EXHIBIT 10.20
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of November 30, 1998
(this "Agreement"), by and between XXXXXX, INC., a Delaware corporation (the
"Company"), with headquarters located at 00000 Xxx Xxxxxxx, Xxxxxxxx Xxxxxxx,
Xxxxxxxxxx 00000, and ___________________________ (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer wishes to purchase, upon the terms and
subject to the conditions of this Agreement, shares of Common Stock (such
capitalized terms and all other capitalized terms used in this Agreement without
definition having the respective meanings provided in Section 1), and in
connection therewith to receive certain Repricing Rights and to acquire warrants
to purchase shares of Common Stock as provided in this Agreement; and
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 of Regulation D as promulgated by the SEC
under the 1933 Act;
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
.c.1. DEFINITIONS;
(a) As used in this Agreement, the terms "Agreement," "Buyer"
and "Company" shall have the respective meanings assigned to such terms in the
introductory paragraph of this Agreement.
(b) All the agreements or instruments herein defined shall
mean such agreements or instruments as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of this Agreement.
(c) The following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Action" means an action, suit, proceeding, inquiry or
investigation before or by any court, public board or body, arbitrator or
governmental agency.
"Adjustment Notice" means a notice given by the Buyer to the
Company in accordance with Section 10(d) increasing the Repricing Price upon the
occurrence of a Repurchase Event.
"Affiliate" means, with respect to any Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with the subject Person;
for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect 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.
"Aggregated Person" means, with respect to any Person, any
Person whose beneficial ownership of shares of Common Stock would be aggregated
with the beneficial ownership of shares of Common Stock by such Person for
purposes of Section 13(d) of the 1934 Act, and Regulation 13D-G thereunder.
"AMEX" means the American Stock Exchange, Inc.
"Auditors" means Xxxxxxx Xxxx Xxxxxxx or such other firm of
independent public accountants of recognized national standing.
"Aura" means Aura Systems, Inc., a Delaware corporation.
"Parent Company Agreement" means the Agreement between and
among Aura, the Company, the Buyer and the buyers under the Other Subscription
Agreements in the form attached hereto as Annex V.
"Average Daily Trading Volume" for any security for any
period of days means, for all trades in such security on the principal
securities market for such security during such period, the quotient obtained by
dividing (x) the number of shares of such security traded in each trade, as
reported by Bloomberg, L.P. by (y) the number of Trading Days in such period.
"Average Market Price" for any Exercise Date or the Second
Closing Date, as the case may be, means the arithmetic average of the Market
Price on each of the two Trading Days, whether or not consecutive, during the
applicable Measurement Period having the lowest Market Prices.
"Base Shares" means the portion of the Initial Shares equal
to 90.91% of the Initial Shares, rounded up or down to the nearest whole share.
"Board of Directors" or "Board" means the Board of Directors
of the Company.
"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 to remain closed.
"Closing Date" means the date and time of the issuance and
sale of the Initial Shares and the issuance of the Initial Repricing Rights and
the Warrants.
"Closing Date Price" means the arithmetic average of the
Market Price of the Common Stock on the five consecutive Trading Days ending on
the Trading Day prior to the Closing Date (when used after the Closing Date, the
Closing Date Price shall be subject to equitable adjustments from time to time
on terms reasonably acceptable to the Buyer for stock splits, stock dividends,
combinations, recapitalizations, reclassifications and similar events occurring
after the Closing Date).
"Closing Price" means the closing sale price of the Common
Stock on the principal securities market for the Common Stock, as reported by
Bloomberg, L.P.
"Common Shares" means the Initial Shares, the Second Tranche
Shares and the Repricing Shares.
"Common Stock" means the Common Stock, $.001 par value, of
the Company.
"Company Proprietary Rights" means all patents, patent
applications, inventions, trademarks, trade names, applications for registration
of trademarks, service marks, service xxxx applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets which are material to the
businesses of the Company and the Subsidiary as now conducted, as proposed to be
conducted or as described in this Agreement.
"Company Repurchase Notice" means a notice given by the
Company to the Buyer pursuant to Section 3(j) which states (1) that the Company
is exercising its right to repurchase all of the Buyer's Repricing Rights which
are exercised during the Repurchase Period, (2) the Company Repurchase Price or
the formula for determining the same, determined in accordance herewith and (3)
the applicable Repurchase Period.
"Company Repurchase Price" means, for each Exercise Notice
given during a Repurchase Period, the number of Repricing Shares required to be
issued multiplied by the Closing Price on the Exercise Date of such Exercise
Notice.
"Equity Securities" means Common Stock or securities
convertible into, exchangeable for, or otherwise entitling the holder to
acquire, any Common Stock.
"Escrow Agent" means the Escrow Agent named in the Joint
Escrow Instructions and any successor thereto.
"Escrow Agreement" means the Escrow Agreement to be entered
into by and between the Company, the Buyer, the Other Buyers and the Repricing
Escrow Agent in the form attached hereto as Annex III.
"Escrow Shares" means shares of Common Stock held in escrow
by the Repricing Escrow Agent pursuant to the Escrow Agreement which are
available to be delivered as Repricing Shares.
"Exercise Date" means the date on which an Exercise Notice is
received by the Company.
"Exercise Notice" means the Exercise Notice in the form
attached hereto as Annex VI.
"First Closing" means the closing of the sale of the Initial
Shares and the other transactions contemplated hereby in connection therewith on
the Closing Date.
"Initial Repricing Rights" means the Repricing Rights
issuable at the First Closing in accordance with Section 2(a).
"Initial Shares" means the number of shares of Common Stock
purchased by the Buyer on the Closing Date and set forth on the signature page
of this Agreement.
"Insufficient Share Amount" means, for each Repricing Share
or Warrant Share which the Company is unable to issue in accordance with Section
6(l), an amount equal to 3% of the Closing Price of such share on the Exercise
Date or the date of exercise of the Warrant, as the case may be.
"Joint Escrow Instructions" means the Joint Escrow
Instructions attached hereto as Annex II.
"Market Price" of the Common Stock on any date means the
closing bid price for one share of Common Stock on such date on the first
applicable among the following: (a) the national securities exchange on which
the shares of Common Stock are listed which constitutes the principal securities
market for the Common Stock, (b) the Nasdaq, if the Nasdaq constitutes the
principal market for the Common Stock on such date, or (c) the Nasdaq SmallCap,
if the Nasdaq SmallCap constitutes the principal securities market for the
Common Stock on such date, in any such case as reported by Bloomberg, L.P.;
provided, however, that if during any Measurement Period or other period during
which the Market Price is being determined:
(i) The Company shall declare or pay a dividend or make a distribution
to all holders of the outstanding Common Stock in shares of Common Stock or fix
any record date for any such action, then the Closing Price for each day in such
Measurement Period or such other period which day is prior to the earlier of (1)
the date fixed for the determination of shareholders entitled to receive such
dividend or other distribution and (2) the date on which ex-dividend trading in
the Common Stock with respect to such dividend or distribution begins shall be
reduced by multiplying the Closing Price (determined without regard to this
proviso) for each such day in such Measurement Period or such other period by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the earlier of (1) the record date fixed
for such determination and (2) the date on which ex-dividend trading in the
Common Stock with respect to such dividend or distribution begins and the
denominator of which shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution;
(ii) The Company shall issue rights or warrants to all holders of its
outstanding shares of Common Stock, or fix a record date for such issuance,
which rights or warrants entitle such holders (for a period expiring within
forty-five (45) days after the date fixed for the determination of shareholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Common Stock at a price per share less than the Closing Price (determined
without regard to this proviso) for any day in such Measurement Period or such
other period which day is prior to the end of such 45-day period, then the
Closing Price for each such day shall be reduced so that the same shall equal
the price determined by multiplying the Closing Price (determined without regard
to this proviso) by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the record date
fixed for the determination of shareholders entitled
to\receive such rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase at such
Closing Price, and the denominator of which shall be the number of shares of
Common Stock outstanding on the close of business on such record date plus the
total number of additional shares of Common Stock so offered for subscription or
purchase. In determining whether any rights or warrants entitle the holders to
subscribe for or purchase shares of Common Stock at less than the Closing Price
(determined without regard to this proviso), and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken into account
any consideration received for such rights or warrants, the value of such
consideration, if other than cash, to be determined in good faith by a
resolution of the Board of Directors of the Company;
(iii) The outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock or a record date for any such
subdivision shall be fixed, then the Closing Price of the Common Stock for each
day in such Measurement Period or such other period which day is prior to the
earlier of (1) the day upon which such subdivision becomes effective and (2) the
date on which ex-dividend trading in the Common Stock with respect to such
subdivision begins shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Closing Price for each day in such Measurement
Period or such other period which day is prior to the earlier of (1) the date on
which such combination becomes effective and (2) the date on which trading in
the Common Stock on a basis which gives effect to such combination begins, shall
be proportionately increased;
(iv) The Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock shares of any class of capital stock of the Company
(other than any dividends or distributions to which clause (i) of this proviso
applies) or evidences of its indebtedness, cash or other assets (including
securities, but excluding any rights or warrants referred to in clause (ii) of
this proviso and dividends and distributions paid exclusively in cash and
excluding any capital stock, evidences of indebtedness, cash or assets
distributed upon a merger or consolidation) (the foregoing hereinafter in this
clause (iv) of this proviso called the "Securities"), or fix a record date for
any such distribution, then, in each such case, the Closing Price for each day
in such Measurement Period or such other period which day is prior to the
earlier of (1) the record date for such distribution and (2) the date on which
ex-dividend trading in the Common Stock with respect to such distribution begins
shall be reduced so that the same shall be equal to the price determined by
multiplying the Closing Price (determined without regard to this proviso) by a
fraction, the numerator of which shall be the Closing Price (determined without
regard to this proviso) for such trade less the fair market value (as determined
in good faith by resolution of the Board of Directors of the Company) on such
date of the portion of the Securities so distributed or to be distributed
applicable to one share of Common Stock and the denominator of which shall be
the Closing Price (determined without regard to this proviso). If the Board of
Directors of the Company determines the fair market value of any distribution
for purposes of this clause (iv) by reference to the actual or when issued
trading market for any securities comprising all or part of such distribution,
it must in doing so consider the prices in such market on the same day for which
an adjustment in the Closing Price is being determined.
