AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
COMMON STOCK
AND WARRANTS
UNIT SUBSCRIPTION AGREEMENT dated as of June 17, 2005 (this
"Agreement"), among
AXS-One Inc., a Delaware corporation (the "Company"), and the
persons who
execute this agreement as investors (each an "Investor" and
collectively the
"Investors").
Background: The Company desires to sell to the Investors, and the
Investors
desire to purchase, an aggregate of 4,534,461 shares of common
stock, $.01 par
value per share, of the Company (the "Shares") in Units (as defined
below) with
3-year warrants, in substantially the form attached hereto as
Exhibit 1,
exercisable to purchase an aggregate of (i) 453,450 shares of
Common Stock at
$1.90 per share (the "Class C Warrants"), and (ii) 453,442 shares
of Common
Stock for an aggregate price of $2.15 (the "Class D Warrants", and
together with
the Class C Warrants, the "Warrants"). The proceeds of the sale
thereof will be
used in the development and continuance of the business of the
Company and each
of its Subsidiaries.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which hereby are
acknowledged, the parties agree as follows:
Certain Definitions:
"Action" has the meaning set forth in Section 2.10.
"Affiliate" means, as to any Person, any other Person that,
directly or
indirectly through one or more intermediaries, controls or is
controlled by or
is under common control with such Person. As used in this
definition, "control"
(including, with its correlative meanings, "controlled by" and
"under common
control with") shall mean possession, directly or indirectly, of
power to direct
or cause the direction of management or policies (whether through
ownership of
securities or partnership or other ownership interests, by contract
or
otherwise).
"Blue Sky Laws" has the meaning set forth in Section 2.7(b).
"Business Day" means any day other than Saturday, Sunday or other
day
on which commercial banks in The City of New York are authorized or
required by
law to remain closed.
"Certificate of Incorporation" has the meaning set forth in Section
2.2(a).
"Closing Date" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 1.2.
"Common Stock" means the Company's Common Stock, $.01 par value per
share, authorized as of the date hereof, and any stock of any class
or classes
(however designated) hereafter authorized upon reclassification
thereof, which,
if the Board of Directors declares a dividend or distribution, has
the right to
participate in the distribution of earnings and assets of the
Company after the
payment of dividends or other distributions on any shares of
capital stock of
the Company entitled to a preference and in the voting for the
election of
directors of the Company.
"Company" has the meaning set forth at the head of this Agreement
and
any corporation or other entity which shall succeed to or assume,
directly or
indirectly, the obligations of the Company hereunder. The term
"corporation"
shall include an association, joint stock company, business trust,
limited
liability company or other similar organization.
"Company Disclosure Letter" means the disclosure letter dated June
17,
2005 delivered to the Investors prior to the execution of this
Agreement, which
letter is incorporated in this Agreement.
"Company IP" has the meaning set forth in Section 2.12(a).
"Convertible Security" means any (i) option to purchase or right to
subscribe for Common Stock, (ii) security by its terms convertible
into or
exchangeable for Common Stock or (iii) option to purchase or right
to subscribe
for such convertible or exchangeable securities.
"Contemplated Transactions" has the meaning set forth in Section
2.1(b).
"Exchange Act" has the meaning set forth in Section 2.7(b).
"Form 10-K Financial Statements" has the meaning set forth in
Section
2.9(d).
"Governmental Body" has the meaning set forth in Section 2.7(b).
"Indemnified Party" has the meaning set forth in Section 5.2(b).
"Indemnifying Party" has the meaning set forth in Section 5.2(c).
"Initial Closing" has the meaning set forth in Section 1.2.
"Initial Closing Date" has the meaning set forth in Section 1.2.
"Investor Rights Agreement" has the meaning set forth in Section
1.3(a).
"Knowledge" shall mean, with respect to a particular fact or other
matter, the actual current knowledge, after reasonable
investigation, of the
Chief Executive Officer or Chief Financial Officer of the Company.
"Legal Requirement" has the meaning set forth in Section 2.8.
"Losses" has the meaning set forth in Section 5.2(b).
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"Material Adverse Effect" has the meaning set forth in Section
2.1(a).
