EXHIBIT 10.45
SECURITIES ISSUANCE AGREEMENT
THIS SECURITIES ISSUANCE AGREEMENT (this "Agreement") is entered into
as of September 4, 1997, between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at 00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, and BANYAN SYSTEMS
INCORPORATED, a Massachusetts corporation (the "Company"), with its chief
executive office located at 000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000.
Recitals
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A. Concurrently herewith, the Company and Foothill are entering into
that certain Loan and Security Agreement, dated as of even date herewith (the
"Loan Agreement").
B. The execution, delivery and performance of this Agreement by the
Company is a condition precedent to the initial advances under the Loan
Agreement.
C. The parties wish to enter into this Agreement by which, among
other things, the Company will issue to Foothill warrants to purchase shares of
the common stock, $.01 par value per share, of the Company (together with any
stock into or for which such common stock may be converted or exchanged, the
"Common Stock").
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Initially capitalized terms used herein and not
otherwise defined herein have the meanings ascribed thereto in the Loan
Agreement.
2. ISSUANCE OF WARRANTS. On each of (a) the date hereof and (b)
each anniversary of the date hereof prior to the repayment in full of the
Obligations and the termination of the obligation of Foothill to make Advances
(but in no event following the earlier to occur of (i) the Renewal Date (unless
the term of the Loan Agreement is renewed beyond the Renewal Date, in which case
the term "Renewal Date" as used in this clause (i) shall refer instead to the
end of the ultimate one year renewal period referred to in Section 3.4 of the
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Loan Agreement), or (ii) the Business Day immediately following the date, if
any, that Borrower terminates the Loan Agreement pursuant to Section 3.6 of the
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Loan Agreement), the Company shall issue to Foothill a warrant to purchase
Seventy Five Thousand (75,000) shares of Common Stock (as adjusted from time to
time pursuant to Section 3 hereof, the "Warrant Shares" or "Shares") at an
exercise price of (y) $2.28125 per share, in the case of the Warrants issued on
the date hereof, and, (z) in the case of Warrants issued on subsequent
anniversary dates, at a per share exercise price equal to the closing price of a
share of the Common Stock of the Company on the last trading day prior to the
date of issuance of such warrant reported on the Exchange (as defined in Section
3(g) hereof) on which the Common Stock of the Company is then traded, or, if
such Common Stock is not then traded on such an Exchange, the fair market value
(as
defined in Section 3(g) hereof) of a share of the Common Stock of the
Company as of the date of issuance of such Warrants, determined in accordance
with Section 3(g) hereof, treating such date of issuance as the "Determination
Date" for purposes of such determination (as such exercise price, in each
instance governed by clause (y) or (z) above, may be adjusted from time to time
pursuant to Section 3 hereof, the "Warrant Price"), and otherwise in the form of
Exhibit W-1 attached hereto and made a part hereof (each, a "Warrant" and
collectively, the "Warrants"). Any provisions to the contrary in this Section 2
notwithstanding, the Company is under no obligation to issue Warrants
exerciseable for more than an aggregate of 225,000 Shares, as such number may be
adjusted from time to time pursuant to Section 3 hereof, pursuant to Warrants to
be issued on the date hereof and the first two (2) anniversaries of such date,
unless the term of the Loan Agreement is renewed beyond the Renewal Date.
3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities that are the subject of any Warrant to be issued hereunder
and the Warrant Price with respect to each such Warrant shall be subject to
adjustment from time to time, up to and including the time of issuance of such
Warrant (after which time Section 4 of such Warrant, among other provisions,
shall govern such adjustments), upon the occurrence of certain events, as
follows:
a. Reclassification or Merger. In case of any
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reclassification, change or conversion of the Common Stock or any other
securities of the class issuable upon exercise of such Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of such Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to Foothill a new securities issuance agreement (in form and
substance reasonably satisfactory to Foothill), so that Foothill shall have the
right to receive, in lieu of the Warrants to be issued hereunder, warrants
providing for a total purchase price not to exceed that which otherwise would
have been payable upon the exercise of such Warrants, and in lieu of the shares
of Common Stock theretofore issuable upon exercise of such Warrants, the kind
and amount of shares of stock, other securities, money and property receivable
upon such reclassification, change or merger by a holder of the number of shares
of Common Stock which otherwise would have been purchasable under such Warrants.
Such new securities issuance agreement shall provide for adjustments and other
rights that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3 and other rights provided for in this
Agreement. The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes, mergers and transfers.
b. Subdivision or Combination of Shares. If the Company shall
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subdivide or combine its outstanding shares of Common Stock, the Warrant Price
shall be proportionately decreased in the case of a subdivision or increased in
the case of a combination, effective at the close of business on the date the
subdivision or combination becomes effective.
