Date.
"Preferred Shares" means shares of Series A Preferred
Stock.
"Properties" shall have the meaning set forth in
Section 5.16(c) hereof.
"Purchase Price" shall have the meaning set forth in
Section 2.2 hereof.
"Purchaser" shall have the meanings set forth in the
preamble of this Agreement.
"Regulatory Approvals" means (i) any and all
certificates, permits, licenses, franchises, concessions,
grants, consents, approvals, orders, registrations,
authorizations, waivers, variances, exemptions, declarations, or
clearances from, or filings or registrations with, or reports or
notices to, any Governmental Authority, and (ii) any and all
waiting periods imposed by applicable laws.
"Release" shall have the meaning set forth in Section
5.16(h) hereof.
"Securities" shall have the meaning set forth in
Section 2.1 hereof.
"Securities Act" means the Securities Act of 1933, as
amended, and any similar or successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same may be in effect from time to time.
"Series A Preferred Stock" shall have the meaning set
forth in the Recitals to this Agreement.
"Series A Preferred Stock Warrants" means the warrants
to be issued by the Company to Purchaser to purchase 75,000
shares of Series A Preferred Stock, as evidenced by the Warrant
Certificate substantially in the form of Exhibit "D" attached
hereto, as the same may be amended from time to time in
accordance with the terms thereof.
"Stated Value" of the Series A Preferred Stock shall
mean $10.00 per share.
"Stockholders Agreement" means the Stockholders
Agreement, substantially in the form of Exhibit "C" attached
hereto, as the same maybe amended from time to time in
accordance with the terms thereof.
"Stock Trading Agreement" means the Stock Trading
Agreement, substantially in the form of Exhibit "F" attached
hereto, as the same may be amended from time to time in
accordance with the terms thereof.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business entity
of which more than 50% of the voting stock or other equity
interests (in the case of Persons other than corporations), is
owned or controlled, directly or indirectly, by the Person, or
one or more of the Subsidiaries of the Person, or a combination
thereof.
"Taxes" means any federal, state, county, local or
foreign taxes, charges, fees, levies, or other assessments,
including, without limitation, all net income, gross income,
sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital
stock, business and occupation, disability, employment, payroll,
license, estimated, or withholding taxes or charges imposed by
any governmental entity, and includes any interest and penalties
on or additions to any such taxes (and, in the case of the
Company and its Subsidiaries, Taxes for which the Company or any
of its Subsidiaries may be liable in its own right, or as the
transferee of the assets of, or as successor to, any other
corporation, association, partnership, joint venture, or other
entity, or under Treasury Regulation Section 1.1502-6 or any
similar provision of state or local law).
"Tax Return" means a report, return or other
information required to be supplied to a Governmental Authority
with respect to Taxes including, where permitted or required,
combined, unitary, group or consolidated returns for any group
of entities that includes the Company or its Subsidiary.
"Transactions" shall have the meaning set forth in
Section 3.1(g).
"Transaction Documents" shall have the meaning set
forth in Section 5.1(b) hereof.
"Union Plan" means the defined contribution plan
described on Schedule 5.15(g) hereof.
ARTICLE II
ISSUE, PURCHASE AND SALE OF THE SECURITIES
2.1 Authorization of Issuance of Series A Preferred
Stock
. The Company has authorized the initial issuance of (a) the
300,000 Preferred Shares to be issued hereunder, having the
powers, designations, preferences and relative rights and the
qualifications, limitations and restrictions set forth in the
Certificate of Designations, plus such additional shares of
Series A Preferred Stock as may be necessary to pay in-kind
accrued but unpaid dividends on the Series A Preferred Stock and
to issue up to 75,000 Preferred Shares upon exercise of the
Series A Preferred Stock Warrants; (b) 75,000 Series A Preferred
Stock Warrants; (c) 421,875 Common Stock Warrants; and (d) the
45,122 Common Shares (collectively the "Securities").
2.2 Purchase and Sale of Securities
. Subject to the terms and conditions herein set forth, the
Company hereby agrees to sell to Purchaser, and Purchaser agrees
that it will purchase from the Company, at the Closing (as
defined herein), for an aggregate purchase price to be paid by
Purchaser to the Company as set forth opposite the Purchaser's
name in the column entitled "Purchase Price" on Schedule I (the
"Purchase Price") the number of shares of Series A Preferred
Stock and Common Stock and the number of Series A Preferred
Stock Warrants and Common Stock Warrants, as set forth opposite
the Purchaser's name on Schedule I. Concurrently with the
execution of this Agreement the Purchaser has delivered to the
Company (i) an amount of immediately available funds equal to
its Purchase Price; and (ii) counterpart signature pages of each
of the Stockholders Agreement, the Stock Trading Agreement and
the Investor Rights Agreement. Subject to the satisfaction or
waiver of the parties' respective conditions to closing set
forth in Sections 3.1 and 3.2, the closing of the purchase and
sale of the Securities (the "Closing") shall take place on
November 29, 2001, or at such other time and on such other date
as the Purchaser and the Company may agree (the "Closing Date").
At the Closing, the Company will deliver to Purchaser at the
offices of Purchaser, or at such other location as Purchaser and
the Company may agree, one or more stock certificates, as
Purchaser may request, registered in Purchaser's name or
otherwise as Purchaser may direct, evidencing the shares of
Series A Preferred Stock and shares of Common Stock to be
purchased by Purchaser, together with 421,875 Common Stock
Warrants and 75,000 Series A Preferred Stock Warrants, against
payment of the purchase price therefor by wire transfer of
immediately available funds to or upon the order of the Company
by the Company.
2.3 Additional Purchase and Sale of Series A
Preferred Stock and Series A Preferred Stock Warrants
. Subsequent to the date of this Agreement, the Company may
enter into an additional securities purchase agreement, in a
form substantially similar to this Agreement and its exhibits
and attachments, providing for the sale by the Company to other
investors (each, an "Additional Purchaser") solely of not more
than 100,000 shares of Series A Preferred Stock in the aggregate
and Series A Preferred Stock Warrants to purchase not more than
25,000 shares of Series A Preferred Stock in the aggregate, in
exchange for an aggregate cash purchase price for such preferred
stock and warrants of not less than $1,000,000, and containing
such additional or different terms and conditions as are set
forth on Schedule 2.3 attached hereto. At or prior to the
closing under the additional securities purchase agreement, each
Additional Purchaser shall execute and deliver to the Company a
Joinder Agreement pursuant to which such Additional Purchaser
shall agree to be bound by and become a party to the
Stockholders Agreement, the Stock Trading Agreement and the
Investor Rights Agreement. The Company will conduct the closing
under such additional securities purchase agreement, if any.
The Purchaser irrevocably consents to the Company's entering
into such additional securities purchase agreement and
consummating such purchase and sale. Any such purchase and sale
shall be conducted in accordance with all applicable laws, rules
and regulations and the rules of the American Stock Exchange.
Neither the execution of an additional securities purchase
agreement nor the consummation of any such purchase and sale
shall be a condition to the parties' respective obligations
under this Agreement.
ARTICLE III
CONDITIONS OF CLOSING
3.1 Purchaser Conditions to Closing
. The Purchaser's obligation to purchase and pay for the
Securities to be purchased by it at the Closing is subject to
the satisfaction, as determined by, or waived by, the Purchaser
on or before the Closing Date, of the following conditions:
(a) Receipt of Securities. The Purchaser shall have
received delivery of the Securities purchased by it in
accordance with Section 2.2 and shall have purchased the
Securities pursuant to this Agreement.
(b) Opinion of the Company's Counsel. The Purchaser
shall have received from Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx,
Chartered, special counsel to the Company in connection with
this transaction, an opinion, dated the Closing Date, as to the
matters set forth on Exhibit "G" attached hereto, in form and
substance reasonably satisfactory to the Purchaser and counsel.
(c) Joinder Agreement. The Joinder Agreement shall
have been entered into and delivered by the Purchaser and the
Company.
(d) Consent. The Consent shall have been entered
into and delivered by the parties thereto other than Purchaser.
(e) Expenses. The Company shall have paid the
reasonable fees and expenses of the Purchaser's counsel up to
$25,000.