For purposes of this clause (iv) and clauses (i) and (ii) of this
proviso, any dividend or distribution to which this clause (iv) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock to which clause (i) or (ii) of this
proviso applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets, shares of capital stock,
rights or warrants other than such shares of Common Stock or rights or warrants
to which clause (i) or (ii) of this proviso applies (and any Closing Price
reduction required by this clause (iv) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or
distribution of such shares of Common Stock or such rights or warrants (and any
further Closing Price reduction required by clauses (i) and (ii) of this proviso
with respect to such dividend or distribution shall then be made), except that
any shares of Common Stock included in such dividend or distribution shall not
be deemed "outstanding at the close of business on the date fixed for such
determination" within the meaning of clause (i) of this proviso;
(v) The Company or any subsidiary of the Company shall (x) by dividend
or otherwise, distribute to all holders of its Common Stock cash in (or fix any
record date for any such distribution), or (y) repurchase or reacquire shares of
its Common Stock (other than an Option Share Surrender) for, in either case, an
aggregate amount that, combined with (1) the aggregate amount of any other such
distributions to all holders of its Common Stock made exclusively in cash after
the Closing Date and within the twelve (12) months preceding the date of payment
of such distribution, and in respect of which no adjustment pursuant to this
clause (v) has been made, (2) the aggregate amount of any cash plus the fair
market value (as determined in good faith by a resolution of the Board of
Directors of the Company) of consideration paid in respect of any repurchase or
other reacquisition by the Company or any subsidiary of the Company of any
shares of Common Stock (other than an Option Share Surrender) made after the
Closing Date and within the twelve (12) months preceding the date of payment of
such distribution or making of such repurchase or reacquisition, as the case may
be, and in respect of which no adjustment pursuant to this clause (v) has been
made, and (3) the aggregate of any cash plus the fair market value (as
determined in good faith by a resolution of the Board of Directors of the
Company) of consideration payable in respect of any Tender Offer by the Company
or any of its subsidiaries for all or any portion of the Common Stock concluded
within the twelve (12) months preceding the date of payment of such distribution
or completion of such repurchase or reacquisition, as the case may be, and in
respect of which no adjustment pursuant to clause (vi) of this proviso has been
made (such aggregate amount combined with the amounts in clauses (1), (2) and
(3) above being the "Combined Amount"), exceeds 10% of the product of the
Closing Price (determined without regard to this proviso) for any day in such
Measurement Period or such other period which day is prior to the earlier of (A)
the record date with respect to such distribution and (B) the date on which
ex-dividend trading in the Common Stock with respect to such distribution begins
or the date of such repurchase or reacquisition, as the case may be, times the
number of shares of Common Stock outstanding on such date, then, and in each
such case, the Closing Price for each such day shall be reduced so that the same
shall equal the price determined by multiplying the Closing Price (determined
without regard to this proviso) for such day by a fraction (i) the numerator of
which shall be equal to the Closing Price (determined without regard to this
proviso) for such day less an amount equal to the quotient of (x) the excess of
such Combined Amount over such 10% and (y) the number of shares of Common Stock
outstanding on such day and (ii) the denominator of which shall be equal to the
Closing Price (determined without regard to this proviso) for such day; or
(vi) A Tender Offer made by the Company or any of its subsidiaries for
all or any portion of the Common Stock shall expire and such Tender Offer (as
amended upon the expiration thereof) shall require the payment to shareholders
(based on the acceptance (up to any maximum specified in the terms of the Tender
Offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined in good faith by resolution of the
Board of Directors of the Company) that combined together with (1) the aggregate
of the cash plus the fair market value (as determined in good faith by a
resolution of the Board of Directors of the Company), as of the expiration of
such Tender Offer, of consideration payable in respect of any other Tender
Offers, by the Company or any of its subsidiaries for all or any portion of the
Common Stock expiring within the 12 months preceding the expiration of such
Tender Offer and in respect of which no adjustment pursuant to this clause (vi)
has been made, (2) the aggregate amount of any cash plus the fair market value
(as determined in good faith by a resolution of the Board of Directors of the
Company) of consideration paid in respect of any repurchase or other
reacquisition by the Company or any subsidiary of the Company of any shares of
Common Stock (other than an Option Share Surrender) made after the Closing Date
and within the 12 months preceding the expiration of such Tender Offer and in
respect of which no adjustment pursuant to clause (v) of this proviso has been
made, and (3) the aggregate amount of any distributions to all holders of Common
Stock made exclusively in cash within 12 months preceding the expiration of such
Tender Offer and in respect of which no adjustment pursuant to clause (v) of
this proviso has been made, exceeds 10% of the product of the Closing Price
(determined without regard to this proviso) for any day in such period times the
number of shares of Common Stock outstanding on such day, then, and in each such
case, the Closing Price for such day shall be reduced so that the same shall
equal the price determined by multiplying the Closing Price (determined without
regard to this proviso) for such day by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding on such day multiplied by
the Closing Price (determined without regard to this proviso) for such day and
the denominator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to shareholders
based on the acceptance (up to any maximum specified in the terms of the Tender
Offer) of all shares validly tendered and not withdrawn as of the last time
tenders could have been made pursuant to such Tender Offer (the "Expiration
Time") (the shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) on such day times the Closing
Price (determined without regard to this proviso) of the Common Stock on the
Trading Day next succeeding the Expiration Time. If the application of this
clause (vi) to any Tender Offer would result in an increase in the Closing Price
(determined without regard to this proviso) for any trade, no adjustment shall
be made for such Tender Offer under this clause (vi) for such day.
"Measurement Period" means, with respect to any date, the
period of 20 consecutive Trading Days ending on the Trading Day prior to such
date.
"Nasdaq" means the Nasdaq National Market.
"Nasdaq SmallCap" means the Nasdaq SmallCap Market.
"1998 10-K" means the Company's Annual Report on Form 10-K
for the fiscal year ended February 28, 1998.
"1934 Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
"1933 Act" means the Securities Act of 1933, as amended, or
any successor statute.
"NYSE" means the New York Stock Exchange, Inc.
"Option Share Surrender" means the surrender of shares of
Common Stock to the Company in payment of the exercise price or tax obligations
incurred in connection with the exercise of a stock option granted by the
Company to any of its employees, directors or consultants.
"Other Buyers" means each of the several buyers of shares of
Common Stock named in the Other Subscription Agreements.
"Other Subscription Agreements" means the several
Subscription Agreements, dated as of the date hereof, between the Company and
the Other Buyers relating to the agreements of such buyers severally to purchase
shares of Common Stock and acquire repricing rights and warrants on the same
terms as provided in this Agreement.
"Person" means an individual, partnership, corporation,
limited liability company, trust, incorporated organization, unincorporated
association or joint stock company.
"Purchase Price" means the aggregate purchase price payable
for the Initial Shares set forth on the signature page of this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement to be entered into between the Company and the Buyer in the form
attached hereto as Annex IV.
"Registration Statement" means the Registration Statement
required to be filed by the Company with the SEC pursuant to Section 2(a) of the
Registration Rights Agreement.
"Regulation D" means Regulation D promulgated by the SEC
under the 1933 Act.
"Repricing Escrow Agent" means the Repricing Escrow Agent
named in the Escrow Agreement and any successor thereto.
"Repricing Price" means:
(a) In connection with the exercise of any Initial Repricing
Rights,
(1) if the Exercise Date is on or prior to the 135th day after the
Closing Date, 114% of the Closing Date Price; and
(2) if the Exercise Date is after the 135th day after the Closing Date,
the Closing Date Price shall be multiplied by a percentage equal to the
percentage referred to in clause (a)(1) of this definition increased by two
percentage points for each period of 45 days after such 135th day (e.g., from
the 136th day through the 180th day after the Closing Date, the Repricing Price
is 116% of the Closing Date Price; from the 181st day through the 225th day
after the Closing Date, the Repricing Price is 118% of the Closing Date Price,
etc.); and
(b) In connection with the exercise of any Second Tranche
Repricing Rights,
(1) if the Exercise Date is on or prior to the 45th day after the
Second Closing Date, 114% of the Second Closing Date Price; and
(2) if the Exercise Date is after the 45th day after the Second Closing
Date, the Second Closing Date Price shall be multiplied by a percentage equal to
the percentage referred to in clause (b)(1) of this definition increased by two
percentage points for each period of 45 days after such 45th day (e.g., from the
46th day through the 90th day after the Second Closing Date, the Repricing Price
is 116% of the Second Closing Date Price; from the 91st day through the 135th
day after the Second Closing Date, the Repricing Price is 118% of the Second
Closing Date Price, etc.);
provided, however, the applicable percentage of the Closing Date Price and the
Second Closing Date Price referred to in this definition shall be increased by
(x) 7.5 percentage points from the percentage it otherwise would be on any day
on which the Common Stock is listed for trading on the Nasdaq SmallCap and (y)
15 percentage points from the percentage it otherwise would be (i) on any day on
which the Common Stock is not listed for trading on any of the Nasdaq, the
Nasdaq SmallCap, the NYSE or the AMEX, or (ii) for a period of 180 days after
the day the Buyer gives the Company an Adjustment Notice pursuant to Section
10(d).
"Repricing Rate" means the number of Repricing Shares
issuable upon exercise of each Repricing Right pursuant to Section 3(c)
determined according to the following formula; provided that if the result of
such formula is less than zero, then the result shall be deemed to be zero:
(Repricing Price Average Market Price)
Average Market Price
"Repricing Right" means a right of the holder thereof to
receive Repricing Shares upon the exercise of Initial Repricing Rights or Second
Tranche Repricing Rights in accordance with Section 3.
"Repricing Shares" means shares of Common Stock issued or
issuable to a holder of Repricing Rights upon the exercise thereof.
"Repurchase Date" means the date of repurchase of Shares and
Repricing Rights pursuant to Section 10.
"Repurchase Event" means any one of the following events:
(1) For any period of five consecutive Trading Days commencing on or
after the Closing Date there shall be no closing bid price of the Common Stock
on any national securities exchange, the Nasdaq or the Nasdaq SmallCap;
(2) The Common Stock ceases to be listed for trading on any of the
NYSE, the AMEX, the Nasdaq or the Nasdaq SmallCap;
(3) The Company fails to file the Registration Statement within 60 days
after the Closing Date;
(4) The Registration Statement is not effective within 120 days after
the Closing Date;
(5) After the SEC Effective Date, the inability for 30 or more days
(whether or not consecutive) of any holder of Shares to sell such shares
pursuant to the Registration Statement for any reason on each of such 30 days;
(6) The Company shall fail or default in the timely performance of any
obligation (A) to issue Repricing Shares as and when required by Section 3, (B)
to comply with Section 6(b)(3) regarding the removal of restrictive legends and
stop transfer restrictions with respect to the Shares or (C) any other material
obligation, in each case to a holder of Shares or Repricing Rights under the
terms of this Agreement, the Escrow Agreement, the Registration Rights
Agreement, the Parent Company Agreement, the Warrants or any other agreements or
documents entered into in connection with the issuance of the Shares, as such
instruments may be amended from time to time;
(7) The Company shall default in making any payment as and when due or
in the performance of any material obligation to Aura under any agreement or
instrument evidencing the Company's indebtedness to Aura;
(8) Aura shall fail or default in the timely performance of any
material obligation under the terms of the Parent Company Agreement;
(9) Any consolidation or merger of the Company with or into another
entity (other than a merger or consolidation of a subsidiary of the Company into
the Company or a wholly-owned subsidiary of the Company) where the common stock
of such surviving company is not listed for trading on the NYSE, the AMEX, the
Nasdaq or the Nasdaq SmallCap, or any sale or other transfer of all or
substantially all of the assets of the Company; or
(10) The Company amends its Certificate of Incorporation or by-laws,
without the consent of the Buyer, which amendment materially and adversely
affects the rights of any holder of Shares or Repricing Rights;
provided, that an event described in clauses 6(c), 7 or 8 of this definition
shall be a Repurchase Event only if such failure or default shall have continued
for a period of 15 days after notice thereof is given to the Company by the
Buyer or any Other Buyer.
"Repurchase Notice" means a notice from the Buyer to the
Company which states (1) that the Buyer is thereby requiring the Company to
repurchase Shares and Repricing Rights pursuant to Section 10, (2) in general
terms the Repurchase Event giving rise to such repurchase, and (3) the number of
Shares and Repricing Rights which are to be repurchased.
"Repurchase Period" means the period commencing seven Trading
Days after the Company gives a Company Repurchase Notice to the Buyer and ending
on the earlier of (x) 30 days thereafter or (y) two Trading Days after the
Company gives notice to the Buyer canceling such Company Repurchase Notice.
"Repurchase Price" means the arithmetic average of the
Closing Price for the five consecutive Trading Days ending on the Trading Day
prior to a Repurchase Date.
"Rule 144" means Rule 144 promulgated by the SEC under the
1933 Act or any other similar rule or regulation of the SEC that may at any time
permit a holder of any securities to sell such securities to the public without
registration under the 1933 Act.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Effective Date" means the date the Registration
Statement is first declared effective by the SEC.
"SEC Reports" means (1) the 1998 10-K, (2) the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended May 31, 1998 and
August 31, 1998, and (3) the Company's definitive proxy statement for its 1998
Annual Meeting of Stockholders, in each case as filed with the SEC.