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c. Stock Dividends and Other Distributions. If the Company
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shall (i) pay a dividend with respect to Common Stock payable in Common Stock,
or (ii) make any other distribution with respect to Common Stock (except any
distribution specifically provided for in the foregoing subparagraphs (a) and
(b)) of Common Stock, then the Warrant Price shall be adjusted, from and after
the date of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
d. Special Distributions. In case the Company shall fix a
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record date for the making of a distribution to all holders of shares of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the surviving corporation) or evidences of
indebtedness or assets (other than dividends and distributions referred to in
subparagraphs (b) and (c) above and other than cash dividends) or of
subscription rights, options, warrants, or exchangeable or convertible
securities containing the right to subscribe for or purchase shares of any class
of equity securities of the Company, the Warrant Price to be in effect on and
after such record date shall be adjusted by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction (i) the numerator of
which shall be the fair market value per share of Common Stock on such record
date, less the fair value (as determined by the Board of Directors of the
Company in good faith as set forth in a duly adopted board resolution certified
by the Company's Clerk or Assistant Clerk) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights,
options, warrants, or exchangeable or convertible securities applicable to one
(1) share of the Common Stock outstanding as of such record date, and (ii) the
denominator of which shall be such fair market value per share of Common Stock.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Warrant Price shall
again be adjusted to be the Warrant Price which would then be in effect if such
record date had not been fixed, but such subsequent adjustment shall not affect
the number of Shares that are the subject of any Warrant issued prior to the
date such subsequent adjustment was made.
e. Other Issuances of Securities. In case the Company or any
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subsidiary shall issue shares of Common Stock, or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, rights, options,
warrants, or convertible or exchangeable securities described in subparagraphs
(f) or (g) of Section 8 hereof or issued in any of the transactions described in
subparagraphs (b), (c) or (d) above, (ii) shares issued upon the exercise of
such rights, options or warrants or upon conversion or exchange of such
convertible or exchangeable securities, (iii) the Warrants and any shares issued
upon exercise thereof, (iv) shares of Common Stock, or other securities
convertible or exercisable therefor, issued to employees, directors, consultants
or advisors to the Company (for serving in such capacities) under any plan or
agreement, provided that the annual aggregate of such shares or other securities
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issued at below fair market value does not exceed 500,000 shares of Common
Stock, on a fully converted and exercised basis (it being understood that the
limitation contained in this proviso does not apply to shares or other
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securities issued at or above fair market value), and (v) shares of Common
Stock, or other securities convertible into or exchangeable or exercisable
therefor, issued to employees, directors, consultants, or advisors to the
Company upon the exercise of any right, option, warrant, or conversion or
exchange feature of any security, to the extent that such right, option,
warrant, or convertible or exchangeable security was issued prior to September
4, 1997 to any such employee, director, consultant, or advisor (for serving in
any such capacity) under any plan or agreement that existed prior to September
4, 1997), at a price per share of Common Stock (determined in the case of such
rights, options, warrants, or convertible or exchangeable securities by dividing
(x) the total amount receivable by the Company in consideration of the sale and
issuance of such rights, options, warrants, or convertible or exchangeable
securities, plus the total minimum consideration payable to the Company upon
exercise, conversion, or exchange thereof by (y) the total maximum number of
shares of Common Stock covered by such rights, options, warrants, or convertible
or exchangeable securities) lower than the fair market value per share of Common
Stock on the date the Company fixes the offering price of such shares, rights,
options, warrants, or convertible or exchangeable securities, then the Warrant
Price shall be adjusted so that it shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a fraction
(i) the numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding immediately prior to such sale and issuance plus (B)
the number of shares of Common Stock which the aggregate consideration received
(determined as provided below) for such sale or issuance would purchase at such
fair market value per share, and (ii) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately after such sale
and issuance. Such adjustment shall be made successively whenever such an
issuance is made. For the purposes of such adjustment, the maximum number of
shares of Common Stock which the holder of any such rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
sale and issuance and the consideration received by the Company therefor shall
be deemed to be the aggregate consideration received by the Company for such
rights, options, warrants, or convertible or exchangeable securities, plus the
aggregate minimum consideration or premium stated in such rights, options,
warrants, or convertible or exchangeable securities to be paid for the shares of
Common Stock covered thereby (without regard to any provision contained therein
for a subsequent adjustment of such consideration or premium). In case the
Company shall sell and issue shares of Common Stock, or rights, options,
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock for a consideration consisting,
in whole or in part, of property other than cash or its equivalent, then in
determining the price per share of Common Stock and the consideration received
by the Company for purposes of the first sentence of this subparagraph (e), the
Board of Directors of the Company shall determine, in good faith, the fair value
of said property, and such determination shall be described in a duly adopted
board resolution certified by the Company's Clerk or Assistant Clerk. In case
the Company shall sell and issue rights, options, warrants, or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock together with one or more other securities as a part of a unit
at a price per unit, then in determining the price per share of Common Stock and
the consideration received by the Company for purposes of the first sentence of
this subparagraph (e), the Board of Directors of the Company shall determine, in
good faith, which determination shall be described in a duly adopted board
resolution certified by the Company's Clerk or Assistant Clerk, the fair value
of
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the rights, options, warrants, or convertible or exchangeable securities then
being sold as part of such unit. Such adjustment shall be made successively
whenever such an issuance occurs, and in the event that such rights, options,
warrants, or convertible or exchangeable securities expire or cease to be
convertible or exchangeable before they are exercised, converted, or exchanged
(as the case may be), then the Warrant Price shall again be adjusted to the
Warrant Price that would then be in effect if such sale and issuance had not
occurred, but such subsequent adjustment shall not affect the number of Shares
that are the subject of any Warrant issued prior to the date such subsequent
adjustment is made.