(f) Issuance of Capital Stock Since September 7,
2001. Neither the Company nor any of its Subsidiaries shall
have amended its certificate of incorporation or by-laws nor
issued any shares of capital stock or securities exercisable for
or convertible into shares of capital stock (other than options
or warrants to purchase Common Stock issued in the ordinary
course of business and on terms consistent with past practice
not to exceed options or warrants to purchase more than 100,000
shares of Common Stock and other than 23,733 shares of Series A
Convertible Preferred Stock issued on October 17, 2001 in
payment of a dividend on the outstanding shares of Series A
Convertible Preferred Stock), nor granted any additional stock
appreciation rights or altered the terms of any stock
appreciation rights existing on the date hereof, in either case
subsequent to the date hereof and prior to the Closing.
(g) No Litigation; No Order. No action, suit or
proceeding relating to the transactions contemplated by this
Agreement or any Ancillary Agreement (the "Transactions") shall
be pending that in the reasonable good faith judgment of
Purchaser (i) seeks to restrain or prevent any of the
Transactions and has a reasonable probability of success or (ii)
is reasonably likely to have a material adverse effect on the
assets, business, prospects, properties, operations or
conditions (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole and no order (including, without
limitation, a temporary restraining order), decree, writ,
judgment or injunction shall be in effect that restrains,
enjoins or prevents the consummation of the transactions
contemplated by this Agreement or any Ancillary Agreement
(collectively, "Litigation").
(h) Proceedings. On or prior to the Closing Date,
all corporate and other proceedings required to be taken under
applicable laws, rules and all regulations and all rules of The
American Stock Exchange in connection with the transactions
contemplated by this Agreement or any Ancillary Agreement shall
have been taken and all filings and documents incident thereto
shall be reasonably satisfactory in form and substance to the
Purchaser and its special counsel, and the Purchaser and its
special counsel shall have received all such counterpart
originals or certified or other copies of such documents as they
may reasonably request.
(i) Compliance with this Agreement. The Company
shall have performed and complied with all of its agreements and
conditions set forth or contemplated herein that are required to
be performed or complied with by the Company on or before the
Closing Date.
(j) Officer's Certificate. Purchaser shall have
received a certificate, dated the Closing Date and signed by the
Chief Executive Officer of the Company, certifying that the
conditions set forth in Sections 3.1(e), 3.1(f), 3.1(g),
3.1(h), 3.1(i), 3.1(j), 3.1(m), 3.1(n) and 3.1(o) hereof have
been satisfied on and as of such date.
(k) Secretary's Certificate. Purchaser shall have
received a certificate, dated the Closing Date and signed by the
Secretary of the Company, attaching good standing certificates
from the Delaware Secretary of State with respect to the Company
and from the respective Secretaries of State for the
jurisdictions of incorporation for its Subsidiaries and
certifying the authenticity of attached copies of (i) the
Certificate of Incorporation and by-laws of the Company and the
certificate of incorporation and by-laws of each of its
Subsidiaries, in each case as amended; (ii) resolutions of the
Board of Directors of the Company approving this Agreement and
the Ancillary Agreements and the transactions contemplated by
this Agreement and the Ancillary Agreements; (iii) evidence of
the approval by the stockholders of the Company of any matters
for which stockholder approval is required under applicable
laws, rules and regulations and the rules of the American Stock
Exchange or evidence reasonably satisfactory to the Purchaser
and its special counsel that such approval is not required; and
(iv) the Certificate of Designations, as filed with the
Secretary of State of the State of Delaware.
(l) Purchase Permitted by Applicable Laws; Legal
Investment. The acquisition of and payment for the Securities
and the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements (i) shall not be
prohibited by any applicable law or governmental regulation,
(ii) shall not subject Purchaser to any penalty or, in its
reasonable judgment, other onerous conditions under or pursuant
to any applicable law or governmental regulation and (iii) shall
be permitted by the laws and regulations of the jurisdictions to
which Purchaser is subject.
(m) Consents and Approvals. All consents, waivers,
approvals, exemptions, authorizations, or other actions by, or
notices to, or filings with, Governmental Authorities and other
Persons necessary or required in connection with the execution,
delivery or performance by the Company or enforcement against
the Company of this Agreement (including, without limitation,
the issuance of the Securities contemplated hereunder), any
Ancillary Agreement or any other document executed in connection
with the consummation of the transactions contemplated by this
Agreement or any Ancillary Agreement shall have been obtained
and be in full force and effect, and the Purchaser shall have
been furnished with appropriate evidence thereof.
(n) Insolvency. The Company shall not have made an
assignment for the benefit of creditors, nor shall it have filed
with a court of competent jurisdiction an application for
appointment of a receiver or similar official with respect to it
or any substantial part of its assets, nor shall there have been
filed by the Company or any of its Subsidiaries a petition
seeking relief under any provision of the Federal Bankruptcy
Code or any other federal or state statute now or hereafter in
effect affording relief to debtors, nor shall there have been
filed against the Company or any of its Subsidiaries any such
application or petition.
(o) Listing. The Company shall have obtained
approval from the American Stock Exchange to list for trading on
the American Stock Exchange the Common Stock issuable upon
conversion of the Series A Preferred Stock (including shares of
Series A Preferred Stock issuable upon the exercise of the
Series A Preferred Stock Warrants), and the Common Shares
issuable upon exercise of the Common Stock Warrants.
3.2 Company Conditions to Closing
. The Company's obligation to issue and sell the Securities at
the Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions:
(a) Receipt of Purchase Price. The Company shall
have received payment of the Purchase Price with respect to the
Securities purchased hereunder.
ARTICLE IV
CERTAIN COVENANTS
4.1 Conduct of the Business
. From the date of this Agreement to the Closing, the Company
shall refrain from taking any action that would render any
representation or warranty contained in this Agreement
inaccurate in any material respect.
4.2 Financial Statements and Other Reports
. After the Closing Date, the Company agrees to send the
following reports to the holder of Series A Preferred Stock: (a)
so long as the Company is subject to the requirements of, or
otherwise making filings pursuant to, Section 13 or 15(d) of the
Exchange Act, within three days after the filing with the
Commission, a copy of its Annual Report on Form 10-KSB or Form
10-K, its Quarterly Reports on Form 10-QSB or Form 10-Q, any
proxy statements or information statements and any Current
Reports on Form 8-K, together in each case with amendments
thereto; (b) within one day after release, copies of all press
releases issued by the Company or any of its Subsidiaries; (c)
promptly upon receipt thereof, copies of reports, if any,
submitted to the Company by independent accountants in
connection with each annual or interim audit of the books of the
Company made by such accountants; and (d) all other information
sent to holders of the Common Stock or any other equity security
holder.
Without limiting the foregoing, the Company shall
deliver to the Purchaser until the Purchaser transfers, assigns
(except in the case of an assignment to an Affiliate) or sells
all of its Series A Preferred Stock (a) as soon as practicable
and in any event within 45 days after the end of each fiscal
quarter, the following information: consolidated statements of
income, stockholders' equity and cash flows of the Company and
its Subsidiaries for such fiscal period and for the period from
the beginning of the then current fiscal year to the end of such
fiscal period and a comparison of each such item to the then
current budget, and the balance sheet of the Company and its
Consolidated Subsidiaries as at the end of such fiscal period,
setting forth in each case in comparative form figures for the
corresponding periods in the preceding fiscal year, all in
reasonable detail, prepared in accordance with generally
accepted accounting principles consistently applied throughout
the periods involved, certified as to fair presentation by the
principal financial officer of the Company and accompanied by a
written discussion of operations in summary form; and (b) as
soon as practicable and in any event within 90 days after the
end of each fiscal year of the Company, the following
information: statements of income, stockholders' equity and cash
flows of the Company and its consolidated Subsidiaries for such
year, and a consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such year, setting
forth in each case in comparative form corresponding figures
from the preceding fiscal year, prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, and accompanied by an opinion
of BDO Xxxxxxx XX, or another firm of independent public
accountants of recognized national standing selected by the
Company, to the effect that the consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and as
are noted therein) and present fairly the financial condition of
the Company and its consolidated Subsidiaries and that the
examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards and accordingly included such tests
of the accounting records and such other auditing procedures as
were considered necessary in the circumstances; and accompanied
by a written discussion of operations by management in summary
form with respect to such fiscal year, including a comparison to
budget.