"Second Closing" means the closing of the sale of the Second
Tranche Shares and the other transactions contemplated hereby in connection with
such sale on the Second Closing Date.
"Second Closing Date" means the date and time of the issuance
and sale of the Second Tranche Shares and the issuance of the Second Tranche
Repricing Rights which shall occur on the first Business Day which is at least
65 days after the SEC Effective Date on which the conditions set forth in
Sections 8(b) and 9(b) have been satisfied or waived; provided, however, that
the Second Closing Date must occur on or before the date which is 95 days after
the SEC Effective Date.
"Second Closing Date Price" means the arithmetic average of
the Market Price of the Common Stock on the five consecutive Trading Days ending
on the Trading Day prior to the Second Closing Date (when used after the Second
Closing Date, the Second Closing Date Price shall be subject to equitable
adjustments from time to time on terms reasonably acceptable to the Buyer for
stock splits, stock dividends, combinations, recapitalizations,
reclassifications and similar events occurring after the Second Closing Date).
"Second Tranche Base Shares" means the portion of the Second
Tranche Shares equal to 90.91% of the Second Tranche Shares, rounded up or down
to the nearest whole share.
"Second Tranche Purchase Price" means $500,000.
"Second Tranche Repricing Rights" means the Repricing Rights
issuable at the Second Closing in accordance with Section 2(b).
"Second Tranche Shares" means the number of shares of Common
Stock equal to the sum of (a) the quotient obtained by dividing $500,000 by the
Second Closing Date Price and (b) 10% of such number.
"Securities" means the Shares, the Repricing Rights and the
Warrants; provided, however, for purposes of the definition of the term "Market
Price" set forth in clause (iv) of the proviso to the definition of the term
"Market Price," Securities shall have the meaning set forth in such clause (iv).
"Shares" means the Common Shares and the Warrant Shares.
"Specified Securities" means any Equity Securities which are
Common Stock which are offered or sold, or which entitle the holder to acquire
any Common Stock, at a price below the market price of the Common Stock on the
date of such issuance or acquisition.
"Stockholder Approval" shall mean the approval by a majority
of the votes cast by the holders of shares of Common Stock (in person or by
proxy) at a meeting of the stockholders of the Company (duly convened at which a
quorum was present), or a written consent of holders of shares of Common Stock
entitled to such number of votes given without a meeting, of the issuance by the
Company of 20% or more of the Common Stock of the Company outstanding on the
Closing Date for less than the greater of the book or market value of such
Common Stock, as and to the extent required under the Stockholder Approval Rule.
"Stockholder Approval Rule" means Rule 4460(i) of the Nasdaq
as in effect from time to time or any successor, replacement or similar
provision thereof or of any other market on which the Common Stock is listed for
trading.
"Stockholder Nonapproval Price" means for each Initial Share
repurchased by the Company pursuant to Section 6(j)(3), 110% of the Closing Date
Price.
"Tender Offer" means a tender offer or exchange offer.
"Total Repricing Rights" means the number of Repricing Rights
issued to the Buyer on the Closing Date and on the Second Closing Date.
"Trading Day" means a day on whichever of (w) the national
securities exchange, (x) the Nasdaq, (y) the Nasdaq SmallCap or (z) such other
securities market, which at the time constitutes the principal securities market
for the Common Stock, is open for general trading of securities.
"Warrants" means the Common Stock Purchase Warrants to
purchase shares of Common Stock in the form attached hereto as Annex I.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
.c.2. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE;.
.c.(a) First Closing;.
(1) At the First Closing on the Closing Date, the Buyer
hereby agrees to purchase from the Company the Initial Shares at the price per
share and for the aggregate purchase price set forth on the signature page of
this Agreement. The Purchase Price shall be payable in United States Dollars. In
connection with the purchase of the Initial Shares by the Buyer, the Company
shall issue to the Buyer, at the closing on the Closing Date, (A) the number of
Initial Repricing Rights set forth on the signature page of this Agreement equal
to one Initial Repricing Right for each Base Share issued as part of the Initial
Shares (which Initial Repricing Right shall be deemed incorporated and part of
each Base Share issued) and (B) Warrants in the form attached hereto as Annex I
to purchase the number of shares of Common Stock set forth on the signature page
of this Agreement.
(2) (A) The Buyer shall pay the Purchase Price for the
Initial Shares by delivering good funds in United States Dollars to the Escrow
Agent identified in the Joint Escrow Instructions attached hereto as Annex III.
Such delivery of funds shall be made against delivery by the Company of the
certificates for the Initial Shares (which for purposes of the closing shall be
deemed to incorporate and include one Initial Repurchase Right for each Base
Share) and the Warrants registered in the name of the Buyer or its nominee.
Promptly following payment by the Buyer to the Escrow Agent of the Purchase
Price, but in any event prior to the Closing Date, the Company shall deliver
certificates for the Initial Shares and the Warrants, registered in the name of
the Buyer or its nominee, to the Escrow Agent for release by the Escrow Agent
pursuant to the Joint Escrow Instructions. The certificates for the Initial
Shares shall be delivered by the Company to the Escrow Agent on a delivery
against payment basis at the closing. By signing this Agreement, the Buyer and
the Company each agrees to all of the terms and conditions of, and becomes a
party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as is set forth in full.
(B) Following the First Closing, the Initial Repricing Rights
issued thereat shall constitute separate rights under this Agreement independent
of the Base Shares. The subsequent sale or transfer of the Base Shares shall not
affect the Buyer's ownership of or rights with respect to such Initial Repricing
Rights.
(3) Payment of the purchase price for the Initial Shares and
the Second Tranche Shares shall be made by wire transfer of funds to:
Citibank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA#000000000
For credit to A/C#37179446
For credit to the account of Xxxxx X. Xxxxx Attorney Escrow Account
Reference: __________________
Not later than 4:00 p.m., New York City time, on the date which is three
Business Days after the Company shall have accepted this Agreement and returned
a signed counterpart of this Agreement to the Buyer or its legal counsel, the
Buyer shall deposit with the Escrow Agent the aggregate purchase price for the
Initial Shares.
.c.(b) Second Closing;.
(1) At the Second Closing on the Second Closing Date, the
Buyer hereby agrees to purchase from the Company the Second Tranche Shares at
the Second Tranche Purchase Price. The Second Tranche Purchase Price shall be
payable in United States Dollars. In connection with the purchase of the Second
Tranche Shares by the Buyer, the Company shall issue to the Buyer, at the
closing on the Second Closing Date, the number of Second Tranche Repricing
Rights equal to one Second Tranche Repricing Right for each Second Tranche Base
Share issued as part of the Second Tranche Shares (which Second Tranche
Repricing Right shall be deemed incorporated and part of each Second Tranche
Base Share issued). The parties shall have no obligation to purchase and sell
the Second Tranche Shares after the date stated in the proviso to the definition
of "Second Closing Date".
(2) (A) The Buyer shall pay the Second Tranche Purchase Price
for the Second Tranche Shares by delivering good funds in United States Dollars
to the Escrow Agent identified in the Joint Escrow Instructions attached hereto
as Annex III. Such delivery of funds shall be made against delivery by the
Company of the certificates for the Second Tranche Shares (which for purposes of
the Second Closing shall be deemed to incorporate and include one Second Tranche
Repurchase Right for each Second Tranche Base Share) registered in the name of
the Buyer or its nominee. Promptly following payment by the Buyer to the Escrow
Agent of the Second Tranche Purchase Price, but in any event prior to the Second
Closing Date, the Company shall deliver certificates for the Second Tranche
Shares, registered in the name of the Buyer or its nominee, to the Escrow Agent
for release by the Escrow Agent pursuant to the Joint Escrow Instructions. The
certificates for the Second Tranche Shares shall be delivered by the Company to
the Escrow Agent on a delivery against payment basis at the Second Closing.
(B) Following the Second Closing, the Second Tranche
Repricing Rights issued thereat shall constitute separate rights under this
Agreement independent of the Second Tranche Base Shares. The subsequent sale or
transfer of the Second Tranche Base Shares shall not affect the Buyer's
ownership of or rights with respect to such Second Tranche Repricing Rights.
(3) Payment of the Second Tranche Purchase Price for the
Second Tranche Shares shall be made by wire transfer of funds as provided in the
first sentence of Section 2(a)(3). On or before the Second Closing Date, the
Buyer shall deposit with the Escrow Agent the Second Tranche Purchase Price for
the Second Tranche Shares.
.c.3. REPRICING RIGHTS;.
.c.(a) Repricing Right;. Subject to the provisions of
Sections 3(g) and 3(h) below, at any time or times on or after the 91st day
after the Closing Date, the Buyer shall be entitled to exercise any whole number
of Repricing Rights for fully paid and nonassessable Repricing Shares in
accordance with Section 3(c), at the Repricing Rate. The Company shall not issue
any fraction of a share of Common Stock upon any exercise of Repricing Rights.
All Repricing Shares (including fractions thereof) issuable upon exercise of
more than one Repricing Right by a holder thereof shall be aggregated for
purposes of determining whether the exercise would result in the issuance of a
fraction of a share of Common Stock. If, after the aforementioned aggregation,
the issuance would result in the issuance of a fraction of a share of Common
Stock, such fraction of a share of Common Stock shall be rounded up or down to
the nearest whole share.
.c.(b) Escrow;. Prior to the Closing Date, the Company and
the Buyer shall execute and deliver the Escrow Agreement in the form attached
hereto as Annex III. In accordance with the Escrow Agreement, on or prior to the
Closing Date the Company shall deposit into escrow such number of shares of
Common Stock equal to the aggregate number of Repricing Shares which would be
issuable assuming all of the Buyer's Repricing Rights were exercised on the
Closing Date and the Average Market Price was 70% of the Average Market Price on
the Closing Date. On the first Business Day of every calendar month after the
Closing Date, on the Second Closing Date after the Second Closing occurs, and at
such other times as the Buyer may request, the Company shall deposit additional
shares of Common Stock into escrow to the extent necessary to ensure that on
such date the number of Escrow Shares is at least equal to the aggregate number
of Repricing Shares which would be issuable assuming all of the Buyer's
outstanding Repricing Rights were exercised (without regard to any limitations
on exercise) on such date and the Average Market Price was 70% of the Average
Market Price on such date. Escrow Shares shall be released to the Company in
accordance with the terms of the Escrow Agreement.
.c.(c) Mechanics of Exercise of Repricing Rights;. The Buyer
may exercise such Repricing Rights at any time on or after the 91st day after
the Closing Date in accordance with the following terms:
(1) To exercise Repricing Rights for full shares of Common
Stock representing Repricing Shares on any Exercise Date, the Buyer shall
transmit by telephone line facsimile (or otherwise deliver), for receipt on or
prior to 11:59 p.m. Eastern Time, on such date, a copy of a fully executed
Exercise Notice in the form attached hereto as Annex VI to the Company.
(2) Upon receipt by the Company of an executed Exercise
Notice, the Company shall, within three Trading Days following the Exercise
Date, (A) issue and deliver to the address specified in the Exercise Notice, a
certificate, registered in the name of the Buyer or its designee, for the number
of Repricing Shares to which the holder shall be entitled, or (B) credit such
aggregate number of Repricing Shares to the Buyer's or its designee's account
with the Depository Trust Company as specified in the Exercise Notice. The
certificates for any Repricing Shares issued to the Buyer prior to the SEC
Effective Date shall bear the restrictive legend specified in Section 6(b). On
and after the SEC Effective Date all Repricing Shares issued to or upon the
order of the Buyer shall not bear any restrictive legends or be subject to any
stop-transfer restrictions.
.c.(d) Record Holder;. The Person or Persons entitled to
receive the Repricing Shares issuable upon an exercise of Repricing Rights shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on the Exercise Date.