f. Adjustment of Number of Shares. Upon each adjustment in
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the Warrant Price pursuant to this Section 3, the number of Shares of Common
Stock that are the subject of any Warrant to be issued hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying the
number of Shares purchasable immediately prior to such adjustment in the Warrant
Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter; provided that any adjustments pursuant to
Section 3(a) shall be made in accordance with the terms of such Section rather
than the terms of this Section 3(f). Notwithstanding the terms of Section 2(z)
hereof, the number of Shares for which Warrants issued hereby are exercisable
shall be adjusted in accordance with this Section 3 as if a Warrant Price
determined pursuant to Section 2(y) hereof and adjusted in accordance with this
Section 3 were the Warrant Price with respect to a given Warrant,
notwithstanding the fact that the Warrant Price is actually determined in
accordance with Section 2(z).
g. Determination of Fair Market Value. For purposes of this
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Section 3, "fair market value" of a share of Common Stock as of a particular
date (the "Determination Date") shall mean (i) if shares of Common Stock are
traded or a national securities exchange (an "Exchange"), the average of the
closing prices of a share of the Common Stock of the Company on the last twenty
(20) trading days prior to the Determination Date reported on such Exchange as
reported in The Wall Street Journal; or (ii) if shares of Common Stock are not
traded on an Exchange but trade in the over-the-counter market and such shares
are quoted on the Nasdaq National Market System or the Nasdaq Small-Cap Market
(either, "NASDAQ"), (A) the average of the last sale prices reported on NASDAQ
or (B) if such shares are an issue for which last sale prices are not reported
on NASDAQ, the average of the closing bid and ask prices, in each case on the
last twenty (20) trading days (or if the relevant price or quotation did not
exist on any of such days, the relevant price or quotation on the next preceding
business day on which there was such a price or quotation) prior to the
Determination Date as reported in The Wall Street Journal; or (iii) if no price
can be determined on the basis of the above methods of valuation, then the
judgment of valuation shall be determined in good faith by the Board of
Directors of the Company, which determination shall be described in a duly
adopted board resolution certified by the Company's Clerk or Assistant Clerk;
provided, however, that solely for the purpose of determining whether a below
"fair market value" issuance has occurred that could result in adjustments to
the Warrant Price pursuant to Section 3(e) (and expressly not with respect to
calculating the adjustments as could result therefrom), such fair market value
shall be the lesser of (x) the fair market value determined in accordance with
the foregoing paragraph, and (y) the fair market value as would be determined in
accordance with the foregoing paragraph if a
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standard of one (1) trading day rather than the average of twenty (20) trading
days were the basis for the calculations therein.
4. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number
of Shares that are the subject of any Warrant to be issued hereunder shall be
adjusted pursuant to Section 3 hereof, the Company shall make a certificate
signed by its chief financial officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Warrant Price and the number of
Shares that are the subject of any Warrant to be issued hereunder after giving
effect to such adjustment, which shall be mailed (without regard to Section 10
hereof, by first class mail, postage prepaid) to Foothill.
5. REGISTRATION RIGHTS.
5.1.a. The Company covenants and agrees that, for a period
ending March 4, 2008, after receipt of a written request (a "Demand Registration
Request") from the holders of the Warrants and/or holders of Shares (the
Warrants and the Shares are referred to herein, collectively, as the
"Securities") (hereinafter, the "Securityholders") constituting fifty-one
percent (51%) or more of the Securities outstanding on such date and then
eligible for inclusion in a registration pursuant to this Section 5.1, stating
that the Initiating Securityholders (as defined below) desire and intend to
transfer all or a portion of the Securities held by them under such
circumstances, the Company shall give notice (the "Registration Notice") to all
of the Securityholders within thirty (30) days of the Company's receipt of such
registration request, and the Company shall cause to be included in such
registration all Securities requested to be included therein by any such
Securityholder within fifteen (15) days after such Registration Notice is
effective (subject to the provisions of the final sentence of this Section
5.1(a)). After such 15-day period, the Company shall file as promptly as
reasonably practicable a registration statement and use its reasonable best
efforts to cause such registration statement to become effective under the
Securities Act of 1933, as amended (the "Act") and remain effective for one
hundred and twenty (120) days (or ninety (90) days in the case of a filing on
Form S-1) or such shorter period as may be required if all such Securities
covered by such registration statement are sold prior to the expiration of such
120-day (or 90-day) period; provided that, except to the extent that any
Securities requested to be included in the initial registration requested under
this Section 5.1(a) are not so included as the result of the provisions of the