"Material Agreement" has the meaning set forth in Section 2.7.
"Notice" has the meaning set forth in Section 6.6.
"Person" means any individual, sole proprietorship, partnership,
corporation, limited liability company, business trust,
unincorporated
association, joint stock corporation, trust, joint venture or other
entity, any
university or similar institution, or any government or any agency
or
instrumentality or political subdivision thereof.
"Purchased Shares" has the meaning set forth in Section 1.1(a).
"Purchased Warrants" has the meaning set forth in Section 1.1(a).
"Rule 144" means Rule 144 promulgated under the Securities Act or
any
successor or substitute rule, law or provision.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 2.9(a).
"Second Closing" has the meaning set forth in Section 1.2.
"Second Closing Date" has the meaning set forth in Section 1.2.
"Securities" has the meaning set forth in Section 1.1(a).
"Securities Act" has the meaning set forth in Section 2.5.
"Specified Investor" has the meaning set forth in Section 1.2.
"Subsidiary" means any significant subsidiary (as defined under
Rule
1.02(w) of Regulation S-X promulgated by the SEC) of the Company.
"Transaction Documents" has the meaning set forth in Section
1.3(a).
"Underlying Shares" means the shares of Common Stock issued or from
time to time issuable upon exercise of the Warrants.
"Unit" means (i) 10,000 Shares, (ii) Class C Warrants to purchase
1,000
shares of Common Stock at $1.90 per share and (iii) Class D
Warrants to purchase
1,000 shares of Common Stock at $2.15 per share.
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1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Securities.
(a) The Company shall sell to the Investors
and the Investors shall purchase from the Company, 453.45
Units at a price per Unit equal to $14,886, or a total of (i)
4,534,461 Shares (the "Purchased Shares") and (ii) Warrants to
purchase an aggregate of 906,892 shares of Common Stock (the
"Purchased Warrants" and collectively with the Purchased
Shares, the "Securities"), for an aggregate purchase price of
$6,750,000.
(b) The number of Purchased Shares and
Purchased Warrants to be purchased by each Investor from the
Company is set forth on Schedule 1.1(b) hereto, subject to
acceptance, in whole or in part, by the Company.
1.2. Closings. The initial closing (the "Initial
Closing") of the purchase and sale of the Securities hereunder
(with
the exception of the Securities purchased by Investors who are
affiliated with or are directors or executive officers of the
Company
(the "Specified Investors")) shall take place within four Business
Days
of the date of this Agreement or such later date that the Company's
American Stock Exchange Additional Listing Application with respect
to
the Securities is approved (the "Initial Closing Date"). The
closing
(the "Second Closing") of the purchase and sale of the Securities
hereunder purchased by the Specified Investors shall take place
within
four Business Days of the date that the investment of the Specified
Investors is approved by a majority of the disinterested
stockholders
of the Company (the "Second Closing Date"). The Initial Closing and
the
Second Closing are each referred to herein as a "Closing" and the
Initial Closing Date and the Second Closing Date are each referred
to
herein as a "Closing Date". The Company agrees to prepare and file
with
the Securities and Exchange Commission a proxy statement with
respect
to stockholder approval of the purchase of Securities by the
Specified
Investors not later than thirty (30) days after the date of the
Initial
Closing and to proceed promptly thereafter with a special meeting
of
the stockholders for such purpose. Each Closing shall take place at
the
offices of Gersten Savage, LLP, the Investors' counsel, in New
York,
New York, or at such other location as is mutually acceptable to
the
Investors and the Company, subject to fulfillment of the conditions
to
such Closing set forth in the Agreement. At each Closing:
(a) each Investor purchasing Securities at
the Closing shall deliver to the Company or its designees by
wire transfer or such other method of payment as the Company
shall approve, an amount equal to the purchase price of the
Securities purchased by such Investor hereunder, as set forth
opposite such Investor's name on the signature pages hereof.