.c.(e) Duty to Deliver Repricing Shares; Dispute Resolution;.
If the Buyer shall have given an Exercise Notice as provided herein, the
Company's obligation to issue and deliver the certificates for Common
Stock representing the Repricing Shares shall be absolute and unconditional,
irrespective of any action or inaction by the Buyer to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, any failure or
delay in the enforcement of any other obligation of the Company to the Buyer, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach
or alleged breach by the Buyer or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Buyer or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Buyer in connection with the
issuance and delivery of Repricing Shares. The number of Repricing Shares to be
issued in connection with a particular Exercise Date is, absent manifest error,
conclusively the number of Repricing Shares stated in the applicable Exercise
Notice. If in connection with a particular Exercise Date the Company determines
that manifest error has been made by virtue of the computation of Repricing
Shares or other information set forth in the applicable Exercise Notice, the
Company shall have the right within one Trading Day after the Buyer gives such
Exercise Notice to notify the Repricing Escrow Agent and the Buyer of such
error, which notice shall state the number of Repricing Shares in dispute, and,
notwithstanding such notice from the Company, the Company shall issue to the
Buyer the number of Repricing Shares not in dispute as and when required by this
Agreement. If the Company shall have notified the Repricing Escrow Agent and the
Buyer of any such manifest error, and the Company and the Buyer do not agree as
to a resolution of such manifest error on or before the date of such notice by
the Company of an error in such Exercise Notice, the Company shall on the date
such notice is given submit the dispute to the Auditors for determination
and shall instruct the Auditors to resolve such dispute and to notify the
Company, the Repricing Escrow Agent and the Buyer of their determination, which
shall be binding on all parties, within two Trading Days after such dispute is
submitted to the Auditors. Immediately after receipt of timely notice of the
Auditors' determination (but in any event within four Trading Days after the
applicable Exercise Notice is given to the Repricing Escrow Agent and the
Company), the Company shall issue to the Buyer any additional Repricing Shares
to which the Buyer is entitled based on the determination of the Auditors. If
the Auditors shall fail to notify the Repricing Escrow Agent and the Company of
their determination within four Trading Days after the applicable Exercise
Notice is given to the Repricing Escrow Agent and the Company, then the Company
shall within four Trading Days after receipt of the applicable Exercise
Notice, issue to the Buyer any additional Repricing Shares to which the Buyer is
entitled based on the applicable Exercise Notice. Such immediate and prompt
action shall be taken by all the parties in order to assure that there shall be
full compliance with the Company's unqualified obligation that all Repricing
Shares issuable upon each Exercise Date be issued and delivered by the due dates
therefor as provided herein.
.c.(f) Company's Failure to Timely Deliver Repricing Shares;.
If within three Trading Days after the Company's receipt of the Exercise
Notice (or such longer period specified in Section 3(e)) the Company shall for
any reason fail to issue a certificate (which shall be free of all restrictive
legends other than those required by Section 6(b)) for the number of Repricing
Shares to which the Buyer is entitled or to credit the Buyer's or its designee's
account with the Depository Trust Company for such number of Repricing Shares to
which the Buyer is entitled upon the Buyer's exercise of the Repricing Rights,
the Buyer shall have the right, commencing seven Business Days after the
Exercise Date, to deliver a copy of the applicable Exercise Notice to the
Repricing Escrow Agent. Promptly but not later than three Trading Days after its
receipt of such Exercise Notice, the Repricing Escrow Agent shall, in accordance
with the Escrow Agreement, release the Escrow Shares from escrow in the amount
of the Repricing Shares specified in such Exercise Notice and deliver such
shares in accordance with such Exercise Notice. In addition to such right to
receive Escrow Shares and all other available remedies which the Buyer may
pursue hereunder and under applicable law, the Company shall, on a weekly basis,
pay as additional damages (and not as a penalty) to such Buyer for each day
after such third Trading Day that such shares are not timely delivered an amount
equal to 0.2% of the product of (1) the sum of the number of Repricing Shares
not issued to the Buyer on a timely basis pursuant to Section 3(c)(2) and to
which the Buyer is entitled and (2) the Closing Price of the Common Stock on
such third Trading Day. In addition, if in connection with such late delivery of
Repricing Shares the Closing Price on the date of delivery is less than the
Closing Price on such third Trading Day when such shares were due, then the
Company shall be required to pay the Buyer, within two Trading Days after such
late delivery, an amount equal to the product of (A) the number of such
Repricing Shares and (B) the difference between such respective Closing Prices.
Any failure of the Repricing Escrow Agent to deliver shares to the Buyer shall
not relieve the Company of its obligations under this Section 3(f).
.c.(g) Exercise Restrictions;. In addition to the termination
provisions set forth in Section 3(h), the right of the Buyer to exercise such
Repricing Rights pursuant to this Section 3 shall be limited as set forth below.
(1) During each consecutive period of 30 days commencing on
the date the Initial Repricing Rights first become exercisable, the Buyer may
not exercise more than the sum of (A) 20% of the Total Repricing Rights and (B)
any unexercised Repricing Rights which were permitted to be exercised in any
prior 30-day period. Accordingly, unused Repricing Rights in prior 30-day
periods may be carried forward to future periods on a cumulative basis, and all
Repricing Rights become exercisable without restriction under this Section
3(g)(1) commencing 211 days after the Closing Date.
(2) Notwithstanding anything to the contrary in this
Agreement, in no event shall the Buyer be entitled to exercise any Repricing
Rights in excess of that number of Repricing Rights upon exercise of which the
sum of (x) the number of shares of Common Stock beneficially owned by the Buyer
and all of its Aggregated Persons (other than shares of Common Stock deemed
beneficially owned through the ownership of unexercised Repricing Rights and
Warrants and the unexercised or unconverted portion of any instrument which
contains limitations similar to those set forth in this sentence) and (y) the
number of shares of Common Stock issuable or deliverable upon the exercise of
the number of Repricing Rights with respect to which the determination in this
sentence is being made, would result in beneficial ownership by the Buyer and
all Aggregated Persons of the Buyer of more than 9.9% of the outstanding shares
of Common Stock. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the 1934 Act
and Regulation 13D-G thereunder, except as otherwise provided in clause (x) of
the immediately preceding sentence.
.c.(h) Termination of Repricing Rights;. So long as (i) each
of the Company and Aura is in compliance in all material respects with its
obligations to the Buyer under this Agreement, the Registration Rights
Agreement, the Parent Company Agreement, the Warrants and the other agreements
and documents contemplated hereby (including following the cure of any prior
breach or noncompliance), (ii) no Repurchase Event shall have occurred and (iii)
the Registration Statement is effective and available for use by the selling
stockholders named therein, 20% of the Total Repricing Rights (or such lesser
remaining amount if more than 80% of the Total Repricing Rights have been
exercised) shall terminate on the first Trading Day of each calendar month if
for the immediately preceding calendar month (1) the Average Market Price on
each Trading Day during such preceding month is greater than 125% of the Closing
Date Price and (2) the Average Daily Trading Volume in such preceding month is
greater than the Average Daily Trading Volume for the 30-day period prior to the
Closing Date.
.c.(i) Taxes;. The Company shall pay any and all transfer
taxes which may be imposed with respect to the issuance and delivery of
Repricing Shares upon the exercise of the Repricing Rights.
.c.(j) Company's Right to Repurchase in Lieu of Issuing
Repricing Shares;. (1) Commencing seven Trading Days after giving a Company
Repurchase Notice to the Buyer, the Company may elect to repurchase all, but not
less than all, Repricing Rights exercised during the Repurchase Period in lieu
of issuing shares of Common Stock upon each such exercise. The Company shall
repurchase each Repricing Right exercised by paying the Company Repurchase Price
to the Buyer for each such Repricing Right within three Business Days after the
applicable Exercise Notice is given. The Company may cancel any Company
Repurchase Notice effective upon at least two Trading Days' prior notice to the
Buyer. Any Exercise Notices submitted after the cancellation of a Company
Repurchase Notice shall require the issuance of Repricing Shares in accordance
with this Section 3.
(2) If the Company fails to pay the Company Repurchase Price
within 15 Business Days after it becomes due, the Buyer may elect by giving
notice thereof to the Company (A) to require the Company to issue Repricing
Shares in lieu of such payment, (B) to cancel the applicable Exercise Notice
and/or (C) to prohibit the Company from giving any Company Repurchase Notice in
the future without the Buyer's prior consent.
.c.(k) Buyer's Assignment of Repricing Rights;. If a Buyer
intends to assign all or any portion of its Repricing Rights, then the Buyer
shall so notify the Company not less than ten Trading Days before any Exercise
Date for such Repricing Rights. Each such notice of assignment by a Buyer shall
specify the name(s) of the assignee(s) and the number of Repricing Rights to be
assigned thereto. Each such notice shall be executed by the assignee(s). From
and after the giving of such notice by such Buyer, the Buyer shall be deemed for
all purposes to have assigned to such assignee(s) the rights under this
Agreement with respect to the acquisition of the number of Repricing Rights
covered by such notice, and such assignee(s) shall be deemed a party to this
Agreement with respect to the acquisition of such number of Repricing Rights
upon the terms and subject to the conditions of this Agreement, and all
applicable references herein to the "Buyer" shall include such assignee(s).
.c.4.BUYER REPRESENTATIONS, WARRANTIES, ETC.;
The Buyer represents and warrants to, and covenants and
agrees with, the Company as follows:
.c.(a) Purchase for Investment;. The Buyer is purchasing the
Initial Shares and acquiring the Repricing Rights and the Warrants, will
purchase the Second Tranche Shares, and upon issuance and delivery of any
Repricing Shares, will acquire such Repricing Shares, for its own account for
investment only and not with a view towards the public sale or distribution
thereof;
.c.(b) Accredited Investor;. The Buyer is an "accredited
investor" as that term is defined in Rule 501 of the General Rules and
Regulations under the 1933 Act by reason of Rule 501(a)(3);
.c.(c) Reoffers and Resales;. All subsequent offers and sales
of the Shares by the Buyer shall be made pursuant to registration of the Shares
being offered and sold under the 1933 Act or pursuant to an exemption from
registration;
.c.(d) Company Reliance;. The Buyer understands that the
Initial Shares and the Second Tranche Shares are being offered and sold, the
Repricing Rights and the Warrants are being issued, and the Repricing Shares and
the Warrant Shares are being offered, in each case to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Initial Shares, the Second Tranche Shares, the Repricing Rights
and the Warrants and to receive an offer of the Repricing Shares and the Warrant
Shares;
.c.(e) Information Provided;. The Buyer and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Initial Shares and the Second Tranche Shares and the issuance of the
Repricing Rights and the Warrants and the offer of the Repricing Shares and the
Warrant Shares which have been requested by the Buyer; the Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and have received satisfactory answers to any such inquiries; without
limiting the generality of the foregoing, the Buyer has had the opportunity to
obtain and to review the SEC Reports; and the Buyer understands that its
investment in the Securities involves a high degree of risk;
.c.(f) Absence of Approvals;. The Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities; and
.c.(g) Subscription Agreement;. The Buyer has all requisite
power and authority, corporate or otherwise, to execute, deliver and perform its
obligations under this Agreement and the other agreements executed or to be
executed by the Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
.c.5. COMPANY REPRESENTATIONS, WARRANTIES, ETC.;
The Company represents and warrants to, and covenants and
agrees with, the Buyer that:
.c.(a) Organization and Authority;. The Company is a
corporation duly organized and validly existing under the laws of Delaware, and
has all requisite corporate power and authority to (i) own, lease and operate
its properties and to carry on its business as described in the SEC Reports and
as now being conducted, and (ii) to execute, deliver and perform its obligations
under this Agreement, the Warrants, the Registration Rights Agreement, the
Escrow Agreement, the Parent Company Agreement and the other agreements to be
executed and delivered by the Company in connection herewith, and to consummate
the transactions contemplated hereby and thereby. The Company is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions wherein such qualification is necessary and where failure so to
qualify could have a material adverse effect on the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company. The Company has no subsidiaries or equity investments in any
Person.