final sentence of this Section 5.1(a), the Company shall not be obligated to
effect any such registration pursuant to this Section 5.1 after the Company has
effected such initial registration; provided further that the Company shall not
be obligated to effect any such registration pursuant to this Section 5.1 after
the Company has effected two (2) such registrations pursuant to this Section
5.1. Each Securityholder making a demand for registration under this Section
5.1 is referred to herein as an "Initiating Securityholder." For purposes of
this Section 5, a registration shall not be deemed to have been effected unless
(i) a registration statement with regard thereto has been declared effective and
remained effective for a period of one hundred and twenty (120) days (or ninety
(90) days in the case of a filing on Form S-1) (or such shorter period as is
permitted in the second sentence of this Section 5.1) or (ii) the registration
is withdrawn at the request of the Securityholders. The foregoing
notwithstanding, in the event of an underwritten offering pursuant to this
Section 5.1, if the managing underwriter of such offering shall advise the
Securityholders
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in writing that, in its opinion, the distribution of a specified portion of the
securities requested to be included in the registration would materially
adversely affect the distribution of such securities by increasing the aggregate
amount of the offering in excess of the maximum amount of securities which such
managing underwriter believes can reasonably be sold in the contemplated
distribution, then the securities to be included in the registration shall be
included in the following order: (i) first, all of the Securities requested to
be included therein by the Initiating Securityholders, pro rata among such
Initiating Securityholders according to the number of Securities requested to be
included by each such Initiating Securityholder requesting inclusion therein,
(ii) second, the Securities requested to be included therein by the other
Securityholders, pro rata among such Securityholders according to the number of
Securities requested to be included by each such Securityholder requesting
inclusion therein, and (iii) third, such other securities requested to be
included therein by the Company and the holders of such other securities, pro
rata among the Company and the holders of such other securities according to the
number of securities requested to be included by the Company and each such
holder requesting inclusion therein.
b. For purposes of this Section 5.1, the Securityholders
who have requested registration of Shares to be acquired upon the exercise of
Warrants not theretofore exercised shall furnish the Company with an undertaking
that they or the underwriters or other persons to whom such Warrants will be
transferred have undertaken to exercise such Warrants and to sell, transfer or
otherwise dispose of the Shares received upon exercise of such Warrants in such
registration.
c. In the event of an underwritten offering pursuant to
this Section 5.1, the Company shall be entitled to select the underwriter;
provided, that the underwriter so selected shall be subject to approval by the
Securityholders requesting registration of the Securities being registered,
which approval shall not be withheld unreasonably.
d. Notwithstanding the terms of Section 5.1(a), the
Company shall not be required to register the Securities of Securityholders
pursuant to this Section 5.1, if the Company elects, at its sole option and to
the extent that it may legally do so, to purchase such Securities and completes
such purchase pursuant to the provisions of this Section 5.1(d). Within fifteen
(15) days after receipt of a Demand Registration Request, the Company may elect
to purchase all and not less than all of the Securities that would otherwise be
subject to registration pursuant to Section 5.1(a) by providing written notice
(the "Purchase Notice") to all of the Securityholders setting forth (i) its
election to purchase such Securities, (ii) the purchase price of the Securities,
and (iii) the closing date for such purchase. The Company shall thereafter
purchase all of the Securities requested to be included in such purchase by the
Securityholders within fifteen (15) days after the Purchase Notice becomes
effective. The purchase price for each Share shall be the fair market value (as
defined in Section 3 hereof) of a share of Common Stock on the date of the
Demand Registration Request; the purchase price for each Warrant shall be (x)
the fair market value (as defined in Section 3 hereof) of a share of Common
Stock on the date of the Demand Registration Request less (y) the Warrant Price
with respect thereto. The closing of the purchase of the Securities shall take
place on the date set forth in the Purchase Notice, which date shall be not less
than fifteen (15) not more than forty-five (45) days after the
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date of the Purchase Notice. At the closing, the Company shall deliver to each
Securityholder, in cash, the purchase price for the Securities surrendered by
such Securityholder.
e. Notwithstanding the terms of Section 5.1(a), the
Company shall not be required to register the Securities of the Securityholders
pursuant to this Section 5.1, if the Securityholders are then entitled to sell
the Securities under Rule 144(k) promulgated under the Act. Shares shall cease
to be "Securities" under Section 5 hereof upon a sale thereof (y) pursuant to
and in compliance with Rule 144 promulgated under the Act, or (z) pursuant to an
effective registration statement under the Act.