The Purchaser is hereby authorized to deliver a copy
of any financial statement delivered to it pursuant to this
Section 4.2 to any regulatory body having jurisdiction over it
that requests such information. Subject to compliance with
reasonable confidentiality requirements imposed by the Company,
the Purchaser shall have reasonable access to the Company,
including its management, and its books and records during
regular business hours and is further authorized to request
information from and to have access to, at the Company's
expense, the Company's independent public accountants. The
Company shall request such accountants to make available to the
Purchaser such information as the Purchaser may reasonably
request.
4.3 Corporate Existence; Licenses and Permits;
Maintenance of Properties
. The Company shall at all times use commercially reasonable
efforts to do or cause to be done all things necessary to
maintain, preserve and renew its existence as a corporation
organized under the laws of a state of the United States of
America, and to preserve and keep in force and effect, and cause
each of its consolidated Subsidiaries to apply for on a timely
basis, all licenses and permits necessary and material to the
conduct of the business of the Company and its Subsidiaries,
taken as a whole.
4.4 Securities Exchange
. The Company shall use its reasonable best efforts to maintain
its Common Stock listing and to continue to have its Common
Stock be quoted on the American Stock Exchange or on another
national securities exchange, so long as it is subject to
Section 13 or 15(d) of the Exchange Act.
4.5 Insurance
. The Company shall at all times maintain customary directors
and officers insurance in amounts as are customary for other
publicly traded companies of similar size.
ARTICLE V
REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company represents, covenants and warrants to Purchaser
as follows:
5.1 Organization; Standing and Qualification of
Company and its Subsidiaries; Corporate Authority
.
(a) Each of the Company and each of its Subsidiaries,
is a corporation duly organized and existing in good standing
under the laws of the jurisdiction of its organization, and has
the corporate power to own its property and to carry on its
business as now being conducted, is duly qualified and in good
standing as a foreign corporation to do business in every
jurisdiction where the character of the properties owned or
leased by it or the nature of any business transacted by it
makes such qualification necessary, except where such
nonqualification or lack of good standing would not have a
material adverse effect on the business of the Company and its
Subsidiaries, taken as a whole. Each of the Company and its
Subsidiaries have delivered to the Purchaser true, complete and
correct copies of their respective certificates of incorporation
and their respective by-laws, as amended through the date
hereof, which are in full force and effect on the date hereof.
(b) The execution and delivery by the Company of this
Agreement and the Ancillary Agreements (collectively, the
"Transaction Documents"), and the performance by the Company of
all transactions and obligations contemplated hereby and thereby
are within its corporate authority. The execution, delivery and
performance of the Transaction Documents and each other
agreement contemplated by the terms hereof and thereof and the
issuance of the Securities have been duly authorized by all
necessary corporate proceedings on the part of the Company.
Each of the Transaction Documents constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and to
equitable principles relating to enforceability. The Preferred
Shares and the Common Shares are duly authorized and, when
issued, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights. Assuming the accuracy of the
representations of Purchaser in this Agreement, the Preferred
Shares and the Common Shares issuable hereunder will be issued
in compliance with all applicable federal and state securities
laws. The shares of Common Stock issuable upon the conversion
of the Preferred Shares and the Series A Preferred Stock that is
issuable upon exercise of the Series A Preferred Stock Warrants,
and the shares of Common Stock issuable upon the exercise of the
Common Stock Warrants, are duly authorized and reserved for
issuance, will be subject to no preemptive rights and, when
issued upon such conversion or exercise, will be validly issued,
fully paid and nonassessable. Assuming the accuracy of the
representations of the Purchaser in this Agreement, when such
shares of Common Stock are issued, such shares will be issued in
compliance with all applicable federal and state securities
laws. The Company has reserved for issuance 3,700,000 shares of
Series A Preferred Stock (of which 1,600,000 shares were issued
on September 7, 2001 and 23,733 shares were issued on October
17, 2001) and 37,000,000 shares of Common Stock for issuance
upon conversion thereof. In addition, the Company has reserved
for issuance 6,314,830 shares of Common Stock issuable upon
exercise of the Common Stock Warrants and the Placement Agent
Warrants.
(c) Great Lakes Controlled Energy Corporation and
Switchboard Apparatus, Inc. are the only Subsidiaries of the
Company. Each such Subsidiary is wholly owned by the Company.
5.2 Capital Stock
.
(a) As of the date hereof, the Company has authorized
85,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, of which 3,700,000 shares have been designated
Series A Preferred Stock. As of the date hereof, the Company
has 31,043,036 issued and outstanding shares of Common Stock and
1,623,733 issued and outstanding shares of Series A Preferred
Stock. All outstanding shares of the Company Common Stock and
Series A Preferred Stock have been duly authorized, validly
issued and are fully paid and nonassessable and free of
preemptive rights. All outstanding shares of Common Stock and
Series A Preferred Stock were issued in compliance with all
applicable federal and state securities laws.
(b) Except as otherwise stated in this Section 5.2 or
in Schedule 5.2 and except for shares of capital stock reserved
for issuance in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements, the Company has not
granted or issued, or agreed to grant or issue, any options,
warrants or similar rights to acquire or receive any of the
authorized but unissued shares of its capital stock of any class
or any securities convertible into shares of its capital stock
of any class or any stock appreciation rights. Except as stated
in Schedule 5.2, no adjustment to the exercise price of any
outstanding options or warrants of the Company will be required
as a result of the issuance of any of the Securities.
(c) Except as set forth in Schedule 5.2(c), no holder
of shares of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock) has any rights to
purchase or receive additional or other securities upon the
occurrence of an event that might dilute such holder's
percentage interest in the Company.
5.3 No Defaults
. Except as set forth in Schedule 5.3, neither the Company nor
any of its Subsidiaries is in violation of, or in default under,
nor has there been any waiver given with respect to, any term or
provision of any charter, by-law, mortgage, indenture,
agreement, instrument, statute, rule, law, regulation, judgment,
decree, order, writ, or injunction applicable to it, such that
such violations and defaults in the aggregate could reasonably
be expected to result in any material adverse change in the
business, assets, properties, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries,
taken as a whole, or materially adversely affect the ability of
the Company to perform in any material respect its obligations
under this Agreement. All Regulatory Approvals required by the
Company and its Subsidiaries to conduct their respective
business as now conducted by them have been obtained and are in
full force and effect, and the Company and its Subsidiaries are
in compliance with the terms and requirements of such Regulatory
Approvals. Except as set forth on Schedule 5.3 hereto, since
December 31, 2000, none of the Company or any of its
Subsidiaries has received any written notice or other written
communication from any Governmental Entity regarding (i) any
revocation, withdrawal, suspension, termination or modification
of, or the imposition of any material conditions with respect
to, any Regulatory Approval, (ii) any violation of any law by
the Company or any of its Subsidiaries, or (iii) any other
limitations on the conduct of business by the Company or any of
its Subsidiaries.
5.4 Burdensome and Conflicting Agreements and Charter
Provisions
. Neither the execution or delivery of the Transaction
Documents by the Company, nor the offering, issuance and sale of
the Securities by the Company, nor fulfillment of, or compliance
with, the terms and provisions of the Transaction Documents and
the Series A Preferred Stock by the Company, nor the issuance of
Series A Preferred Stock upon exercise of the Series A Preferred
Stock Warrants, nor the issuance by the Company of shares of
Common Stock upon conversion of the Series A Preferred Stock as
provided in the Certificate of Designations, or upon exercise of
the Common Stock Warrants or the Placement Agent Warrants, will,
except as set forth in Schedule 5.4, conflict with, or result in
a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or
result in the creation of any lien upon any of the properties or
assets of the Company or any of its Subsidiaries, or require any
consent, approval or other action by, or notice to, or filing
with, any court or administrative or governmental body or any
other Person or pursuant to the Certificate of Incorporation or
by-laws of the Company or the certificate of incorporation or
by-laws of any of the Company's Subsidiaries, any award of any
arbitrator or any material agreement (including any agreement
with stockholders), instrument, order, judgment, decree,
statute, law, rule or regulation to which the Company or any of
its Subsidiaries is subject, except for (a) approval of the
holders of at least 66 2/3 % of the outstanding shares of Series
A Convertible Preferred Stock and (b) approvals or waivers as
may be required in connection with fulfillment of, or compliance
with, the Investor Rights Agreement, in each case, which
approvals or waivers shall have been obtained by the Closing
Date.