.c.(b) Capitalization;. The authorized capital stock of the
Company consists of (a) 50,000,000 shares of Common Stock of which 10,466,665
shares of Common Stock were outstanding on November 30, 1998, all of which are
fully paid and nonassessable; and (b) 5,000,000 shares of Preferred Stock, $.001
par value, none of which are outstanding on November 30, 1998; and on the
Closing Date (x) there will be no material increase from November 30, 1998 in
the number of shares of Common Stock outstanding and (y) no issuances of any
other class or series of securities. As of November 30, 1998, the Company had
outstanding options, warrants and similar rights entitling the holders to
purchase 5,850,184 shares of Common Stock. Other than as set forth in the
preceding sentence, the Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares of
Common Stock, except as disclosed in the SEC Reports. The Company has duly
reserved from its authorized and unissued shares of Common Stock the full number
of shares required for (a) all options, warrants, convertible securities and
other rights to acquire shares of Common Stock which are outstanding and (b) all
shares of Common Stock and options and other rights to acquire shares of Common
Stock which may be issued or granted under the stock option and similar plans
which have been adopted by the Company. Each outstanding class or series of
securities, if any, for which any antidilution or similar adjustment arising by
reason of the issuance of the Common Shares or the issuance or exercise of the
Warrants is identified on Schedule 5(b)-1 attached hereto, together with the
amount of such antidilution adjustment. The outstanding shares of Common Stock
and outstanding options, warrants and other securities convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock have been duly authorized and validly issued. None of such
outstanding shares of Common Stock, options, warrants and other securities has
been issued in violation of the preemptive rights of any security holder of the
Company. The offers and sales of the outstanding shares of Common Stock and such
options, warrants and other securities were at all relevant times either
registered under the 1933 Act and applicable state securities laws or exempt
from such requirements. All registration rights under the 1933 Act relating to
any of the Company's securities are described on Schedule 5(b)-2 attached hereto
and, except as described on such Schedule, no holder of any of the Company's
securities has any rights, "demand," "piggy-back" or otherwise, to have such
securities registered by reason of the intention to file, filing or
effectiveness of the Registration Statement.
.c.(c) Concerning the Shares and the Common Stock;. The
Shares and the Repricing Rights have been duly authorized. The Initial Shares
and the Second Tranche Shares, when issued and paid for in accordance with this
Agreement, the Repricing Shares when issued in accordance with this Agreement,
and the Warrant Shares, when issued upon exercise of the Warrants, as the case
may be, will be duly and validly issued, fully paid and non-assessable and will
not subject the holder thereof to personal liability by reason of being such
holder. There are no preemptive or similar rights of any shareholder of the
Company or any other Person to acquire any of the Securities. The Company has
duly reserved 2,093,300 shares of Common Stock for issuance of the Initial
Shares, the Repricing Shares, the Second Tranche Shares and the Warrant Shares
and the issuance of similar securities under the Other Subscription Agreements,
and such shares shall remain so reserved. The Common Stock is listed for trading
on the Nasdaq and (1) the Company and the Common Stock meet the criteria for
continued listing and trading on the Nasdaq; (2) the Company has not been
notified since January 1, 1996 by the Nasdaq of any failure or potential failure
to meet the criteria for continued listing and trading on the Nasdaq and (3) no
suspension of trading in the Common Stock is in effect. The Company knows of no
reason that the Shares will not be eligible for listing on the Nasdaq.
.c.(d) Subscription Agreement; Escrow Agreement; Registration
Rights Agreement; Parent Company Agreement; Warrants;. This Agreement, the
Escrow Agreement, the Registration Rights Agreement, the Parent Company
Agreement and the Warrants and the other agreements and instruments contemplated
hereby and thereby have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered by the Company and this Agreement
is, and the Escrow Agreement, the Registration Rights Agreement, the Parent
Company Agreement and the Warrants and such other agreements, when executed and
delivered by the Company, will be, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
.c.(e) Non-contravention;. The execution and delivery by the
Company of this Agreement and the other documents contemplated by this Agreement
and the consummation by the Company of the issuance of the Shares, the Repricing
Rights and the Warrants as contemplated by this Agreement, and the other
transactions contemplated by this Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Parent Company Agreement and the Warrants do
not and will not, with or without the giving of notice or the lapse of time, or
both (i) result in any violation of any terms of the Certificate of
Incorporation or by-laws of the Company, (ii) conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, or result in the modification, amendment, termination or
cancellation of, result in the acceleration of any obligation of the Company
under, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company
pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company is a party or by which the Company or any of its
properties or assets is bound or affected, (iii) violate or contravene any
applicable law, rule or regulation or any applicable decree, judgment or order
of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its properties or assets or (iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company to own or lease and operate any of its properties or to conduct
any of its business or the ability of the Company to make use thereof.
.c.(f) Approvals;. No authorization, approval or consent of,
or filing with, any court, governmental body, regulatory agency, self-regulatory
organization, or stock exchange or market or the stockholders of the Company is
required to be obtained or made by the Company for (1) the execution, delivery
and performance by the Company of this Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Parent Company Agreement, the Warrants and
the other agreements and instruments contemplated hereby and thereby, (2) the
issuance and sale of the Initial Shares and the Second Tranche Shares and the
issuance of the Repricing Rights, the Repricing Shares and the Warrants as
contemplated by this Agreement and (3) the issuance of the Warrant Shares upon
the exercise of the Warrants, other than (w) the listing of the Shares on the
Nasdaq, (x) registration of the resale of the Shares under the 1933 Act as
contemplated by the Registration Rights Agreement, (y) as may be required under
applicable state securities or "blue sky" laws and (z) filing of one or more
Forms D with respect to the Shares as required under Regulation D.
.c.(g) Information Provided;. The information provided by or
on behalf of the Company to the Buyer in connection with the transactions
contemplated by this Agreement, including, without limitation, the information
referred to in Section 4(e) of this Agreement, does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, it being understood that, for purposes of
this Section 5(g), any statement contained in such information shall be deemed
to be modified or superseded for purposes of this Section 5(g) to the extent
that a statement in any document included in such information which was prepared
or filed with the SEC on a later date modifies or replaces such statement,
whether or not such later prepared or filed statement so states. The Company has
not filed any reports with the SEC under the 1934 Act since February 28, 1998
other than the SEC Reports.
.c.(h) Absence of Certain Changes; Liabilities;. Except as
disclosed in the SEC Reports, since February 28, 1998, there has been no
material adverse change and no material adverse development in the business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company. Except as and to the extent disclosed, reflected or
reserved against in the financial statements of the Company and the notes
thereto included in the SEC Reports, the Company has no material (individually
or in the aggregate) liabilities, debts or obligations (including guaranties)
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, including without limitation any such liabilities or obligations to Aura,
any of its officers, directors, security holders, or lenders or any of their
respective Affiliates. Subsequent to February 28, 1998, the Company has not
incurred any liabilities, debts or obligations of any nature whatsoever which
are individually or in the aggregate material to the Company other than those
incurred in the ordinary course of its business or disclosed in the SEC Reports.
.c.(i) Absence of Certain Proceedings;. Except as described
in the SEC Reports, there is no Action pending or, to the knowledge of the
Company, threatened against the Company, in any such case wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
business, properties, condition (financial or other), results of operations or
prospects of the Company or the transactions contemplated by this Agreement or
any of the documents contemplated hereby or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of such other documents;
the Company does not have pending before the SEC any request for confidential
treatment of information and to the best of the Company's knowledge no such
request will be made by the Company prior to the time the Registration Statement
relating to the Shares which is contemplated by the Registration Rights
Agreement is first ordered effective by the SEC; and there has not been, and to
the best of the Company's knowledge there is not pending or contemplated, any
investigation by the SEC involving the Company or any current or former director
or officer of the Company.
.c.(j) Properties;. The Company has good title to all
property real and personal (tangible and intangible) and other assets owned by
it, free and clear of all security interests, charges, mortgages, liens or other
encumbrances, except such as are described in the SEC Reports or such as do not
materially interfere with the use of such property made, or proposed to be made,
by the Company. The leases, licenses or other contracts or instruments under
which the Company lease, hold or is entitled to use any property, real or
personal, are valid, subsisting and enforceable with only such exceptions as do
not materially interfere with the use of such property made, or proposed to be
made, by the Company. The Company has not received notice of any material
violation of any applicable law, ordinance, regulation, order or requirement
relating to its owned or leased properties. The Company does not have any
knowledge of, and the Company has not given or received any notice of, any
pending conflicts with or infringement of the rights of others with respect to
any Company Proprietary Rights or with respect to any license of Company
Proprietary Rights. No action, suit, arbitration, or legal, administrative or
other proceeding or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Company Proprietary Rights. The Company
is not subject to any judgment, order, writ, injunction or decree of any court
or any federal, state, local, foreign or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any arbitrator, has not entered into and is not a party to any contract which
restricts or impairs the use of any such Company Proprietary Rights in a manner
which would have a material adverse effect on the use by the Company of any of
the Company Proprietary Rights. To the best knowledge of the Company, no Company
Proprietary Rights and no services or products sold by the Company, conflict
with or infringe upon any proprietary rights available to any third party. The
Company has not received written notice of any pending conflict with or
infringement upon such third-party proprietary rights. The Company has not
entered into any consent, indemnification, forbearance to xxx or settlement
agreement with respect to Company Proprietary Rights other than in the ordinary
course of business. No claims have been asserted by any Person with respect to
the validity of the Company's ownership or right to use the Company Proprietary
Rights and, to the best knowledge of the Company, there is no reasonable basis
for any such claim to be successful. To the best knowledge of the Company, the
Company Proprietary Rights are valid and enforceable. No registration relating
to the Company Proprietary Rights has lapsed, expired or been abandoned or
canceled or is the subject of cancellation or other adversarial proceedings, and
all applications therefor are pending and are in good standing, except for such
lapses, expirations, abandonments, cancellations, adversarial proceedings or
failures to be in good standing which would not, singly or in the aggregate,
have a material adverse effect on the business, properties, operations,
condition (financial or otherwise), results of operations or prospects of the
Company. The Company has complied, in all material respects, with its
contractual obligations relating to the protection of the Company Proprietary
Rights used pursuant to licenses. To the best knowledge of the Company, no
Person is infringing on or violating the Company Proprietary Rights.
.c.(k) Labor Relations;. No material labor problem exists or,
to the knowledge of the Company, is imminent with respect to any of the
employees of the Company.
.c.(l) SEC Filings;. The Company has timely filed all
required forms, reports and other documents required to be filed with the SEC
under the 1934 Act. All of such forms, reports and other documents complied,
when filed, in all material respects, with all applicable requirements of the
1933 Act and the 1934 Act.
.c.(m) Absence of Brokers, Finders, Etc.; No broker, finder
or similar Person is entitled to any commission, fee or other compensation by
reason of the transactions contemplated by this Agreement other than WS
Marketing & Financial Services, Inc. and H&H Securities, and the Company shall
pay, and indemnify and hold harmless the Buyer from, any claim made against the
Buyer by such entities or any other Person for any such commission, fee or other
compensation.
.c.(n) No Solicitation;. No form of general solicitation or
general advertising was used by the Company or, to the best of its knowledge,
any other Person acting on behalf of the Company, in respect of or in connection
with the offer and sale of the Shares, the Repricing Rights or the Warrants.