5.2.a. The Company covenants and agrees with the
Securityholders that, for a period ending March 4, 2008, in the event that the
Company proposes to file a registration statement under the Act with respect to
any of its equity securities (other than pursuant to registration statements on
Form S-4 or Form S-8 or any successor or similar forms), whether or not for its
own account, then the Company shall give written notice of such proposed filing
to all Securityholders promptly (and in any event at least twenty (20) days
before the anticipated filing date). Such notice shall offer to such
Securityholders, together with others who have similar rights, the opportunity
to include in such registration statement such number of Securities as they may
request. The Company shall cause the managing underwriter of a proposed
underwritten offering (unless the offering is an underwritten offering of a
class of the Company's equity securities other than Common Stock and the
managing underwriter has advised the Company in writing that, in its opinion,
the inclusion in such offering of Common Stock would materially adversely affect
the distribution of such offering) to permit the holders of Securities requested
to be included in the registration to include such Securities in the proposed
offering and the Company shall use its reasonable best efforts to include such
Securities in such proposed offering on the same terms and conditions as any
similar securities of the Company included therein. If the offering of which
the Company gives notice is a public offering involving an underwriter, the
right of a Securityholder to registration pursuant to this Section 5.2 shall be
conditioned upon such Securityholder's participation in such underwriting and
the inclusion of the Securities to be sold by such Securityholder in the
underwriting. All Securityholders proposing to distribute Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the representative of the underwriter or underwriters. The foregoing
notwithstanding, in the case of a firm commitment offering on underwriting terms
appropriate for such a transaction, other than a registration requested by
Securityholders pursuant to Section 5.1, if any such managing underwriter of
recognized standing shall advise the Company and the Securityholders in writing
that, in its opinion, the distribution of all or a specified portion of the
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution,
then the securities to be included in a registration which is a primary
underwritten offering on behalf of the Company shall be included in the
following order: (i) first, the securities the Company proposes to include
therein and (ii) second, such other securities (including the Securities)
requested to be included, pro rata among the holders (including the
Securityholders) of such other securities according to the number of securities
requested to be included by each such holder requesting inclusion therein.
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b. In the event that a holder or holders of the Company's
securities (other than a Securityholder or Securityholders) requests, pursuant
to rights granted to such holder or holders, that the Company file a
registration statement for the public offering of securities and the Company and
the other holders of the Company's securities (including the Securityholders)
who have rights to be included in such registration, request to be included in
such registration and the managing underwriter of such offering shall advise the
Company and the holders requesting inclusion in the offering that, in its
opinion, the distribution of a specified portion of the securities requested to
be included in the registration would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution
then, the securities to be included in the registration shall be included in the
following order: (i) first, all of the securities requested to be included
therein by the holder or holders making the initial request for the
registration, and (ii) second, such other securities requested to be included
therein by the Company and the holders of such other securities, pro rata among
the Company and the holders of such other securities according to the number of
securities requested to be included by the Company and each such holder
requesting inclusion therein. For purposes of this Section 5.2(b), the Company
and each Securityholder agrees to request for inclusion in the registration only
that number of securities that the Company or such Securityholder intends, in
good faith, to sell, if all such securities so requested by the Company or such
Securityholder were permitted to be included by the managing underwriter in such
registration and sold pursuant thereto.
c. The Company shall not be obligated to allow
Securityholders to participate in any such registration pursuant to this Section
5.2 if, at such time, the Company has effected a number of registrations, (i) in
which Securityholders have participated and elected to register their
Securities, (ii) which have been deemed effective under the terms of this
Agreement, and (iii) which were other than registrations required pursuant to
Section 5.1 hereof, equal to three (3) plus the number of Warrants issued
pursuant to Section 2 hereof.
5.3.a. In connection with the registration of Securities on
behalf of the holders thereof (such Securityholders being referred to herein as
"Sellers") in accordance with Section 5.1 or Section 5.2 above, the Company
agrees to:
(i) enter into a cross-indemnity agreement, in customary
form, with each underwriter, if any, and each Seller;
(ii) subject to the provisions of Section 5.1(a) and
Sections 5.2(a) and (b) above regarding reductions by the managing underwriter,
include in the registration statement filed with the Securities and Exchange
Commission ("SEC"), the Securities for which requests for registration have been
made; provided, however, that promptly after filing a registration statement or
prospectus or any amendments or supplements thereto, the Company shall furnish
to each Seller copies of all such documents filed including documents
incorporated by reference in the registration statement; and notify each Seller
of any stop order issued or threatened by the SEC and use its reasonable best
efforts to prevent the entry of such stop order or to remove it if entered;
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(iii) prepare and file with the SEC such amendments of and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective (A)
in the case of a registration pursuant to Section 5.1, for a period of one
hundred and twenty (120) days, or, in the case of a registration pursuant to
Section 5.2 or a registration filed on Form S-1, for a period of ninety (90)
days or (B) such shorter period as may be required if all such Securities
covered by such registration statement are sold prior to the expiration of such
periods, and comply with the provisions of the Act with respect to the
disposition of all Securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the Sellers set
forth in such registration statement;
(iv) furnish to each Seller and each underwriter, if any,
without charge, such number of copies of the registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Seller may reasonably
request in order to facilitate the disposition of the Securities proposed to be
sold by such Seller;
(v) use its reasonable best efforts to register or qualify
such Securities under such other securities or Blue Sky laws of such
jurisdictions as any Seller or any such underwriter reasonably requests and keep
such registrations or qualifications in effect for so long as such registration
statement remains in effect and do any and all acts and things, to the extent
commercially reasonable, which may be reasonably necessary or advisable to
enable such Seller to consummate the disposition in such jurisdictions of the