(b) the Company shall authorize its transfer
agent to arrange delivery to each Investor of one or more
stock certificates registered in the name of the Investor, or
in such nominee name(s) as designated by the Investor in
writing,
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representing the number of Shares as set forth opposite such
Investor's name on Schedule 1.1(b) hereto and purchased at
such Closing; and
(c) the Company shall issue and deliver to
each Investor purchasing Securities at such Closing: (i) Class
C Warrants, registered in the name of such Investor, pursuant
to which such Investor shall have the right to acquire the
number of Underlying Shares as set forth opposite such
Investor's name on Schedule 1.1(b) hereto on the terms set
forth therein; and (ii) Class D Warrants, registered in the
name of such Investor, pursuant to which such Investor shall
have the right to acquire the number of Underlying Shares as
set forth opposite such Investor's name on the Schedule 1.1(b)
hereto on the terms set forth therein.
1.3. Investors' Conditions to Closing. The obligation
of the Investors to complete the purchase of the Securities at the
applicable Closing is subject to fulfillment of the following
conditions:
(a) the Company shall have executed and
delivered to the Investors an Investor Rights Agreement, dated
the Initial Closing Date, in the form attached as Exhibit 2
with respect to the Purchased Shares and the Underlying Shares
(the "Investor Rights Agreement", and with the Agreement and
the Warrants, the "Transaction Documents");
(b) the Company shall deliver to the applicable
Investors an opinion of counsel, dated the applicable
Closing Date and reasonably satisfactory to counsel for the
Investors, with respect to the matters set forth on Exhibit 3;
(c) the representations and warranties of the
Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this
Agreement and as of the applicable Closing Date as though
made on and as of such Closing Date (except to the extent
such representations and warranties speak as of an earlier
date, in which case such representations and warranties
shall be true and correct in all material respects as of
such earlier date), and the Company shall have performed in
all material respects all covenants and other obligations
required to be performed by it under this Agreement at or
prior to the applicable Closing Date, and the applicable
Investors shall have received a certificate signed on behalf
of the Company by an authorized officer of the Company to
such effect;
(d) the Company shall have delivered to the
applicable Investors a certified copy of its Certificate of
Incorporation and by-laws and a Certificate of Good Standing
from the Secretary of State of the State of Delaware; and
(e) the Company shall have executed and
delivered all other documents reasonably requested by counsel
for the Investors.
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1.4
Company's Conditions to Closing. The obligation
of the Company to complete the sale of the Securities at the
Closing is
subject to fulfillment of the following conditions:
(a) the Investors shall execute and deliver
to the Company the Investor Rights Agreement; and
(b) the representations and warranties of
the Investors set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the
applicable Closing Date as though made on and as of such
Closing Date (except to the extent such representations and
warranties speak as of an earlier date), in which case such
representations and warranties shall be true and correct in
all material respects as of such earlier date), and the
Investors shall have performed in all material respects all
covenants and other obligations required to be performed by
them under this Agreement, if any, at or prior to the
applicable Closing Date.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Investors as follows:
2.1. Corporate Organization; Authority; Due
Authorization.
(a) The Company (i) is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own or lease its properties
as and in the places where its business is now conducted and
to carry on its business as now conducted, and (iii) is duly
qualified as a foreign corporation authorized to do business
in every jurisdiction where the failure to so qualify,
individually or in the aggregate, would have a material
adverse effect on the operations, assets, liabilities,
financial condition or business of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect").
Set forth in Section 2.1(a) of the Company Disclosure Letter
is a complete and correct list of all Subsidiaries. Each
Subsidiary is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and is qualified to do business as a foreign corporation in
each jurisdiction in which qualification is required, except
where failure to so qualify would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) The Company (i) has the requisite corporate
power and authority to execute, deliver and perform this
Agreement and the other Transaction Documents to which it is
a party and to incur the obligations herein and therein and
(ii) has been authorized by all necessary corporate action
to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby
(the "Contemplated Transactions"). This Agreement is and
each of the other Transaction Documents will be on the
Closing Date a valid and binding obligation of the Company
enforceable in accordance with its terms except as limited
by applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting the
6
enforcement of creditors' rights and the availability of
equitable remedies (regardless of whether such enforceability
is considered in a proceeding at law or equity).
2.2. Capitalization.
(a)
As of June 17, 2005, the authorized capital
stock of the Company consisted of (i) 50,000,000 shares of
Common Stock, of which 29,498,616 shares of Common Stock
were outstanding and (ii) 5,000,000 shares of Preferred
Stock, $.01 par value, of which no shares were outstanding.
All outstanding shares of capital stock of the Company were
issued in compliance with all applicable Federal and state
securities laws, and the issuance of such shares was duly
authorized by all necessary corporate action on the part of
the Company. Except as contemplated by this Agreement or as
set forth in the SEC Documents or in Section 2.2(a) of the
Company Disclosure Letter, there are (A) no outstanding
subscriptions, warrants, options, conversion privileges or
other rights or agreements obligating the Company to
purchase or otherwise acquire or issue any shares of capital
stock of the Company (or shares reserved for such purpose),
(B) no preemptive rights contained in the Company's
Certificate of Incorporation, as amended (the "Certificate
of Incorporation"), the By-laws of the Company or contracts
to which the Company is a party or rights of first refusal
with respect to the issuance of additional shares of capital
stock of the Company (other than as set forth in the
Investor Rights Agreement), including without limitation the
Securities and the Underlying Shares, and (C) no commitments
or understandings (oral or written) of the Company to issue
any shares, warrants, options or other rights to acquire any
equity securities of the Company. To the Company's
Knowledge, except as set forth in the SEC Documents or in
Section 2.2(a) of the Company Disclosure Letter, none of the
shares of Common Stock are subject to any stockholders'
agreement, voting trust agreement or similar arrangement or
understanding. Except as set forth in the SEC Documents or
in Section 2.2(a) of the Company Disclosure Letter, the
Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the
Company on any matter.
(b) With respect to each Subsidiary, except as set
forth in Section 2.2(b) of the Company Disclosure Letter, (i)
all the issued and outstanding shares of each Subsidiary's
capital stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in
compliance with applicable Federal and state securities laws,
were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase
securities, and (ii) there are no outstanding options to
purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or
sell, shares of any Subsidiary's capital stock or any such
options, rights, convertible securities or obligations. Except
as disclosed in the SEC Documents or Section 2.2(b) of the
Company Disclosure Letter, the Company beneficially owns 100%
of the outstanding equity securities of each Subsidiary.
2.3. Validity of Securities. The issuance of the
Securities has been duly authorized by all necessary corporate
action
on the part of the Company and, when issued to,
7
delivered to, and paid for by the Investors in accordance with this
Agreement, the Purchased Shares will be validly issued, fully paid
and
non-assessable.
2.4. Underlying Shares. The issuance of the
Underlying Shares upon exercise of the Purchased Warrants has been
duly
authorized, and the Underlying Shares have been, and at all times
prior
to such exercise will have been, duly reserved for issuance upon
such
exercise and, when so issued, will be validly issued, fully paid
and
non-assessable.
2.5. Private Offering. Neither the Company nor anyone
acting on its behalf has within the last 12 months issued, sold or
offered any security of the Company (including, without limitation,
any
Common Stock or warrants of similar tenor to the Purchased
Warrants) to
any Person under circumstances that would cause the issuance and
sale
of the Securities, as contemplated by this Agreement, to be subject
to
the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act"). The Company agrees that
neither the Company nor anyone acting on its behalf will offer the
Securities or any part thereof or any similar securities for
issuance
or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale of the Securities
subject to
the registration requirements of Section 5 of the Securities Act.
2.6. Brokers and Finders. Except as set forth in
Section 2.6 of the Company Disclosure Letter, the Company has not
retained any broker, investment banker or finder in connection with
the
Contemplated Transactions.
2.7. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance
of this Agreement and the other Transaction Documents by the
Company do not, and the consummation by the Company of the
Contemplated Transactions will not, (i) conflict with or
violate the Certificate of Incorporation or the By-laws of the
Company or its Subsidiaries, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
the Company or its Subsidiaries or by which any property or
asset of the Company or its Subsidiaries is bound or affected,
or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would
become a default) under, result in the loss of a material
benefit under, or give to others any right of purchase or
sale, or any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any property or
asset of the Company or of any of its Subsidiaries pursuant
to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or of any of
its Subsidiaries or any property or asset of the Company or of
any of its Subsidiaries is bound or affected (the "Material
Agreements"); except, in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults
or other occurrences that would not prevent or delay
consummation of any of the Contemplated Transactions in any
material respect or otherwise prevent the
8
Company from performing its obligations under this Agreement
or any of the other Transaction Documents in any material
respect, and would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement
and the other Transaction Documents by the Company do not,
and the performance of this Agreement and the other
Transaction Documents and the consummation by the Company of
the Contemplated Transactions will not, require, on the part
or in respect of the Company, any consent, approval,
authorization or permit of, or filing with or notification
to, any Governmental Body (as hereinafter defined) except
for the filing of a Form D with the SEC and applicable
requirements, if any, of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or any state
securities or "blue sky" laws (collectively, "Blue Sky
Laws"), and any approval required by applicable rules of the
markets in which the Company's securities are traded. For
purposes of this Agreement, "Governmental Body" shall mean
any: (i) nation, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign or
other government; or (iii) governmental or
quasi-governmental authority of any nature (including any
governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or
entity and any court or other tribunal).
2.8. Compliance. Except as set forth in the SEC
Documents or in Section 2.8 of the Company Disclosure Letter,
neither
the Company nor any Subsidiary is in conflict with, or in default
or
violation of (i) any law, rule, regulation, order, judgment or
decree
applicable to the Company or such Subsidiary or by which any
property
or asset of the Company or such Subsidiary is bound or affected
("Legal
Requirement"), or (ii) any Material Agreement, in each case except
for
any such conflicts, defaults or violations that would not,
individually
or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any written notice or other
communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal
Requirement, except any such violations or failures that would not,
individually or in the aggregate, have a Material Adverse Effect.
2.9. SEC Documents; Financial Statements.
(a) The information contained in the following
documents, did not, as of the date of the applicable document,
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, as of
their respective filing dates or, if amended, as so amended
(the following documents, collectively, the "SEC Documents"),
provided that the representation in this sentence shall not
apply to any misstatement or omission in any SEC Document
filed prior to the date of this Agreement which was superseded
by a subsequent SEC Document filed prior to the date of this
Agreement: (i) the Company's Annual Report on Form 10-K for
the year ended
9
December 31, 2004; (ii) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005; (iii) the
Company's definitive Proxy Statement with respect to its
2005 Annual Meeting of Stockholders, filed with the
Commission on April 25, 2005; and (iv) the Company's Current
Reports on Form 8-K filed January 5, 2005 and May 27, 2005.
(b) In addition, as of the date of this
Agreement, the Company Disclosure Letter, when read together
with the SEC Documents and the information, qualifications and
exceptions contained in this Agreement, does not include any
untrue statement of a material fact.
(c) The Company has filed all forms, reports
and documents required to be filed by it with the SEC for the
12 months preceding the date of this Agreement, including
without limitation the SEC Documents. As of their respective
dates, the SEC Documents filed prior to the date hereof
complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder.
(d) The Company's Annual Report on Form 10-K
for the year ended December 31, 2004, includes consolidated
balance sheets as of December 31, 2003 and 2004 and
consolidated statements of income for the one year periods
then ended (collectively, the "Form 10-K Financial
Statements").
(e) The Form 10-K Financial Statements
(including the related notes and schedules thereto) fairly
present in all material respects the consolidated financial
position, the results of operations, retained earnings or cash
flows, as the case may be, of the Company for the periods set
forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments that would not be
material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
2.10. Litigation. Except as set forth in the SEC
Documents or in Section 2.10 of the Company Disclosure Letter,
there
are no claims, actions, suits, investigations, inquiries or
proceedings
(each, an "Action") pending against the Company or any of its
Subsidiaries or, to the Knowledge of the Company, threatened
against
the Company or any of its Subsidiaries, at law or in equity, or
before
or by any court, tribunal, arbitrator, mediator or any federal or
state
commission, board, bureau, agency or instrumentality, that,
individually or in the aggregate, would reasonably be expected to
have
a Material Adverse Effect. Except as set forth in the SEC Documents
or
in Section 2.10 of the Company Disclosure Letter, neither the
Company
nor any of its Subsidiaries is a party to or subject to the
provisions
of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
10
2.11. Absence of Certain Changes. Except as
specifically contemplated by this Agreement or as set forth in
Section
2.11 of the Company Disclosure Letter or in the SEC Documents,
since
December 31, 2004, there has not been (a) any Material Adverse
Effect;
(b) any dividends or other distribution of assets to stockholders
of
the Company; (c) any acquisition (by merger, consolidation,
acquisition
of stock and/or assets or otherwise) of any Person by the Company;
or
(d) any transactions, other than in the ordinary course of
business,
consistent in all material respects with past practices, with any
of
its officers, directors or principal stockholders or any of their
respective Affiliates.
2.12. Intellectual Property.
(a) The Company and its Subsidiaries own, or
have the right to use, sell or license all intellectual
property reasonably required for the conduct of their
respective businesses as presently conducted (collectively,
the "Company IP") except for any failure to own or have the
right to use, sell or license the Company IP that would not
have a Material Adverse Effect.
(b) The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a breach of any
instrument or agreement governing any Company IP, will not
cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any Company IP or impair the
right of Company and its Subsidiaries to use, sell or license
any Company IP, except for the occurrence of any such breach,
forfeiture, termination or impairment that would not,
individually or in the aggregate, result in a Material Adverse
Effect.
(c) (i) None of the manufacture, marketing,
license, sale and use of any product currently licensed or
sold by the Company or any of its Subsidiaries violates any
license or agreement between the Company or any of its
Subsidiaries and any third party or, to the Knowledge of the
Company, infringes any intellectual property right of any
other party; and (ii) there is no pending or, to the Knowledge
of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose
of any Company IP; except, with respect to clauses (i) and
(ii), for any violations, infringements, claims or litigations
that would not, individually or in the aggregate, have a
Material Adverse Effect.
2.13 No Adverse Actions. Except as set forth in the
SEC Documents or in Section 2.13 of the Company Disclosure Letter,
there is no existing, pending or, to the Knowledge of the Company,
threatened termination, cancellation, limitation, modification or
change in the business relationship of the Company or any of its
Subsidiaries, with any supplier, customer or other Person except
such
as would not reasonably be expected, individually or in the
aggregate,
to have a Material Adverse Effect.
2.14. Registration Rights. Except as set forth in the
Investor Rights Agreement, in the SEC Documents or in Section 2.14
of
the Company Disclosure Letter, the Company is not under any
obligation
to register under the Securities Act any of its currently
11
outstanding securities or any securities issuable upon exercise or
conversion of its currently outstanding securities nor is the
Company
obligated to register or qualify any such securities under any Blue
Sky Laws.
2.15. Corporate Documents. The Company's Certificate
of Incorporation and By-laws, each as amended to date, which have
been
requested and previously provided to the Investors are true,
correct
and complete and contain all amendments thereto.
2.16. Disclosure. On or before 5:30 p.m., New York
City Time, on the fourth Business Day after date of this Agreement,
the
Company shall file with the SEC a Current Report on Form 8-K
describing
the material terms of the Contemplated Transactions, and attaching
as
exhibits to such Form 8-K copies of this Agreement and the other
Transaction Documents. Except for information that may be provided
to
the Investors pursuant to this Agreement, the Company shall not,
and
shall use commercially reasonable efforts to cause each of its
officers, directors, employees and agents not to, provide any
Investor
(other than a Specified Investor) with any material nonpublic
information regarding the Company from and after the filing of such
Form 8-K without the express written consent of such Investor.
2.17. Use of Proceeds. The net proceeds received by
the Company from the sale of the Securities shall be used by the
Company for working capital and general corporate purposes,
including
without limitation to support the operations of each of the
Subsidiaries.
2.18. Securities Compliance. To the Company's
knowledge, it is in material compliance with all requirements
currently
applicable to it under the Sarbanes-Oxley Act of 2002 and the
Securities Exchange Act of 1934, as amended.
3. Representations and Warranties of the Investors. Each
Investor represents and warrants to the Company as follows:
3.1. Authorization. If an entity, such Investor (i)
is duly organized, validly existing and in good standing under the
laws
of the jurisdiction of its organization, and (ii) has the power and
authority to own and hold the