Neither the Company nor, to its knowledge, any Person acting on behalf of the
Company has, either directly or indirectly, sold or offered for sale to any
Person any of the Shares, the Repricing Rights or the Warrants or, within the
six months prior to the date hereof, any other similar security of the Company
except as contemplated by this Agreement; and neither the Company nor any Person
authorized to act on its behalf will sell or offer for sale any shares of Common
Stock or Warrants, or solicit any offers to buy any shares of Common Stock or
Warrants, so as thereby to cause the issuance or sale of any of the Shares or
the issuance of the Repricing Rights and the Warrants to be in violation of
Section 5 of the 1933 Act.
.c.(o) Certain Issuances of Securities; Rights of First
Refusal;. Except as set forth on Schedule 5(o) attached hereto, the Company has
not issued any shares of Common Stock or shares of any series of preferred stock
or other securities convertible into, exchangeable for or otherwise entitling
the holder to acquire shares of Common Stock which are subject to the
Stockholder Approval Rule and which could be integrated with the sale of the
Initial Shares or the Second Tranche Shares to the Buyer or the issuance of
Repricing Shares or Warrant Shares to the Buyer under the Stockholder Approval
Rule. Except as provided in this Agreement and the Other Subscription
Agreements, no Person has any right of first refusal or similar right to acquire
any of the Company's securities.
.c.(p) Absence of Rights Agreement;. The Company has not
adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
.c.6. CERTAIN COVENANTS AND ACKNOWLEDGMENTS;.
.c.(a) Transfer Restrictions;. The Company and the Buyer
acknowledge and agree that (1) the Warrants and the Repricing Rights have not
been and are not being registered under the provisions of the 1933 Act and,
except as provided in the Registration Rights Agreement with respect to the
resale of the Shares, the Shares have not been and are not being registered for
resale under the 1933 Act, and the Securities may not be transferred unless (A)
subsequently registered for resale thereunder or (B) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Securities to be sold
or transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any resale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
Rule 144 and further, if Rule 144 is not applicable, any such resale of
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than registration of the resale of the Shares pursuant to the
Registration Rights Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder (other than pursuant to Section 6(d)
hereof and pursuant to the Registration Rights Agreement).
.c.(b) Restrictive Legends;.
(1) The Buyer acknowledges and agrees that the Warrants shall
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the Warrants):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act of
1933, as amended, or an opinion of counsel that registration is not required
under said Act.
(2) The Buyer further acknowledges and agrees that until such
time as the Shares have been registered for resale under the 1933 Act as
contemplated by the Registration Rights Agreement, the certificates for the
Shares may bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for the
Shares):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act of
1933, as amended, or an opinion of counsel that registration is not required
under said Act.
(3) Once the Registration Statement required to be filed by
the Company pursuant to Section 2 of the Registration Rights Agreement has been
declared effective, thereafter (1) upon request of the Buyer the Company will
substitute certificates without restrictive legend for certificates for any
Shares issued prior to the date such Registration Statement is declared
effective by the SEC which bear such restrictive legend and remove any
stop-transfer restriction relating thereto promptly, but in no event later than
three Trading Days after surrender of such certificates by the Buyer or the
Repricing Escrow Agent acting at the request of the Buyer and (2) the Company
shall not place any restrictive legend on certificates for any Shares issued or
impose any stop-transfer restriction thereon.
.c.(c) Escrow Agreement; Registration Rights Agreement;
Parent Company Agreement;. On or before the Closing Date, the parties hereto
agree to enter into (i) the Escrow Agreement in the form attached hereto as
Annex III, (ii) the Registration Rights Agreement in the form attached hereto as
Annex IV and (iii) the Parent Company Agreement in the form attached hereto as
Annex V.
.c.(d) Form D;. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to the Buyer promptly after such filing. The Buyer agrees to cooperate
with the Company in connection with such filing and, upon request of the
Company, to provide all information relating to the Buyer reasonably required
for such filing.
.c.(e) Authorization for Trading; Reporting Status;. Within
two Business Days after the Closing Date, the Company shall file a
notification for listing of additional shares with the Nasdaq relating to the
Shares and on or prior to such date shall provide evidence of such filing to the
Buyer. So long as the Buyer owns any of the Shares, the Repricing Rights or the
Warrants, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination.
.c.(f) Use of Proceeds;. The Company does not own or have any
present intention of acquiring any "margin stock" as defined in Regulation G (12
CFR Part 207) of the Board of Governors of the Federal Reserve System ("margin
stock"). The proceeds of sale of the Initial Shares and the Second Tranche
Shares will be used for general working capital purposes and in the operation of
the Company's business. None of such proceeds will be used, directly or
indirectly (1) to make any loan to or investment in any other Person or (2) for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any margin stock or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
stock that is currently a margin stock or for any other purpose which might
constitute the transactions contemplated by this Agreement a "purpose credit"
within the meaning of such Regulation G. Neither the Company nor any agent
acting on its behalf has taken or will take any action which might cause this
Agreement or the transactions contemplated hereby to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the 1934 Act, in each case as in effect now or as
the same may hereafter be in effect.
.c.(g) Blue Sky Laws;. On or before the Closing Date, the
Company shall take such action as and to the extent it shall be necessary or
required to qualify, or to obtain an exemption for, the Initial Shares and the
Second Tranche Shares for sale to the Buyer and the Warrants, the Repricing
Rights and the Repricing Shares for issuance to the Buyer pursuant to this
Agreement, and the Warrant Shares for issuance to the Buyer on exercise of the
Warrants under such of the securities or "blue sky" laws of jurisdictions as
shall be applicable to the sale of the Initial Shares and the Second Tranche
Shares and the issuance of the Warrants pursuant to this Agreement, the issuance
to the Buyer of the Repricing Rights and the Repricing Shares pursuant to this
Agreement, and the issuance to the Buyer of Warrant Shares on exercise of the
Warrants. The Company shall furnish copies of all filings, applications, orders
and grants or confirmations of exemptions relating to such securities or "blue
sky" laws on or prior to the Closing Date.
.c.(h) Certain Expenses;. Whether or not any closing occurs,
the Company shall pay or reimburse the Buyer for all reasonable expenses
(including, without limitation, legal fees and expenses of counsel to the
Buyer), not in excess of $30,000 in the aggregate for the Buyer and the Other
Buyers, incurred by the Buyer in connection with this Agreement and the
transactions contemplated hereby, including without limitation compliance with
the Buyer's SEC beneficial ownership reporting obligations. The Company shall
pay on demand all expenses incurred by the Buyer, including reasonable
attorneys' fees and expenses, as a consequence of, or in connection with (1) the
negotiation, preparation or execution of any amendment, modification or waiver
of this Agreement, the Escrow Agreement, the Registration Rights Agreement, the
Parent Company Agreement, the Warrants and the other agreements and instruments
contemplated hereby and thereby requested by the Company, (2) any default or
breach of any of the Company's obligations set forth in any of such agreements
or instruments and (3) the enforcement or restructuring of any right of,
including the collection of any payments due, the Buyer under any of such
agreements or instruments, including any action or proceeding relating to such
enforcement or any order, injunction or other process seeking to restrain the
Company from paying any amount due the Buyer, in which the Buyer prevails. The
Company shall pay all costs and expenses associated with the performance of the
Escrow Agreement, the fees and expenses of the Repricing Escrow Agent as
provided in the Escrow Agreement, and the issuance and delivery of the Shares.
.c.(i) Certain Issuances of Securities;. (1) Unless the
Company obtains the Stockholder Approval or a waiver thereof from the Nasdaq,
the Company will not issue any shares of Common Stock or shares of any series of
preferred stock or other securities convertible into, exchangeable for, or
otherwise entitling the holder to acquire, shares of Common Stock which would be
subject to the requirements of the Stockholder Approval Rule and which would be
integrated with the sale of the Initial Shares or the Second Tranche Shares or
the issuance of Repricing Shares to the Buyer for purposes of the Stockholder
Approval Rule.
(2) During the period from the date of this Agreement to the
date which is 180 days after the Closing Date, the Company shall not offer,
sell, contract to sell or issue (or engage any Person to assist the Company in
taking any such action) any Specified Securities; provided, however, that
nothing in this Section 6(i) shall prohibit the Company from issuing securities
(w) as permitted by Section 6(i)(4), (x) pursuant to compensation plans for
employees, directors, officers, advisers or consultants of the Company and in
accordance with the terms of such plans as in effect as of the date of this
Agreement, (y) upon exercise of conversion, exchange, purchase or similar rights
issued, granted or given by the Company and outstanding as of the date of this
Agreement and disclosed in the SEC Reports or this Agreement or (z) pursuant to
the specific terms of the transaction described on Schedule 6(i)(2)attached
hereto.
(3) Except as permitted by Section 6(i)(4), during the period
commencing on the date which is 181 days after the Closing Date to the date
which is one year after the Closing Date, the Company shall not offer, sell,
contract to sell or issue (or engage any Person to assist the Company in taking
any such action) any Specified Securities without giving the Buyer the first
right to acquire the Specified Securities on the same terms as the Specified
Securities are to be offered to other investors. The Company shall give notice
to the Buyer of the detailed terms of the Specified Securities proposed to be
issued and, promptly after being requested by the Buyer, such other information
as requested by the Buyer. The Buyer may, by notice to the Company, exercise
such right of first refusal at any time until the later of (x) 10 Business Days
after such notice from the Company to the Buyer and (y) 5 Business Days after
the Company provides such additional information as shall have been requested by
the Buyer.
(4) During the period commencing on the day after the Second
Closing Date to the date which is one year after the Closing Date, if the
Company desires to offer and sell shares of Common Stock for an aggregate
consideration of up to $1,500,000 on substantially the same terms as the sale of
the Shares pursuant to this Agreement (including the issuance of repricing
rights and warrants in connection therewith), the Company shall first offer such
securities to the Buyer and the Other Buyers. The Company shall give notice to
the Buyer of the detailed terms of such securities proposed to be issued and,
promptly after being requested by the Buyer, such other information as requested
by the Buyer. The Buyer may exercise such right of first refusal by giving
notice to the Company on or before the second Business Day after receiving such
notice from the Company. If the Buyer fails to exercise such right, the Company
may complete the transaction on the same terms with other investors during the
following 30-day period. This Section 6(i)(4) shall only be effective if the
Second Closing Date has occurred.
.c.(j) Stockholder Approval;. (1) On or before the 60th day
after the Closing Date, the Company shall seek and use its best efforts to
obtain, at a special meeting of its stockholders called for such purpose or by
written consent of the Company's stockholders, Stockholder Approval of the
issuance of all Initial Shares, Second Tranche Shares and Repricing Shares
issued and issuable pursuant to this Agreement and all similar securities issued
and issuable pursuant to the Other Subscription Agreements. The Company shall
prepare and file with the SEC within 30 days prior to the scheduled mailing of
notice of such special meeting or proposed consent preliminary proxy materials
which set forth a proposal to seek such Stockholder Approval. The Company shall
provide the Buyer an opportunity to consult with the Company regarding the
content of such proxy materials insofar as it relates to the Stockholder
Approval by providing copies of such preliminary proxy materials and any revised
preliminary proxy materials to the Buyer a reasonable period of time prior to
their filing with the SEC. The Company shall furnish to the Buyer and its
counsel a copy of its definitive proxy materials for such special meeting or
action by written consent and any amendments or supplements thereto promptly
after the same are mailed to stockholders or filed with the SEC.
(2) Prior to the closing on the Closing Date, the Company
shall deliver to the Buyer irrevocable proxies, in form satisfactory to Buyer
and its counsel and duly executed by stockholders who own of record and
beneficially in excess of 51% of the outstanding shares of Common Stock on the
Closing Date, which proxies (x) grant Buyer or its designee the authority to
vote all of such stockholders' shares in favor of the Stockholder Approval
described in Section 6(j)(1) and (y) prohibit such stockholders from selling or
otherwise transferring their shares prior to such Stockholder Approval being
obtained.