5.5 Title to Assets, Etc.
The Company has good and marketable fee simple title to the
assets reflected on the balance sheet set forth on Schedule 5.5
(the "Assets"). Except as set forth in Schedule 5.5, none of
the Assets is subject to any encumbrances, except for minor
liens that in the aggregate are not substantial in amount, do
not materially detract from the value of the property or assets
subject thereto or interfere with the present use thereof and
have not arisen other than in the ordinary course of business.
There are no pending or threatened condemnation proceedings
relating to any of the facilities of the Company. The real
property improvements (including leasehold improvements) and
fixtures and equipment of the Company are adequately insured and
are structurally sound with no known material defects. The
facilities, fixtures and equipment of the Company are in good
operating condition and repair (except for ordinary wear and
tear and any defect for which the cost of repairing would not be
material), are sufficient for the operation of the Company's
business as presently conducted and are in conformity in all
material respects with all applicable laws, ordinances, orders,
regulations and other requirements (including applicable zoning,
environmental, motor vehicle safety or standards, occupational
safety and health laws and regulations) relating thereto
currently in effect, except where the failure to conform would
not have a material adverse effect on the business or financial
condition of the Company. The Assets are valued on the
Company's books at or below actual cost less an adequate and
proper depreciation charge. The Company has not depreciated any
of the Assets on an accelerated basis or in any other manner
inconsistent with applicable Internal Revenue Service tax and
fiscal guidelines, if any.
5.6 Leases
. Each of the Company and its Subsidiaries enjoy peaceful and
undisturbed possession of all leases material to them. All such
leases are valid and subsisting and are in full force and
effect.
5.7 Contracts
. Except as set forth in Schedule 5.7, there is no contract,
agreement or understanding required to be described in or filed
as an exhibit to any Commission Documents that is not described
in or filed as required by the Securities Act or the Exchange
Act, as the case may be. Except as set forth in Schedule 5.7,
each such contract, agreement and understanding is valid and
binding and is in full force and effect and enforceable in
accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally or as
may be limited by equitable principles relating to
enforceability), except in the case of such contracts,
agreements or understandings that are by their terms no longer
in force or effect. Except as set forth on Schedule 5.7, (a) no
approval or consent of, or notice to, any Person is needed in
order that such contract, agreement or understanding shall
continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination
following the consummation of the transactions contemplated by
the Transaction Documents, other than such notices, consents and
approvals as have been obtained and (b) the Company and/or its
Subsidiaries are not in violation of, breach of, or default
under any such contract, agreement or understanding nor, to the
Company's knowledge, is any other party to any such contract,
agreement or understanding.
5.8 Financial Statements
. The Company has furnished Purchaser with (a) the balance
sheet of the Company and its consolidated Subsidiaries as at
December 31, 2000 and the related statements of income,
stockholders' equity and cash flows of the Company and its
consolidated Subsidiaries for the fiscal year ended December 31,
2000, all certified by BDO Xxxxxxx XX, including in each case
the related schedules and notes, and (b) an unaudited balance
sheet of the Company and its consolidated Subsidiaries as at
September 30, 2001 and statements of income, stockholders'
equity and cash flows of the Company and its consolidated
Subsidiaries for the interim period ended on such date, prepared
by the Company and certified by its principal financial officer
(item (b) is referred to as the "Interim Financial Statements").
All such financial statements (including any related
schedules and notes) have been prepared in accordance with
generally accepted accounting principles consistently applied,
except to the extent set forth in the notes to such financial
statements and except for the absence of footnotes to the
Interim Financial Statements and except that the Interim
Financial Statements are subject to normal year-end adjustments
and to adjustments made in the course of an audit that would not
in the aggregate be material, throughout the periods involved
and to the extent required by such principles show all
liabilities, direct and contingent, of the Company and its
Subsidiaries required to be shown thereon in accordance with
generally accepted accounting principles. The balance sheets
and the related schedules and notes fairly present the financial
condition of the Company and its consolidated Subsidiaries.
Except as set forth in Schedule 5.8, the Company has incurred
no material liabilities since March 31, 2001, other than those
incurred in the ordinary course. The net income and
stockholders' equity statements and the related schedules and
notes fairly present the results of the operations of the
Company and its consolidated Subsidiaries for the periods
indicated.
Except as set forth in Schedule 5.8, there has been no
material adverse change in the assets, business, prospects,
properties, operations or condition, financial or otherwise, of
the Company and its Subsidiaries, taken as a whole, since
December 31, 2000.
5.9 Actions Pending
. There is no action, suit, investigation or proceeding pending
or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries before any court, arbitrator
or administrative or governmental body that (a) seeks to enjoin
or otherwise prevent the consummation of the sale or issuance of
the Securities or (b) materially and adversely affects, or as to
which there is a reasonable possibility of an adverse decision
that would materially and adversely affect, either individually
or collectively, the assets, business, properties, prospects,
operations or condition, financial or otherwise, of the Company
and its Subsidiaries, taken as a whole. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, order,
writ, injunction, decree, rule or regulation of any court or
governmental department, commission, board, bureau, agency or
instrumentality, the violation of which reasonably could be
expected to, either individually or collectively, materially and
adversely affect the business, property, assets, prospects,
operations or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole.
5.10 Offering of Securities
. Assuming the accuracy of the representations of the Purchase
in this Agreement, the offer, sale and issuance of the
Securities are exempt from the registration requirements of the
Securities Act. Neither the Company nor any agent on its behalf
has solicited or will solicit any offers to sell or has offered
to sell or will offer to sell all or any part of the Securities
to any Person so as to bring the offering and sale of such
Securities by the Company within the registration provisions of
the Securities Act. The Company has filed all notices and
satisfied all registration or qualification requirements of any
state securities or Blue Sky law of any applicable jurisdiction
with respect to the offer, issuance and sale of the Securities
or required by the Ancillary Agreements.
5.11 Broker's or Finder's Commissions
. No broker's or finder's or placement fee or commission will
be payable with respect to the sale or the issuance of the
Securities contemplated hereby or by the Ancillary Agreements as
a result of any act or omission by the Company, and the Company
will hold Purchaser harmless from any claim, demand or
liability for broker's or finder's or placement fees or
commissions alleged to have been incurred in connection with the
sale or the issuance of the Securities, due to any actions or
omissions by the Company or its Subsidiaries or any of their
respective directors, officers or agents.
5.12 Application of Proceeds
. The net proceeds of the sale of the Series A Preferred Stock
will be used by the Company in the manner described in Schedule
5.12.
5.13 Intellectual Property
(a) The Company and its Subsidiaries exclusively own
or possess the requisite licenses or rights (on reasonable
commercial terms) to use all patents, trade secrets, trademarks,
service marks, service names, trade names, copyrights and other
intellectual property rights necessary to enable each of them to
conduct their respective businesses as now operated
(collectively, the "Company IP"). Schedule 5.13(a) sets forth a
full and complete list of all intellectual property rights of
the Company and its Subsidiaries. There is no claim or action
by any Person pertaining to, or proceeding pending, or to the
Company's knowledge threatened, that challenges the rights of
the Company or its Subsidiaries with respect to any Company IP.
To the Company's knowledge, neither the Company's nor any of its
Subsidiaries' current and intended products and services
infringe on any patents, licenses, trademarks, service marks,
service names, trade names, copyrights or other intellectual
property rights held by any Person and neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances
that might give rise to any of the foregoing.