Securities owned by such Seller in accordance with applicable laws, rules and
regulation; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection (v), (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to general service
of process in any jurisdiction;
(vi) notify each Seller, at any time when a prospectus
relating to such Seller's Securities is required to be delivered under the Act,
of the occurrence of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein not
misleading, and as soon as practicable prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading;
(vii) cause all such Securities to be listed on any Exchange
on which similar securities issued by the Company are then listed;
(viii) provide a transfer agent, registrar and CUSIP number
for all such Securities not later than the effective date of such registration
statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions that
the Sellers or the
10
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Securities;
(x) make available for inspection by the Sellers and their
counsel, any underwriter participating in any disposition pursuant to such
registration statement, and any counsel retained by any such underwriter, all
pertinent financial and other information and corporate documents of the Company
(subject to the execution of a reasonable confidentiality agreement to the
extent reasonably necessary to protect the interests of the Company), and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such Seller, underwriter or counsel in connection
with such registration statement;
(xi) use its reasonable best efforts to obtain a "cold
comfort" letter from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by "cold comfort"
letters as the Sellers or any underwriter may reasonably request;
(xii) obtain an opinion of counsel to the Company, addressed
to the Sellers and any underwriter, in customary form and including such matters
as are customarily covered by such opinions in underwritten registered offerings
of equity securities as the Sellers or any underwriter may reasonably request,
such opinion to be reasonably satisfactory in form and substance to each Seller;
and
(xiii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, to the extent the failure to comply
with which would have a material adverse effect on the Seller's ability to sell
Securities under a registration statement, and make available to its
securityholders, by the date required by the Act or any regulations promulgated
under the Act, an earnings statement covering the period of at least twelve (12)
months subsequent to the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
b. Any other provisions of this Section 5 notwithstanding,
upon receipt by the Securityholders of a written notice signed by the chief
executive officer, chief operating officer or chief financial officer of the
Company to the effect set forth below, the Company shall not be obligated during
a reasonable period of time thereafter to effect any registrations pursuant to
this Section 5, and the Securityholders agree that they will immediately suspend
sales of shares under any effective registration statement for a reasonable
period of time, in either case not to exceed ninety (90) days, at any time at
which, in the Company's reasonable judgment, (i) there is a development
involving the Company or any of its affiliates which is material but which has
not yet been publicly disclosed, (ii) sales pursuant to the registration
statement would materially and adversely affect an underwritten public offering
for the account of the Company or any other material financing project or a
proposed or pending material merger or other material acquisition or material
business combination or material disposition of the Company's assets, to which
the Company or any of its affiliates is, or is expected to be, a party, or (iii)
such registration would require a special audit. In the event sales by the
Securityholders pursuant to an effective registration statement are suspended in
accordance with this Section 5.3(b), there shall be added to the period during
which the Company is obligated to keep a
11
registration effective the number of days for which sales were suspended
pursuant to this Section 5.3(b).
c. The Company may require each Seller to furnish to the
Company such information regarding the distribution of the Securities proposed
to be sold by such Seller as the Company may from time to time reasonably
request in writing.
d. Each Seller agrees that, upon receipt of any notice
from the Company of the occurrence of any event of the kind described in
subsection (vi) of Section 5.3(a) above, such Seller shall forthwith discontinue
disposition of Securities pursuant to the registration statement covering such
Securities until such Seller's receipt of copies of the supplemented or amended
prospectus contemplated by Section 5.3(a)(vi) above and, if so directed by the
Company, such Seller will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies in such Seller's possession, of the
prospectus covering such Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 5.3(a)(iii) above shall be extended by the number of days
during the period from and including the date of giving of such notice to and
including the date when each Seller shall have received the copies of the
supplemented or amended prospectus contemplated by Section 5.3(a)(vi) above.
e. The Company shall not file or permit the filing of any
registration or comparable statement which refers to any Seller by name or
otherwise as the Seller of any securities of the Company unless such reference
to such Seller is specifically required by the Act or any similar federal
statute or Blue Sky law then in force.
5.4 All expenses incident to the Company's performance of
or compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses relating to filings with any Exchange, fees
and expenses of compliance with securities or Blue Sky laws in jurisdictions
reasonably requested by any Seller or underwriter pursuant to Section 5.3(a)(v),
all word processing, duplicating and printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company and one (1) counsel
for the Sellers (to the extent such fees, expenses and disbursements are
reasonable), independent public accountants (including the expenses of any
special audit or "cold comfort" letters required by or incident to such
performance) and underwriters (excluding discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals attributable to the securities being registered, or legal expenses
of any person other than the Company and the Sellers, but including liability
insurance if the Company so desires), all the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the expense of any liability insurance (if the Company determines to
obtain such insurance) and the fees and expenses incurred in connection with the
listing of the securities to be registered on each Exchange on which such
securities issued by the Company are then listed, the reasonable fees and
expenses of any special experts (including attorneys) retained by the Company
(if it so desires) in connection with such registration and fees and expenses of
other persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne by the Company.
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5.5 In connection with the preparation and filing of each
registration statement under the Act pursuant to this Section 5, the Company
shall give the Sellers under such registration statement, their underwriters, if
any, and their accountants and one (1) counsel for the Sellers, to the extent
reasonably requested by Foothill, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such Sellers' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Act (and subject to the execution of a reasonable confidentiality agreement
to the extent reasonably necessary to protect the interests of the Company).
5.6.a. In the event of any registration of any securities of
the Company under the Act, the Company shall, and hereby does, indemnify and
hold harmless in the case of any registration statement filed pursuant to
Section 5.1 or Section 5.2 above, the Seller of any Securities covered by such
registration statement, its directors, officers and employees, each other person
who participates as an underwriter in the offering or sale of such Securities
and each other person, if any, who controls such Seller or any such underwriter
within the meaning of the Act against any losses, claims, damages, or
liabilities (or actions or proceedings whether commenced or threatened in
respect thereof), joint or several, to which such Seller or any such director or
officer or underwriter or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Securities were registered under the Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company shall reimburse such Seller and each
such director, officer, employee, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action, or
proceeding; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding, whether commenced or threatened in respect thereof), or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment, or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Seller for the express purpose of use in the preparation
thereof and, provided, further, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding, whether commenced or threatened, in respect thereof), or expense
arises out of such person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, within the time
required by the Act to the person asserting an untrue statement or alleged
untrue statement or omission or alleged omission if such statement or omission
was corrected in such final prospectus. Such indemnity shall remain in full
force and effect regardless of any
13
investigation made by or on behalf of such Seller or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
Securities by such Seller.
b. In the event of any registration of any securities of
the Securityholders under the Act pursuant to Section 5.1 or 5.2 above, each
such Seller shall, hereby does, and shall be deemed to, indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
5.6(a) above) the Company, each director, officer and employee of the Company,
and each other person, if any, who controls the Company within the meaning of
the Act, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
Seller specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment, or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer, or controlling person and shall survive the
transfer of such Securities by such Seller. In no event shall the liability of
any Seller hereunder be greater in amount than the dollar amount of the proceeds
(net of underwriting commissions but not of any other offering expenses)
received by such Seller upon the sale of the Securities giving rise to such
indemnification obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers, and similar
securities industry professionals participating in the distribution to the same
extent as provided above with respect to information so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
c. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in this Section 5.6, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 5.6, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that the
indemnifying party may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. If, in the
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnified party may separately participate in the defense of such claim,
jointly with any other indemnified party that reasonably determines such
conflict of interest to exist, and the indemnifying party shall be liable to
such
14
indemnified parties for the reasonable legal fees and expenses of one
counsel for all such indemnified parties and for other expenses reasonably
incurred in connection with the participation in the defense thereof incurred by
the indemnified party. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which 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, or a covenant not to xxx, in respect of such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
d. Indemnification and contribution similar to that
specified in this Section 5.6 (with appropriate modifications) shall be given by
the Company and each Seller with respect to any required registration or other
qualification of Securities under any Federal or state law or regulation of any
governmental authority, other than the Act.
e. The indemnification required by this Section 5.6 shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
f. If the indemnification provided for in this Section 5.6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities, or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of losses, claims, damages, liabilities, or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities, or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities, and expenses referred to above shall be deemed to include any
reasonable legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. In no event shall the liability of any
Seller hereunder be greater in amount than the dollar amount of the proceeds
received by such Seller upon the sale of the Securities giving rise to such
contribution obligation. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.6(f) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in this Section 5.6(f). No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.
5.7 The Company shall not after the date hereof grant any
additional registration rights that conflict with the rights under this Section
5.
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5.8 If requested by the managing underwriter of an offering
for which Shares of the Company or a Securityholder have been registered, a
Securityholder shall not sell or otherwise transfer or dispose of any Securities
held by such Securityholder (other than those included in the registration)
during such period following the effective date of such registration as is usual
and customary at such time in similar public offerings of similar securities;
provided, however, that the Company shall use its reasonable best efforts to
cause each holder of a material number of shares of Common Stock to enter into
similar "lock-up" agreements in respect of such offering. The obligations
described in this Section 5.8 shall not apply to offerings pursuant to a
registration statement on Form S-4 or Form S-8 or any successor or similar form.
6. PUT RIGHTS. Each Warrant and the Shares issuable upon exercise
of same shall be subject to the right of the holder hereof to require the
Company to repurchase such Securities, as is set forth in the form of Warrant
attached hereto.
7. CALL RIGHTS. Each Warrant and the Shares issuable upon exercise
of same shall be subject to the right of the Company to repurchase ("call") such
Securities, as is set forth in the form of Warrant attached hereto.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Foothill as follows:
a. This Agreement has been, and upon issuance each Warrant
will be, duly authorized and executed by the Company. This Agreement is, and
upon issuance each Warrant will be, a valid and binding obligation of the
Company enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and the
rules of law or principles at equity governing specific performance, injunctive
relief and other equitable remedies;
b. The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms of the
Warrants, will be validly issued, fully paid and nonassessable;
c. The rights, preferences, privileges and restrictions
granted to or imposed upon the Common Stock and the holders thereof are as set
forth in the certificate of incorporation of the Company, as amended to the date
hereof (as so amended, the "Charter"), a true and complete copy of which has
been delivered to Foothill;
d. The execution and delivery of this Agreement are not,
and the issuance of the Warrants and the Shares upon exercise of the Warrants in
accordance with the terms hereof and thereof will not be, inconsistent with the
Charter or by-laws of the Company, do not and will not contravene, in any
material respect, any governmental rule or regulation, judgment or order
applicable to the Company, and do not and will not conflict with or contravene
any provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound or require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by, any
Federal, state or local government authority or agency or other person,
16
except for the filing of notices pursuant to federal and state securities laws,
which filings will be effected by the time required thereby, in each case as
could not have a material adverse effect on the Company;
e. Except as set forth in the Loan Agreement, there are no
actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against the Company in any court or before
any governmental commission, board or authority which, if adversely determined,
will have a material adverse effect on the ability of the Company to perform its
obligations under this Agreement or any Warrant to be issued pursuant hereto;
f. The authorized capital stock of the Company consists of
Twenty-Five Million (25,000,000) shares of Common Stock, of which approximately
Seventeen Million Three Hundred Twelve Thousand Three Hundred Eighteen
(17,312,318) shares were issued and outstanding as of the date hereof, and
approximately One Million Eight Hundred Forty Eight Thousand (1,848,000) shares
were treasury stock held by the Company, and One Million (1,000,000) shares of
Preferred Stock, $.01 par value per share, of which no shares were issued and
outstanding as of the date hereof. All such outstanding shares have been
validly issued and are fully paid, nonassessable shares free of preemptive
rights;
g. There are no subscriptions, rights, options, warrants,
or calls relating to any shares of the Company's capital stock, including any
right of conversion or exchange under any outstanding security or other
instrument, except as follows: (i) the Warrants issued and issuable hereunder
and (ii) rights, options, warrants or convertible or exchangeable securities
outstanding or issued as of the date hereof which, upon exercise, conversion or
exchange, would result in the issuance of an aggregate number of shares of
Common Stock not in excess of Three Million Four Hundred Ninety Three Thousand
Seven Hundred Forty Two (3,493,742) (as such number may be adjusted as the
result of the operation of anti-dilution protection provisions of such rights,
options, warrants or convertible or exchangeable securities for events occurring
before the date hereof); and
h. Except as expressly disclosed in writing to Foothill
prior to the date hereof, the Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or any security convertible into or exchangeable for
any of its capital stock.
9. REPRESENTATIONS AND WARRANTIES OF FOOTHILL. Foothill represents
and warrants to the Company that the Warrants and the Shares to be issued upon
exercise thereof are being acquired for its own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, and
that Foothill will not offer, sell or otherwise dispose of any Warrant or Shares
except under circumstances which will not result in a violation of the Act.
Foothill is an accredited investor (as that term is defined in Rule 501 of
Regulation D promulgated under the Act). All Warrants and all shares of Common
Stock issued upon exercise of any Warrant (unless registered under the Act)
shall be stamped or imprinted with a legend substantially in the form set forth
in Exhibit W-1 attached hereto.
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10. NOTICES. Any notice, request, communication or other document
required or permitted to be given or delivered to Foothill, any other holder of
Securities, or the Company shall be delivered, or shall be sent by private
courier or certified or registered mail, postage prepaid, to Foothill and each
such holder at its respective address as shown on the books of the Company or to
the Company at the address indicated therefor in the introductory paragraph of
this Agreement.
11. BINDING EFFECT ON SUCCESSORS. This Agreement shall be binding
upon any corporation succeeding the Company or Foothill by merger, consolidation
or acquisition of all or substantially all of the Company's assets, and any
successor or assign of Foothill, and all of the obligations of the Company
relating to the Common Stock issuable upon the exercise or conversion of any
Warrant shall survive the exercise, conversion and termination of such Warrant
and all of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of Foothill. Notwithstanding any other
provision herein to the contrary, this Agreement (but not the Warrants) may only
be sold or otherwise transferred, in whole or part, to entities that have been
or are sold or otherwise transferred Foothill's rights, in whole or in whatever
part, under the Loan Agreement.
12. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
13. 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 Commonwealth of Massachusetts.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations and warranties of the Company and Foothill contained herein
shall survive the consummation hereof, the issuance of any Warrants pursuant
hereto, the exercise or conversion of any Warrant (or any part hereof) and the
termination or expiration of rights hereunder. All agreements of the Company
and Foothill contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative.
15. REMEDIES. In case any one or more of the covenants and
agreements contained in this Agreement shall have been breached, Foothill (in
the case of a breach by the Company), or the Company (in the case of a breach by
Foothill), may proceed to protect and enforce its rights either by suit in
equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement.
16. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
Foothill against impairment.
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17. INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be presumed construed or resolved against Foothill or the
Company, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
18. SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
19. AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed by both Foothill and the Company.
20. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
21. INTEGRATION. This Agreement, together with the Warrants issuable
hereunder and the Loan Agreement, reflect the entire understanding of the
parties with respect to the transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before the
date hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in Los Angeles, California.
BANYAN SYSTEMS INCORPORATED,
a Massachusetts corporation
By: /s/ Xxxxxxx X. Xxxxxxxxx
Title: VP & CFO
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxxxxx XxXxxxxxxx
Title: SVP
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