(3) If for any reason the Company fails to obtain, or the
Company abandons its efforts to obtain, such Stockholder Approval within such 60
day period, on the earlier of (x) the Business Day which is 61 days after the
Closing Date and (y) the Business Day after such abandonment, the Company shall
repurchase all of the Initial Shares then held by the Buyer, together with all
of the Buyer's Repricing Rights and the Warrants, for an amount equal to the
number of Initial Shares held by the Buyer on the date of such repurchase
multiplied by the Stockholder Nonapproval Price.
.c.(k) Certain Trading Restrictions;. The Buyer agrees that
on the Closing Date it will have no short position in the Common Stock and shall
not engage in short sales relating to the Common Stock for 120 days thereafter.
After such 120th day, so long as (1) no Repurchase Notice has been given with
respect to which the applicable Repurchase Price has not been paid and (2) the
SEC Effective Date has occurred, the Buyer agrees that during the period from
the SEC Effective Date to the date on which the Buyer no longer owns any
unexercised Repricing Rights, the Buyer shall not engage in short sales relating
to the Common Stock; provided, however, the Buyer may engage in such short sales
to the extent the Buyer delivers an Exercise Notice in accordance with Section 3
within one Trading Day after entering into such short sale which Exercise Notice
provides for the delivery of a sufficient number of Repricing Shares to cover
such short sale.
.c.(l) Reservation and Authorization of Common Stock;. The
Company (and any successor corporation) shall take all action necessary so that
a number of shares of the authorized but unissued Common Stock (or common stock
in the case of any successor corporation) sufficient to provide for the issuance
of all Second Tranche Shares, Repricing Shares and Warrant Shares issuable
hereunder are at all times reserved by the Company (or any successor
corporation), free from preemptive rights. If the Company shall issue any
securities or make any change in its capital structure which would change the
number of shares of Common Stock issuable as Second Tranche Shares, Repricing
Shares or Warrant Shares as herein provided, the Company shall at the same time
also make proper provision so that thereafter there shall be a sufficient number
of shares of Common Stock authorized and reserved, free from preemptive rights,
for issuance of such Shares on the new basis. If at any time the number of
authorized but unissued shares or the number of reserved shares of Common Stock
shall not be sufficient to permit the issuance of all Repricing Shares and
Warrant Shares issuable hereunder, (1) the Company promptly shall seek, and use
its best efforts to obtain and complete, such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose and (2) for each 30-day period or portion thereof while such
insufficiency shall continue, the Company shall pay the Buyer, at the end of
each such 30-day period or portion thereof, an amount equal to the Insufficient
Share Amount for each Repricing Share for which an Exercise Notice has been
given and for each Warrant Share for which Warrants have been exercised, as the
case may be, which is not then issuable by reason of such insufficiency. The
payment provided in clause (2) of the foregoing sentence shall be in addition to
and shall not limit any other rights or remedies of the Buyer under this
Agreement and applicable law.
.c.(m) Suspension of Trading;. In addition to adjustments of
the Repricing Price and any other rights and remedies which the Buyer has under
this Agreement and under applicable law, for each Business Day on which trading
in the shares of Common Stock is suspended or prohibited on the principal
securities market for the Common Stock (including, if applicable, the OTC
Bulletin Board), the Company shall pay the Buyer an amount equal to 0.2% of the
product of (1) the number of Shares and Repricing Rights then held by the Buyer
and (2) the Closing Price of the Common Stock on the Trading Day prior to such
suspension or prohibition. The cumulative amount of such amounts which have
accrued shall be paid by the Company to the Buyer every seven Business Days
after the date of such suspension or prohibition.
.c.(n) Consolidation, Merger, etc.; In case of any
consolidation or merger of the Company with any other corporation (other than a
wholly-owned subsidiary of the Company) in which the Company is not the
surviving corporation, or in case of any sale or transfer of all or
substantially all of the assets of the Company, or in the case of any share
exchange pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property, the Company shall make appropriate
provision or cause appropriate provision to be made so that each holder of
Repricing Rights then outstanding shall have the right thereafter to receive
Repricing Shares in the form of the kind of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, transfer, or
share exchange by a holder of shares of Common Stock immediately prior to the
effective date of such consolidation, merger, sale, transfer, or share exchange
and on a basis which preserves the economic benefits of the rights of the
holders of Repricing Rights to receive Repricing Shares on a basis as nearly as
practical as such rights exist hereunder prior thereto. The Company shall not
effect any such transaction unless the provisions of this Section 7(n) have been
complied with. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, or share exchanges.
.c.(o) Overdue Amounts;. Whenever any amount which is due by
the Company to any holder of Shares, Repricing Rights or Warrants, pursuant to
the terms of this Agreement, the Registration Rights Agreement or the Warrants,
is not paid to such holder when due, such amount shall bear interest at the rate
of 14% per annum (or such lesser rate as shall be the maximum rate allowable by
applicable law) until paid in full.
.c.(p) Transactions with Affiliates;. The Company will not,
and will not permit any subsidiary of the Company, directly or indirectly, to
pay any funds to or for the account of, make any investment (whether by
acquisition of stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any indebtedness, or otherwise) in, lease, sell, transfer or
otherwise dispose of any assets, tangible or intangible, to, or participate in,
or effect any transaction in connection with, any joint enterprise or other
joint arrangement with, any Affiliate of the Company (including without
limitation Aura, Aura's Affiliates, and their respective directors, officers and
stockholders), except, on terms to the Company or such subsidiary no less
favorable than terms that could be obtained by the Company or such subsidiary
from a Person that is not an Affiliate of the Company, as determined in good
faith by the Board of Directors.
.c.(q) Other;. So long as any Shares, Repricing Rights or
Warrants are owned by the Buyer:
.c.(1) Payment of Obligations;. The Company will pay and
discharge, and will cause each subsidiary of the Company to pay and discharge,
when due all their respective obligations and liabilities which are material to
the Company and its subsidiaries taken as a whole, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings.
.c.(2) Maintenance of Property; Insurance;. (A) The Company
will keep, and will cause each subsidiary of the Company to keep, all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(B) The Company will maintain, and will cause each subsidiary
of the Company to maintain, with financially sound and responsible insurance
companies, insurance against loss or damage by fire or other casualty and such
other insurance, including but not limited to, product liability insurance, in
such amounts and covering such risks as is reasonably adequate for the conduct
of their businesses and the value of their properties.
.c.(3) Conduct of Business and Maintenance of Existence;.
The Company will continue, and will cause each subsidiary of the Company to
continue, to engage in business of substantially the same general type as
conducted by the Company and its operating subsidiaries on the date of this
Agreement, and will preserve, renew and keep in full force and effect, and will
cause each subsidiary of the Company to preserve, renew and keep in full force
and effect, their respective corporate existence and their respective material
rights, privileges and franchises necessary or desirable in the normal conduct
of business.
.c.(4) Compliance with Laws;. The Company will comply, and
will cause each subsidiary of the Company to comply, in all material respects
with all applicable laws, ordinances, rules, regulations, decisions, orders and
requirements of governmental authorities and courts (including, without
limitation, environmental laws) except (i) where compliance therewith is
contested in good faith by appropriate proceedings or (ii) where non-compliance
therewith could not reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its subsidiaries taken as a whole.
.c.(5) Investment Company Act;. The Company will not be or
become an open-end investment trust, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act of 1940, as amended, or any successor provision.
.c.(r) Best Efforts;. Each of the parties shall use its best
efforts timely to satisfy each of the conditions to the other party's
obligations to sell and purchase the Initial Shares set forth in Section 8 or 9,
as the case may be, of this Agreement on or before the Closing Date.
.c.7. CLOSING DATE; SECOND CLOSING DATE;.
Subject to the satisfaction or waiver of the conditions set
forth in Sections 8(a) and 9(a), the Closing Date shall be 12:00 noon, New York
City time, on or before the date which is three Business Days after the date of
this Agreement, or such other mutually agreed to time. The closing of the sale
of the Initial Shares and the other transactions contemplated hereby shall occur
on the Closing Date at the offices of the Escrow Agent. The Second Closing shall
occur on the Second Closing Date at the offices of the Escrow Agent.
.c.8 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
AND ISSUE;.
.c.(a) First Closing.; The Buyer understands that the
Company's obligation to sell the Initial Shares and issue the Initial Repricing
Rights and the Warrants to the Buyer pursuant to this Agreement on the Closing
Date is conditioned upon the satisfaction of the following conditions precedent
on or before the Closing Date (any or all of which may be waived by the Company
in its sole discretion):
(1) The receipt and acceptance by the Company of this
Agreement as evidenced by execution of this Agreement by the Company and
delivery of an executed counterpart of this Agreement to the Buyer or its legal
counsel;
(2) Delivery by the Buyer to the Escrow Agent of good funds
as payment in full of an amount equal to the Purchase Price for the Initial
Shares, in accordance with Section 2(a)(2) hereof; and
(3) The accuracy on the Closing Date of the representations
and warranties of the Buyer contained in this Agreement as if made on the
Closing Date and the performance by the Buyer on or before the Closing Date of
all covenants and agreements of the Buyer required to be performed on or before
the Closing Date.
.c.(b) Second Closing;. The Buyer understands that the
Company's obligation to sell the Second Tranche Shares and issue the Second
Tranche Repricing Rights to the Buyer pursuant to this Agreement on the Second
Closing Date is conditioned upon the satisfaction of the following conditions
precedent on or before the Second Closing Date (any or all of which may be
waived by the Company in its sole discretion):
(1) Delivery by the Buyer to the Escrow Agent of good funds
as payment in full of an amount equal to the Second Tranche Purchase Price, in
accordance with Section 2(b)(2) hereof; and
(2) The Average Market Price on the Second Closing Date is
equal to or greater than $4.00 (subject to equitable adjustments from time to
time on terms reasonable acceptable to the Buyer for stock splits, stock
dividends, combinations, recapitalizations, reclassifications, and similar
events occurring after the date of this Agreement).
.c.9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE;.
.c.(a) First Closing;. The Company understands that the
Buyer's obligation to purchase the Initial Shares and acquire the Initial
Repricing Rights and the Warrants from the Company pursuant to this Agreement on
the Closing Date is conditioned upon the satisfaction of the following
conditions precedent on or before the Closing Date (any or all of which may be
waived by the Buyer in its sole discretion):
(1) Delivery by the Company to the Escrow Agent of the
certificates for the Initial Shares and the Warrants in accordance with this
Agreement;
(2) Delivery by the Company to the Repricing Escrow Agent of
the number of Escrow Shares required to be so delivered in accordance with this
Agreement and the Escrow Agreement and receipt by the Buyer of written
confirmation thereof;
(3) The accuracy on the Closing Date of the representations
and warranties of the Company contained in this Agreement as if made on the
Closing Date and the performance by the Company on or before the Closing Date of
all covenants and agreements of the Company required to be performed on or
before the Closing Date and receipt by the Buyer of a certificate, dated the
Closing Date, of the Chief Executive Officer or the Chief Financial Officer of
the Company confirming such matters and such other matters as the Buyer may
reasonably request;
(4) The receipt by the Buyer of a certificate, dated the
Closing Date, of the Secretary of the Company certifying (A) the Certificate of
Incorporation and By-Laws of the Company as in effect on the Closing Date, (B)
all resolutions of the Board of Directors (and committees thereof) of the
Company relating to this Agreement and the transactions contemplated hereby and
(C) such other matters as reasonably requested by the Buyer;
(5) The Escrow Agent shall have executed and delivered the
Escrow Agreement in the form attached hereto as Annex III;
(6) Aura shall have executed and delivered the Parent Company
Agreement in the form attached hereto as Annex V; and
(7) Receipt by the Buyer on the Closing Date of an opinion of
Xxxxx & Associates, counsel for the Company, dated the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer, to the effect set
forth in Annex VIIattached hereto.