(b) Except as set forth in Schedule 5.13(b), no
proceedings or claims in which the Company alleges that any
Person is infringing upon, or otherwise violating, any Company
IP are pending, and none has been served by, instituted or
asserted by the Company or any of its Subsidiaries, nor are any
proceedings threatened alleging any such violation or
infringement.
(c) The Company has taken and will take all
commercially reasonable actions that are necessary or advisable
in order to fully protect the Company IP, in a manner consistent
with prudent commercial practice.
5.14 Taxes
. The Company and each of its Subsidiaries has timely filed (or
caused to be filed) all Tax Returns that are required to be
filed by (or with respect to) it on or before the date hereof
and has paid all Taxes due on or before the date hereof whether
or not reflected on such Tax Returns, including pursuant to any
assessment received by it. All such Tax Returns were true,
correct and complete in all material respects. None of such Tax
Returns has been audited by the relevant taxing authority, and
no taxing authority has notified (or threatened) the Company or
any of its Subsidiaries, orally or in writing, that such taxing
authority will or may audit any such return. The Company and
its Subsidiaries have complied with all requirements of the
Code, the Treasury Regulations and any state, local or foreign
law relating to the payment and withholding of Taxes relating to
them, and the Company and each of its Subsidiaries have, within
the time and in the manner prescribed by applicable law, paid
over to the proper taxing authorities all amounts required to be
so withheld and paid over relating to them. The charges,
accruals and reserves on the books of the Company and its
Subsidiaries in respect of Taxes or other governmental charges
are adequate to cover any liability of the Company and its
Subsidiaries for Taxes through the date hereof. There are no
liens for Taxes with respect to any asset of the Company or any
of its Subsidiaries, except for liens with respect to Taxes that
are not yet due and payable. No taxing authority in a
jurisdiction where the Company or any of its Subsidiaries, as
the case may be, does not file tax returns has made a claim,
assertion or threat that the Company or any of its Subsidiaries
is or may be subject to taxation in such jurisdiction.
5.15 ERISA
.
(a) Schedule 5.15 sets forth each plan, agreement,
arrangement or commitment that is an employment or consulting
agreement, executive or incentive compensation plan, bonus plan,
deferred compensation agreement, employee pension, profit
sharing, savings or retirement plan, employee stock option or
stock purchase plan, group life, health, or accident insurance
or other employee benefit plan, agreement, arrangement or
commitment, including, without limitation, any severance,
holiday, vacation, Christmas or other bonus plans (including,
but not limited to, "employee benefit plans," as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained by the Company or any of
its Subsidiaries for any present or former employees, officers
or directors of the Company or any of its Subsidiaries ("Company
Personnel") or with respect to which the Company or any of its
Subsidiaries has liability or makes or has an obligation to make
contributions ("Employee Plans").
(b) Except as to the Union Plan, the Company has
provided Purchaser with access to (i) copies of all Employee
Plans or, in the case of an unwritten plan, a written
description thereof, (ii) copies of any annual, financial or
actuarial reports and Internal Revenue Service determination
letters relating to such Employee Plans and (iii) copies of all
summary plan descriptions (whether or not required to be
furnished under ERISA) and employee communications relating to
such Employee Plans that materially modify an existing summary
plan description and have been distributed to Company Personnel,
in each case under this clause (iii), existing or in effect
during or within the past five years.
(c) Except as set forth on Schedule 5.15(c), no
Employee Plan except the Union Plan (which is excluded from this
Section 5.15(c) representation and warranty) entitles Company
Personnel to (i) any pension benefit that is unfunded or (ii)
any pension or other benefit to be paid after termination of
employment other than required by Section 601 of ERISA or
pursuant to plans intending to be qualified under Section 401(a)
of the Code and listed on the Schedule 5.15(c), and no other
benefits whatsoever are payable to any Company Personnel after
termination of employment (including retiree medical and death
benefits).
(d) Each Employee Plan, except the Union Plan (which
is excluded from this Section 5.15(d) representation and
warranty), that is an employee welfare benefit plan under
Section 3(1) of ERISA is either (i) funded through an insurance
company contract and is not a "welfare benefit fund" within the
meaning of Section 419 of the Code or (ii) unfunded.
(e) Each Employee Plan, except the Union Plan (which
is excluded from this Section 5.15(e) representation and
warranty) by its terms and operation is in compliance in all
material respects with all applicable laws (including, but not
limited to, ERISA, the Code and the Age Discrimination in
Employment Act of 1967, as amended).
(f) There are no actions, suits or claims pending or,
to the Company's knowledge, threatened against any Employee Plan
or administrator or fiduciary of any such Employee Plan (other
than routine noncontested claims for benefits) nor, to the
Company's knowledge, does any set of circumstances exist that
may reasonably give rise to such a claim. As to each Employee
Plan for which an annual report is required to be filed by the
Company under ERISA or the Code, all such filings, including
schedules, have been made on a timely basis and with respect to
the most recent report regarding each such Employee Plan
liabilities do not exceed assets, and no material adverse change
has occurred with respect to the financial materials covered
thereby.
(g) Except as set forth on Schedule 5.15(g), neither
the Company nor any entity that is or was at any time treated as
a single employer with the Company under Section 414(b), (c),
(m) or (o) of the Code has at any time (i) maintained,
contributed to or been required to contribute to any plan under
which more than one employer makes contributions (within the
meaning of Section 4064(a) of ERISA) or any plan that is a
multiemployer plan, (ii) incurred or expects to incur any
liability to the Pension Benefit Guaranty Corporation or
otherwise under Title IV of ERISA or (iii) incurred or expects
to incur liability in connection with an "accumulated funding
deficiency" within the meaning of Section 412 of the Code
whether or not waived.
(h) Each Employee Plan except the Union Plan (which
is excluded from this Section 5.15(h) representation and
warranty) intended to be qualified under Section 401(a) of the
Code and, if applicable, Section 401(k) of the Code has received
a favorable determination letter from the Internal Revenue
Service stating that such Employee Plan is qualified under
Section 401(a) and, if applicable, Section 401(k) of the Code
and the related trust is exempt from tax under Section 501(a)
and nothing has occurred since the date of such letter to cause
the letter to be no longer valid or effective.
(i) Neither the Company nor, to the knowledge of the
Company, any other Person, including any fiduciary, has engaged
in any "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA), that could subject any of the
Employee Plans (or their trusts), the Company, or any Person who
the Company has an obligation to indemnify, to any tax or
penalty imposed under Section 4975 of the Code or Section 502 of
ERISA. No "reportable event" (as such term is defined in
Section 4043 of ERISA) for which the notice requirement has not
been waived by the Pension Benefit Guaranty Corporation has
occurred or is expected to occur with respect to any Employee
Plan and the Company will provide each Purchaser notice of any
reportable events upon learning of the same.
(j) Except as set forth on Schedule 5.15(j), the
events contemplated by this Agreement (either alone or together
with any other event) will not (i) entitle any Company Personnel
to severance pay, unemployment compensation, or other similar
payments under any Employee Plan or law, (ii) accelerate the
time of payment or vesting or increase the amount of benefits
due under any Employee Plan or compensation to any Company
Personnel, (iii) result in any payments (including parachute
payments) under any Employee Plan or law becoming due to any
Company Personnel or (iv) terminate or modify or give a third
party a right to terminate or modify the provisions or terms of
any Employee Plan.
(k) Except as set forth in Schedule 5.15(k), neither
the Company nor any of its Subsidiaries (nor any entity that is
or was at any time treated as a single employer with the Company
or any Subsidiary under Section 414(b), (c), (m) or (o) of the
Code or ERISA) has any obligation or liability (contingent or
otherwise) relating to or in connection with the Union Plan.
The Union Plan is not subject to Title IV of ERISA. Except as
set forth in Schedule 5.15(k), all contributions required to be
made by the Company or any Subsidiary to the Union Plan have
been made when due and, to the best of the Company's knowledge,
if the Company and/or any of its Subsidiaries were to withdraw
from the Union Plan on the Closing Date, neither the Company nor
any of its Subsidiaries would incur any liability relating to or
in connection with the Union Plan.
5.16 Environmental
.
(a) Except as set forth on Schedule 5.16(a), the
Company and its Subsidiaries comply, and the Company, its
Subsidiaries and their respective predecessors at all times
during their existence have complied, with all applicable
Environmental Laws (as defined below).
(b) There is not now pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened, any action,
claim, proceeding or investigation, nor has the Company, its
Subsidiaries, or any of their respective predecessors received
any notice, claim, demand letter or request for information at
any time, alleging that the Company, any of its Subsidiaries, or
any of their respective predecessors may be or is in violation
of, or liable under, any Environmental Law, nor does there exist
any basis for any such action, claim, proceeding or
investigation.
(c) Except as disclosed on Schedule 5.16(c), there
are no Hazardous Substances (as defined below) located on any of
the properties currently or formerly owned or operated by the
Company, any of its Subsidiaries or any of their respective
predecessors (including soil, groundwater and surface features
and buildings and structures thereon) (the "Properties"), and
none of the Properties contains, or has contained, any
underground improvements, including, but not limited to,
treatment or storage tanks, sumps, water, gas or oil xxxxx, or
associated piping.
(d) The Company and its Subsidiaries do not have any
contingent liability in connection with a Release (as defined
below) or threatened Release of any Hazardous Substance at any
location.
(e) To the knowledge of the Company and its
Subsidiaries, there are no present or past Environmental
Conditions (as defined below) in any way related to the Company,
any of its Subsidiaries, or any of their respective predecessors
that have, or may have, individually or in the aggregate, a
material adverse effect with respect to any Property or the
business or condition of the Company and its Subsidiaries, taken
as a whole.
(f) As used herein, "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree,
judgment, opinion, common law or binding equitable principle or
agency requirement relating to pollution, contamination, wastes,
hazardous material or the protection of the environment, human
health or safety.
(g) As used herein, "Hazardous Substance" means any
substance that is listed, classified under or regulated by any
governmental authority pursuant to any Environmental Law,
including, without limitation, any petroleum product or
by-product, asbestos-containing material, lead-containing paint
or plumbing, polychlorinated biphenyls, radioactive material or
radon.
(h) As used herein, "Release" means any release,
spill, emission, leaking, pumping, injection, deposit,
discharge, dispersal, leaching or migrating into the indoor or
outdoor environment of any Hazardous Substance.
(i) As used herein, "Environmental Condition" means
the Release or threatened Release of any Hazardous Substance
upon, under, in or about any of the Properties, or any other
circumstance involving any Property or the Company, any of its
Subsidiaries, or any of their respective predecessors that could
be expected to result in any claim, liability, costs or losses,
or any restriction on the ownership, use or transfer of any
Property pursuant to any Environmental Law.
5.17 Insurance
. The Company maintains or is covered by valid policies of
workers' compensation insurance, product liability insurance,
and of insurance with respect to its properties and business.
The Company currently maintains in full force insurance covering
the respective risks of the Company and its Subsidiaries of such
types and in such amounts, with such deductibles and with such
insurance companies as are customary for other companies engaged
in similar lines of business. The Company currently maintains
key man life insurance for each of Xxxx Xxxxxx and Xxxxx
Xxxxxxxx in the amount of $5,000,000, which is and will remain
in full force and effect through December 31, 2005. Schedule
5.17 lists all insurance policies, the name of the insurer, a
description of the policy, the amount of coverage, the amount of
any deductible, the amount of the premium and the expiration
date of the policy.
5.18 Transactions with Affiliates
. Except as set forth on Schedule 5.18, neither the Company nor
any of its Subsidiaries is directly or indirectly a party to or
otherwise involved in any transaction including, without
limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service, with any Affiliate.
The Company has delivered to the Purchasers copies of all
agreements and documents related to all transactions listed on
Schedule 5.18.
5.19 Employees; Labor Matters
. Except as set forth in Schedule 5.19, the Company is not a
party to any labor agreement with respect to its employees with
any labor organization, group or association. Except as set
forth on Schedule 5.19, the Company is not delinquent in
payments to any of the employees of the Company for any wages,
salaries, commissions, bonuses or other direct compensation for
any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. The Company is in
material compliance with all applicable laws respecting
employment practices, terms and conditions of employment and
wages and hours and is not engaged in any unfair labor practice.
Except as set forth in Schedule 5.19, there is no unfair labor
practice charge or complaint against the Company pending before
any Governmental Authority arising out of the Company's
activities, and the Company has no knowledge of any facts or
information that would give rise thereto. There is no labor
strike or labor disturbance pending or threatened against the
Company nor, except as set forth in Schedule 5.19, is any
grievance currently being asserted, and the Company has not
experienced a work stoppage or other labor difficulty. The
Company has not received any information indicating that any of
its employment policies or practices is currently being audited
or investigated by any Governmental Authority. The Company is,
and at all times has been, in compliance with the requirements
of the Immigration Reform Control Act of 1986.
5.20 Customers, Suppliers and Distributors
. Schedule 5.20 sets forth a listing of each customer that
accounted for more than $100,000 in revenue for the Company for
the year ended December 31, 2000 (collectively, the
"Customers"). The relationships of the Company with its
Customers, suppliers, distributors and manufacturer's
representatives are good commercial working relationships. To
the knowledge of the Company, no Customer, supplier, distributor
or manufacturer's representative of the Company intends to
terminate or materially reduce its business relationship with
the Company for any reason.
5.21 Investor Rights Agreements
. Schedule 5.21 lists all agreements with any Person in which
the Company has granted registration rights with respect to its
capital stock. The Company will not, on or after the date of
this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to
Purchasers in the Investor Rights Agreement or otherwise
conflicts with the provisions thereof.
5.22 Agreements with Stockholders
. Schedule 5.22 lists all agreements, arrangements or
understandings between the Company and one or more stockholders
of the Company relating to the transfer of any class of
securities of the Company (including, without limitation,
tag-along rights, drag-along rights, rights of first offer or
any similar rights or obligations) or voting of any class of
securities of the Company. The Company has delivered to
Purchaser copies of all agreements and documents relating
thereto.
5.23 Company Qualifies as a "Smaller Enterprise"
. The Company qualifies as a "smaller enterprise" under the
Code of Federal Regulations, such that a small business
investment company is permitted to make an investment in the
Company.
5.24 Commission Documents
. Except as set forth in Schedule 5.24, the Company has filed
all registration statements, proxy statements, information
statements, reports and other documents required to be filed by
it under the Securities Act or the Exchange Act, and all
amendments thereto (collectively, the "Commission Documents")
Each Commission Document when filed with the Commission was true
and accurate in all material respects and in compliance in all
material respects with the requirements of its respective report
form and the rules and regulations of the Commission. No
Commission Document contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements contained
therein, in light of the circumstances under which made, not
misleading.
5.25 Disclosure
. Neither this Agreement nor any other document, certificate or
statement prepared by or on behalf of the Company by its
authorized representatives or agents and furnished to or made
available to the Purchasers in writing by or on behalf of the
Company by its authorized representatives or agents in
connection herewith, including without limitation, the PPM,
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
in order to make the statements contained herein and therein, in
the light of the circumstances under which made, not misleading.
ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
Purchaser represents and warrants as follows:
6.1 Investment Purpose
. Purchaser is purchasing the Securities for Purchaser's own
account for investment only and not with a view toward or in
connection with the public sale or distribution thereof.
Purchaser will not resell the Securities or the capital stock
issued upon conversion of any such Securities (the "Conversion
Stock") except pursuant to sales that are exempt from the
registration requirements of the Securities Act and all
applicable state securities laws, and/or sales registered under
the Securities Act and all applicable state securities laws.
Purchaser understands that Purchaser may bear the economic risk
of this investment indefinitely, unless the Securities and/or
the Conversion Stock are registered pursuant to the Securities
Act and any applicable state securities laws or an exemption
from such registration is available, and that the Company has no
present intention of registering the Securities or the
Conversion Stock other than as contemplated by the Investor
Rights Agreement.
6.2 Accredited Investor Status
. Purchaser is an "accredited investor" as that term is defined
in Rule 501(a) of Regulation D promulgated under the Securities
Act. By reason of its business and financial experience,
sophistication and knowledge, Purchaser is capable of evaluating
the risks and merits of the investment made pursuant to this
Agreement.
6.3 Authorization; Enforcement
. This Agreement has been duly and validly authorized, executed
and delivered on behalf of Purchaser and is the legally valid
and binding agreement of Purchaser enforceable in accordance
with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable
principles relating to enforceability. As of the Closing Date,
each Ancillary Agreement to which Purchaser will become a party
pursuant to the Joinder Agreement will be the legally valid and
binding agreement of Purchaser enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
6.4 Broker's or Finder's Commissions
. No broker's or finder's or placement fee or commission will
be payable with respect to the sale or the issuance of the
Securities as a result of any act or omission by Purchaser, and
Purchaser will hold the Company harmless from any claim, demand
or liability for broker's or finder's or placement fees or
commissions alleged to have been incurred in connection with the
sale or the issuance of the Securities, due to any actions of
Purchaser.
ARTICLE VII
TERMINATION
7.1 Termination
. This Agreement may be terminated at any time with respect to
the applicable parties prior to the Closing:
(a) by mutual written agreement of the Company and
the Purchaser;
(b) by Purchaser, on the one hand, or the Company, on
the other hand, if a court of competent jurisdiction or a
governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling
or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement;
7.2 Effect of Termination
. In the event of the termination of this Agreement pursuant to
Section 7.1, except as set forth below, this Agreement shall
forthwith become void with respect to the applicable parties and
there shall be no liability on the part of any such party hereto
(or any stockholder, director, officer, partner, employee,
agent, consultant or representative of such party); provided,
however, that nothing contained in this Agreement shall relieve
any party from liability for any breach of this Agreement and
provided further that Article VIII shall survive termination of
this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Company
. In addition to all other sums due hereunder or provided for
in this Agreement, the Company agrees to indemnify and hold
harmless Purchaser and its Affiliates and their respective
officers, directors, agents, employees and partners (each, an
"indemnified party") to the fullest extent permitted by law from
and against any and all losses, claims, damages, expenses
(including reasonable fees, disbursements and other charges of
counsel), damages or other liabilities ("Losses") resulting from
(i) any breach of any representation or warranty, covenant or
agreement of the Company in this Agreement, or (ii) any legal,
administrative or other actions (including actions brought by
any equityholders of the Company or derivative actions brought
by any Person claiming through the Company or in the Company's
name), proceedings or investigations (whether formal or
informal), or written threats thereof, based upon, relating to
or arising out of any of the Transaction Documents or the
Securities, the transactions contemplated hereby or thereby, or
any indemnified person's role therein; provided, however, that
the Company shall not be liable under this Section 8.1: (a) for
any amount paid in settlement of claims without the Company's
consent (which consent shall not be unreasonably withheld or
delayed), or (b) to the extent that it is finally judicially
determined that such Losses resulted primarily from the willful
misconduct, bad faith or gross negligence of such indemnified
party or a breach of Purchaser's representations in Article VI;
provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, the Company
shall make the maximum contribution to the payment and
satisfaction of such indemnified liability that shall be
permissible under applicable laws. In connection with the
obligation of the Company to indemnify for expenses as set forth
above, the Company further agrees to reimburse each indemnified
party for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred
by such indemnified party; provided, however, that in no event
shall the Company be required to pay fees and expenses under
this Article VIII for more than one firm of attorneys in
addition to the firm of attorneys representing the Company in
any jurisdiction in any one legal action or group of related
legal actions; provided, further, that if an indemnified party
is reimbursed hereunder for any expenses, such reimbursement of
expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted
primarily from the willful misconduct, bad faith or gross
negligence of such indemnified party.
8.2 Notification
. Each indemnified party under this Article VIII shall,
promptly (and in any event within 20 days), after the receipt of
notice of the commencement of any action or other proceeding
against such indemnified party in respect of which indemnity may
be sought from the Company under this Article VIII, notify the
Company in writing of the commencement thereof. The failure of
any indemnified party so to notify the Company of any such
action shall not relieve the Company from any liability that it
may have to such indemnified party pursuant to this Article
VIII, except to the extent that such failure causes material
prejudice to the Company. In case any such action or other
proceeding shall be brought against any indemnified party and it
shall notify the Company of the commencement thereof, the
Company shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party;
provided, however, that any indemnified party may, at its own
expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in
which both the Company and an indemnified party is, or is
reasonably likely to become, a party, such indemnified party
shall have the right to employ separate counsel at the Company's
expense and to control its own defense of such action or
proceeding if, in the reasonable written opinion of counsel to
such indemnified party (obtained at the expense of the Company),
(a) there are or may be legal defenses available to such
indemnified party or to other indemnified parties that are
different from or additional to those available to the Company
or (b) any conflict or potential conflict exists between the
Company and such indemnified party that would make such separate
representation advisable; provided, however, that in no event
shall the Company be required to pay fees and expenses under
this Article VIII for more than one firm of attorneys in
addition to the firm of attorneys representing the Company in
any jurisdiction in any one legal action or group of related
legal actions. The Company shall not, without the consent of
the indemnified party (which consent shall not be unreasonably
withheld), consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to
such claim or litigation or that requires action other than the
payment of money by the Company. The rights accorded to
indemnified parties hereunder shall be in addition to any rights
that any indemnified party may have at common law, by separate
agreement or otherwise.
8.3 Investor Rights Agreement
. Notwithstanding anything to the contrary in this Article
VIII, the indemnification and contribution provisions of the
Investor Rights Agreement shall govern any claim made with
respect to registration statements filed pursuant thereto or
sales made thereunder.
8.4 Survival of Provisions of Article VIII
. The obligations of the Company under this Article VIII shall
survive indefinitely.
ARTICLE IX
MISCELLANEOUS
9.1 Dividend Payments
. The Company agrees that, so long as Purchaser shall hold any
Series A Preferred Stock, the Company will make any cash
payments with respect thereto pursuant to the terms of the
Certificate of Designations by wire transfer of immediately
available funds for credit to the Purchaser's account in the
United States of America as Purchaser may designate in writing,
notwithstanding any contrary provision herein or in any share of
Series A Preferred Stock with respect to the place of payment.
The Company agrees to afford the benefits of this Section 9.1 to
any permitted transferee of any Series A Preferred Stock
purchased by Purchaser hereunder.
9.2 Expenses
. The Company agrees to pay, and save Purchaser harmless
against liability for the payment of, all reasonable
out-of-pocket expenses arising in connection with (a) the
negotiation and execution of the Transaction Documents and the
Certificate of Designations and the issuance of the Securities,
including all taxes (including any intangible personal property
tax, together in each case with interest and penalties, if any,
and also including any filing fees payable to any governmental
authority, and any income tax payable by any Purchaser in
respect of any reimbursement for any such tax or fee) that may
be payable in respect of the execution and delivery of the
Transaction Documents or the issuance, delivery or acquisition
(but not the holding, ownership or transfer) of any of the
Securities issued pursuant to this Agreement or any Common Stock
issuable upon conversion of any Series A Preferred Stock or upon
exercise of the Common Stock Warrants or the Placement Agent
Warrants, and (b) the cost and expenses, including reasonable
attorney's fees, incurred by Purchaser in enforcing any of its
rights hereunder, including, without limitation, costs and
expenses incurred in any bankruptcy case. The obligations of
the Company under this Section 9.2 shall survive the transfer of
any Securities by the Purchaser.
9.3 Restrictive Legends
. The Securities shall bear a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED,
QUALIFIED, APPROVED OR DISAPPROVED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS AND NEITHER THE
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION NOR ANY OTHER FEDERAL OR STATE
REGULATORY AUTHORITY HAS PASSED ON OR
ENDORSED THE MERITS OF THESE SECURITIES.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE
[CONVERSION] [EXERCISE] OF THE SECURITIES
REPRESENTED HEREBY ARE SUBJECT TO AN
INVESTOR RIGHTS AGREEMENT, A STOCKHOLDERS
AGREEMENT AND A TRADING AGREEMENT, AS EACH
OF THE SAME MAY BE AMENDED FROM TIME TO
TIME, COPIES OF WHICH ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICES OF THE
COMPANY.
9.4 Consent to Amendments
. This Agreement may be amended, and the Company may take any
action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the
written consent of Purchaser to such amendment, action or
omission to act. Any consideration given to any holder to
obtain his, her or its consent under this Agreement or any
Ancillary Agreement or with respect to the Series A Preferred
Stock shall be given pro rata to all holders of shares of Series
A Preferred Stock whether or not they give consent. Each holder
of any shares of Series A Preferred Stock at the time or
thereafter outstanding (or of shares of Common Stock entitled to
any rights hereunder) shall be bound by any consent authorized
by this Section 9.4, whether or not such shares of Series A
Preferred Stock shall have been marked to indicate such consent,
but any shares of Series A Preferred Stock issued thereafter may
bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any shares of
Series A Preferred Stock nor any delay in exercising any rights
hereunder or under any shares of Series A Preferred Stock shall
operate as a waiver of any rights of any holder of such shares
of Series A Preferred Stock. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as
it may from time to time be amended or supplemented.
9.5 Notices to Subsequent Holder
. Except as otherwise provided herein, if any shares of Series
A Preferred Stock shall have been transferred to another holder
and that holder shall have designated in writing the address to
which communications with respect to such shares of Series A
Preferred Stock shall be mailed, all notices, certificates,
requests, statements and other documents required to be
delivered to the Purchaser by any provision hereof shall also be
delivered to each such holder.
9.6 Survival of Representations, Warranties and
Indemnities
. All representations, warranties, covenants and agreements
contained herein or made in writing by the Company in connection
herewith shall survive the execution, delivery and performance
of this Agreement and the Ancillary Agreements, regardless of
any investigation made by the Purchaser or on the Purchaser's
behalf.
9.7 Successors and Assigns
. Except as otherwise provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether
so expressed or not.
9.8 Notices
. All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been
duly given when (a) delivered by hand, (b) sent by telecopier
(with receipt confirmed), provided that a copy is mailed by
certified or registered mail, return receipt requested or (c)
when received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested),
in each case to the appropriate addresses and telecopier numbers
set forth below (or to such other addresses and telecopier
numbers as a party may designate as to itself by notice to the
other parties):
(i) If to the Company:
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, XX 00000
Fax No. 000-000-0000
Attention: General Counsel.
(ii) If to Purchaser: at the address set forth
on Schedule I.
9.9 Accounting Terms
. Unless otherwise set forth herein, all accounting terms and
provisions in this Agreement or any Ancillary Agreement shall be
construed to be as determined in accordance with generally
accepted accounting principles in the United States then in
effect.
9.10 Governing Law
. This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the
laws of the State of New York. This Agreement may not be
changed orally, but only by an agreement in writing signed by
the party against whom enforcement is sought.
9.11 Headings; Table of Contents
. The descriptive headings of the several paragraphs of this
Agreement and the table of contents are inserted for convenience
only and do not constitute a part of this Agreement.
9.12 Counterparts
. This Agreement may be executed in two or more counterparts,
all of which shall be deemed but one and the same instrument and
each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or
account for more than one such counterpart. It shall not be
necessary in making proof of this Agreement to produce or
account for more than one such counterpart for each of the
parties hereto. Delivery by facsimile by any of the parties
hereto of an executed counterpart of this Agreement shall be
effective as an original executed counterpart hereof and shall
be deemed a representation that an original executed counterpart
hereof will be delivered.
9.13 Non-Business Days
. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as
provided in this Agreement, shall not be a Business Day, such
payment may be made or act performed or right exercised on the
next succeeding Business Day, with the same force and effect as
if done on the nominal date provided in this Agreement.
9.14 Further Assurances
. The Company shall from time to time and at all times
hereafter make, do, execute or cause or procure to be made, done
and executed such further acts, deeds, conveyances, consents and
assurances, without further consideration, that may reasonably
be required to effect the transactions contemplated by this
Agreement or any Ancillary Agreement.
9.15 Integration
. This Agreement and the Ancillary Agreements, together with
the exhibits hereto and thereto, embody the entire agreement by
and among the parties hereto with respect to the matters set
forth herein and supersede any and all previous agreements,
whether oral or written, on the same subject matter.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
COMPANY PURCHASER
ELECTRIC CITY CORP., LEAF MOUNTAIN COMPANY,
LLC,
a Delaware corporation an Illinois limited
liability company
By: /s/ Xxxx X. Xxxxxx By: ___/s/ Xxxx X.
Jiganti___________
Name: Xxxx Xxxxxx Name: ______John J.
Jiganti___________
Title: Chief Executive Officer Title:
_______Manager_______________
SCHEDULE I
Purchaser
No. of
Shares
of
Series
A
Preferr
ed
Stock
No. of
Series
A
Preferr
ed
Stock
Warrant
s
No. of
Shares
of
Common
Stock
No. of
Common
Stock
Warrant
s
Total
Aggregate
Purchase
Price
Leaf Mountain
Company, LLC
000 Xxxxx
XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX
00000
Attn: Xxxx X.
Xxxxxxx
300,000
75,000
45,122
421,875
$3,000,000
ARTICLE I DEFINITIONS 1
ARTICLE II ISSUE, PURCHASE AND SALE OF THE SECURITIES 5
2.1 Authorization of Issuance of Series A Preferred Stock 5
2.2 Purchase and Sale of Securities 5
ARTICLE III CONDITIONS OF CLOSING 6
3.1 Purchaser Conditions to Closing 6
3.2 Company Conditions to Closing 9
ARTICLE IV CERTAIN COVENANTS 9
4.1 Conduct of the Business 9
4.2 Financial Statements and Other Reports 9
4.3 Corporate Existence; Licenses and Permits; Maintenance of
Properties 10
4.4 Securities Exchange 10
4.4 Insurance 10
ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES 10
5.1 Organization; Standing and Qualification of Company and its
Subsidiaries; Corporate Authority 11
5.2 Capital Stock 12
5.3 No Defaults 12
5.4 Burdensome and Conflicting Agreements and Charter
Provisions 12
5.5 Title to Assets, Etc. 13
5.6 Leases 13
5.7 Contracts 13
5.8 Financial Statements 14
5.9 Actions Pending 14
5.10 Offering of Securities 15
5.11 Broker's or Finder's Commissions 15
5.12 Application of Proceeds 15
5.13 Intellectual Property 15
5.14 Taxes 16
5.15 ERISA 16
5.16 Environmental 18
5.17 Insurance 19
5.18 Transactions with Affiliates 19
5.19 Employees; Labor Matters 20
5.20 Customers, Suppliers and Distributors 20
5.21 Investor Rights Agreements 20
5.22 Agreements with Stockholders 20
5.23 Company Qualifies as a "Smaller Enterprise" 20
5.24 Commission Documents 20
5.25 Disclosure 20
ARTICLE VI REPRESENTATIONS OF THE PURCHASERS 21
6.1 Investment Purpose 21
6.2 Accredited Investor Status 21
6.3 Authorization; Enforcement 21
6.4 Broker's or Finder's Commissions 22
ARTICLE VII TERMINATION 22
7.1 Termination 22
7.2 Effect of Termination 22
ARTICLE VIII INDEMNIFICATION 22
8.1 Indemnification by Company 22
8.2 Notification 23
8.3 Investor Rights Agreement 24
8.4 Survival of Provisions of Article VIII 24
ARTICLE IX MISCELLANEOUS 24
9.1 Dividend Payments 24
9.2 Expenses 24
9.3 Restrictive Legends 24
9.4 Consent to Amendments 25
9.5 Notices to Subsequent Holder 25
9.6 Survival of Representations, Warranties and Indemnities 25
9.7 Successors and Assigns 25
9.8 Notices 26
9.9 Accounting Terms 26
9.10 Governing Law 26
9.11 Headings; Table of Contents 26
9.12 Counterparts 26
9.13 Non-Business Days 26
9.14 Further Assurances 26
9.15 Integration 27
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