.c.(b) Second Closing;. The Company understands that the
Buyer's obligation to purchase the Second Tranche Shares and acquire the Second
Tranche Repricing Rights from the Company pursuant to this Agreement on the
Second Closing Date is conditioned upon the satisfaction of the following
conditions precedent on or before the Second Closing Date (any or all of which
may be waived by the Buyer in its sole discretion):
(1) Delivery by the Company to the Escrow Agent of the
certificates for the Second Tranche Shares in accordance with this Agreement;
(2) The Average Market Price on the Second Closing Date is
equal to or greater than $4.00 (subject to equitable adjustments from time to
time on terms reasonable acceptable to the Buyer for stock splits, stock
dividends, combinations, recapitalizations, reclassifications, and similar
events occurring after the date of this Agreement);
(3) Each of the Company and Aura shall be in compliance in
all material respects with its obligations to the Buyer under this Agreement,
the Registration Rights Agreement, the Escrow Agreement, the Parent Company
Agreement, the Warrants and the other agreements and instruments contemplated
hereby;
(4) No Repurchase Event, or any event with the giving of
notice or the lapse of time, or both, would constitute a Repurchase Event, shall
have occurred and be continuing; and
(5) The Registration Statement shall have been effective and
available for use by the selling stockholders named therein for at least 60
consecutive days prior to the Second Closing Date with respect to the Initial
Shares, and at least three consecutive days prior to the Second Closing Date
with respect to the other Shares.
.c.10. REPURCHASE AT OPTION OF THE BUYER;.
.c.(a) Repurchase Right;. If a Repurchase Event occurs, then,
in addition to any other right or remedy of the Buyer, the Buyer shall have the
right, at the Buyer's option, to require the Company to repurchase all of the
Buyer's Shares and Repricing Rights owned by the Buyer (which for purposes of
this Section 10 include any Repricing Shares due to the Buyer which have not
been delivered to the Buyer), or any portion thereof, on the date that is three
Business Days after the date the Buyer gives the Company a Repurchase Notice
with respect to such Repurchase Event at any time while any of the Buyer's
Shares or Repricing Rights are outstanding, at a price equal to the Repurchase
Price for (i) each Share being repurchased and (ii) each Repricing Share which
would otherwise be issuable upon exercise on the Repurchase Date of the
Repricing Rights being repurchased.
.c.(b) Notices; Method of Exercising Optional Repurchase
Rights, Etc.; (1) On or before the fifth Business Day after the occurrence of a
Repurchase Event, the Company shall give to the Buyer a notice of the occurrence
of such Repurchase Event and of the repurchase right set forth herein arising as
a result thereof. Such notice from the Company shall set forth:
(i) the date by which the optional repurchase right must be
exercised, and
(ii) a description of the procedure (set forth below) which the Buyer
must follow to exercise the Buyer's optional repurchase right.
No failure of the Company to give such notice or defect therein shall limit the
right of the Buyer to exercise the optional repurchase right or affect the
validity of the proceedings for the repurchase of the Buyer's Shares and
Repricing Rights.
(2) To exercise its optional repurchase right, the Buyer
shall deliver to the Company on or before the 30th day after the notice required
by Section 10(b)(1) is given to the Buyer (or if no such notice has been given
by the Company to the Buyer, within 40 days after the Buyer first learns of such
Repurchase Event) a Repurchase Notice to the Company. A Repurchase Notice may be
revoked by the Buyer giving such Repurchase Notice by giving notice of such
revocation to the Company at any time prior to the time the Company pays the
Repurchase Price to the Buyer.
(3) If the Buyer shall have given a Repurchase Notice, on the
date which is three Business Days after the date such Repurchase Notice is given
(or such later date as the Buyer surrenders the Buyer's certificates for the
Shares repurchased) the Company shall make payment in immediately available
funds of the applicable Repurchase Price for each Share being repurchased and
each Repricing Share which would otherwise be issuable upon exercise of each
Repricing Right being repurchased to such account as specified by the Buyer in
writing to the Company at least one Business Day prior to the applicable
Repurchase Date.
.c.(c) Other;. (1) In connection with a repurchase pursuant
to this Section 10 of less than all of the Shares evidenced by a particular
certificate, promptly, but in no event later than three Business Days after
surrender of such certificate to the Company, the Company shall issue and
deliver to the Buyer a replacement certificate for the Shares evidenced by such
certificate which have not been repurchased.
(2) A Repurchase Notice given by the Buyer shall be deemed
for all purposes to be in proper form unless the Company notifies the Buyer in
writing within three Business Days after such Repurchase Notice has been given
(which notice shall specify all defects in such Repurchase Notice), and any
Repurchase Notice containing any such defect shall nonetheless be effective on
the date given if the Buyer promptly undertakes to correct all such defects. No
such claim of error shall limit or delay performance of the Company's obligation
to repurchase all Shares and Repricing Rights not in dispute whether or not the
Buyer makes such undertaking.
.c.(d) Adjustment of Repricing Price;. For any Repricing
Rights not subject to a Repurchase Notice following the occurrence of a
Repurchase Event, the Buyer may elect to deliver an Adjustment Notice to the
Company to increase the Repricing Price as provided in the definition thereof in
Section 1. At any time the Buyer may terminate an Adjustment Notice by giving a
Repurchase Notice with respect to the applicable Repricing Rights.
.c.11. MISCELLANEOUS;.
.c.(a) Governing Law;. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of California.
.c.(b) Counterparts;. This Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, all of which
together shall constitute one and the same instrument. A facsimile transmission
of this Agreement bearing a signature on behalf of a party hereto shall be legal
and binding on such party. Although this Agreement is dated as of the date first
set forth above, the actual date of execution and delivery of this Agreement by
each party is the date set forth below such party's signature on the signature
page hereof. Any reference in this Agreement or in any of the documents executed
and delivered by the parties hereto in connection herewith to (1) the date of
execution and delivery of this Agreement by the Buyer shall be deemed a
reference to the date set forth below the Buyer's signature on the signature
page hereof, (2) the date of execution and delivery of this Agreement by the
Company shall be deemed a reference to the date set forth below the Company's
signature on the signature page hereof and (3) the date of execution and
delivery of this Agreement or the date of execution and delivery of this
Agreement by the Buyer and the Company shall be deemed a reference to the later
of the dates set forth below the signatures of the parties on the signature page
hereof.
.c.(c) Headings, etc.; The headings, captions and footers of
this Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement.
.c.(d) Severability;. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
.c.(e) Amendments;. (1) No amendment, modification, waiver,
discharge or termination of any provision of this Agreement nor consent to any
departure by the Buyer or the Company therefrom shall in any event be effective
unless the same shall be in writing and signed by the party to be charged with
enforcement, and then shall be effective only in the specific instance and for
the purpose for which given. No course of dealing between the parties hereto
shall operate as an amendment of this Agreement.
(2) Notwithstanding any other provision of this Agreement, in
addition to the requirements of Section 11(e)(1), any amendment of (x) Section
3(g)(2), (y) the definition of the term Aggregated Person or (z) this Section
11(e)(2) shall require approval by the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock, present in person or
represented by proxy at a duly convened meeting of stockholders of the Company,
and entitled to vote or the consent thereto in writing by holders of a majority
of the outstanding shares of Common Stock, and the stockholders of the Company
are hereby expressly made third party beneficiaries of this Section 11(e)(2).
.c.(f) Waivers;. Failure of any party to exercise any right
or remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, or any course of dealings between the parties, shall not
operate as a waiver thereof or an amendment hereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or exercise of any other right or power.
.c.(g) Notices;. Any notices required or permitted to be
given under the terms of this Agreement shall be delivered personally (which
shall include telephone line facsimile transmission with answer back
confirmation) or by courier and shall be effective upon receipt, if delivered
personally or by courier, in the case of the Company addressed to the Company at
its address shown in the introductory paragraph of this Agreement, Attention:
Chief Executive Officer (telephone line facsimile transmission number (818)
597-1002), or, in the case of the Buyer, at its address or telephone line
facsimile transmission number shown on the signature page of this Agreement, or
such other address or telephone line facsimile transmission number as a party
shall have provided by notice to the other party in accordance with this
provision.
.c.(h) Assignment;. Prior to the Closing Date, the Buyer
shall have the right to assign its rights and obligations under this Agreement
with respect to the purchase of all or any portion of the Initial Shares or the
Second Tranche Shares and the issuance of the Repricing Rights and the Warrants
to any Affiliate of the Buyer, provided any such assignee, by written instrument
duly executed by such assignee, assumes all obligations of the Buyer hereunder
with respect to the purchase of the portion of the Initial Shares or the Second
Tranche Shares or the acquisition of the Repricing Rights and the Warrants so
assigned and makes the same representations and warranties with respect thereto
as the Buyer makes in this Agreement, whereupon the Buyer shall be relieved of
any further obligations, responsibilities and liabilities with respect to the
purchase of all or the portion of the Initial Shares or the Second Tranche
Shares and the acquisition of the Repricing Rights and the Warrants the
obligation for the purchase or acquisition of which has been so assigned. In the
case of any such assignment, the Company shall agree in writing with such
assignee to make available to such assignee the benefits of the Registration
Rights Agreement with respect to the Initial Shares, the Second Tranche Shares,
the other Shares issuable in connection with this Agreement and the Warrants
with respect to which the purchase under this Agreement has been so assigned.
Any transfer of the Shares, the Warrants or the Repricing Rights by the Buyer
after the Closing Date shall be made in accordance with Section 6(a). After the
Closing Date, the Buyer shall have the right to assign its rights and
obligations under this Agreement (1) in connection with any transfer of the
Buyer's rights under the Registration Rights Agreement by compliance with the
provisions of Section 9 of the Registration Rights Agreement and (2) as provided
in Section 3(k).
.c.(i) Survival of Representations and Warranties;.
The respective representations, warranties, covenants and agreements of the
Buyer and the Company contained in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall survive the delivery of
payment for the Initial Shares and shall remain in full force and effect
regardless of any investigation made by or on behalf of them or any Person
controlling or advising any of them.
.c.(j) Entire Agreement;. This Agreement and its Schedules
and Annexes set forth the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, whether written or oral, with respect thereto.
.c.(k) Termination;. The Buyer shall have the right to
terminate this Agreement by giving notice to the Company at any time at or prior
to the Closing Date if:
(1) the Company shall have failed, refused, or been unable at or prior
to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the closing of the sale of the Initial Shares shall not have
occurred on a Closing Date on or before December 4, 1998, other than solely by
reason of a breach of this Agreement by the Buyer.
Any such termination shall be effective upon the giving of notice thereof by the
Buyer. Upon such termination, the Buyer shall have no further obligation to the
Company hereunder and the Company shall remain liable for any breach of this
Agreement or the other documents contemplated hereby which occurred on or prior
to the date of such termination.
.c.(l) Further Assurances;. Each party to this Agreement will
perform any and all acts and execute any and all documents as may be necessary
and proper under the circumstances in order to accomplish the intents and
purposes of this Agreement and to carry out its provisions.
.c.(m) Public Statements, Press Releases, Etc.; The Company
and the Buyer shall have the right to approve before issuance any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of the Buyer, to make any press release or other public disclosure with
respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any
such press release or other public disclosure prior to its release and shall be
provided with a copy thereof).
.c.(n) Construction;. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
~ IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer and the
Company by their respective officers or other representatives thereunto duly
authorized on the respective dates set forth below.
NUMBER OF INITIAL SHARES:
PRICE PER SHARE:
AGGREGATE PURCHASE PRICE:
NUMBER OF INITIAL REPRICING RIGHTS:
NUMBER OF WARRANT SHARES:
[NAME OF BUYER]
By:__________________________________
Name:
Title:
Date:
Address:
Facsimile No.:
XXXXXX, INC.
By:
Name:
Title:
Date:
