CONVERTIBLE NOTE
PURCHASE AGREEMENT
CONVERTIBLE NOTE PURCHASE
AGREEMENT
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT (the
“ Agreement ”) is made effective as of
August 24, 2009, by and between Ebix, Inc., a Delaware
corporation (the “ Company ”), and Rennes
Foundation (the “ Investor ”), with respect to
the following recitals.
A. The Company desires to issue and sell
and the Investor desires to purchase convertible promissory notes
in substantially the form attached to this Agreement as
Exhibit A (collectively, the “ Notes
”), which shall be convertible on the terms stated therein
into common stock, par value $.10 per share (the “ Common
Stock ”), of the Company.
NOW, THEREFORE , in consideration of the respective
representations, warranties, covenants and agreements contained
herein, and for other valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
Section 1.1 Specific Definitions .
As used in this Agreement, the following terms shall have the
meanings set forth or as referenced below:
“
Action ” shall have the meaning ascribed to such term
in Section 4.10.
“ Affiliate ” of a specified
person (natural or juridical) means a person that directly, or
indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, that person, as
such terms are used in and construed under Rule 405 under the
Securities Act. With respect to the Investor, any investment fund
or managed account that is managed on a discretionary basis by the
same investment manager as the Investor will be deemed to be an
Affiliate of the Investor.
“
Agreement ” means this Agreement and all Exhibits and
Schedules hereto.
“
Closing ” shall have the meaning ascribed to such term
in Section 3.1.
“
Closing Date ” shall have the meaning ascribed to such
term in Section 3.1.
“
Code ” shall have the meaning ascribed to such term in
Section 4.35.
“
Common Stock ” means the Company’s common stock,
par value $0.10 per share.
“ Conversion Price ” means
the conversion price in effect on any given date, which initially
shall be equal to $50.00, but which shall be subject to adjustment
as described herein and in the Note.
“ Common Stock Equivalents ”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“ Conversion Shares ” or
“ Shares ” means the shares of Common Stock
issued or issuable upon conversion of any of the Convertible
Note.
“ Convertible Note ” or
“ Note ” means the promissory note, in the form
attached hereto as Exhibit A , to be issued by the
Company to the Investor.
“ Disclosure Schedules ”
means the Disclosure Schedules of the Company delivered
concurrently herewith.
“ Environmental Laws or Regulations
” means any federal, state or local statute, law, ordinance
or regulation that relates to or deals with hazardous substances,
human health or the environment, and all regulations promulgated by
a regulatory body pursuant to any of the foregoing statutes, laws,
regulations, or ordinances.
“
ERISA ” shall have the meaning ascribed to such term
in Section 4.35.
“
Evaluation Date ” shall have the meaning ascribed to
such term in Section 4.18.
“
Exchange Act ” shall mean the Securities Exchange Act
of 1934, as amended to date.
“ Exempt Issuance ” means
(a) the vesting of shares of Common Stock or options to
employees, officers, consultants or directors of the Company
pursuant to the Company’s 1996 Stock Option Plan, as amended
(provided that any such vesting shall not exceed 10% of the
Company’s outstanding shares and/or options, in the
aggregate, in any twelve-month period), (b) the issuance of
securities upon the exercise or exchange of or conversion of any
securities issued pursuant to the Purchase Agreement and/or other
securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this
Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such
securities or to decrease the exercise, exchange or conversion
price of such securities, and (c) the issuance of securities issued
pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided
any such issuance shall only be to a person which is, itself or
through its subsidiaries, an operating company in a business
synergistic with or complementary to the business of the Company
and in which the Company receives benefits in addition to the
investment of funds, but shall not include a transaction in which
the Company is issuing securities primarily for the purpose of
raising capital or to an entity whose primary business is investing
in securities.
“ Financial Statements ”
means the Company’s audited financial statements as of and
for the year ended December 31, 2008 and unaudited quarterly
financial statements of the Company for the quarter ended
June 30, 2009.
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“ GAAP ” shall have the
meaning ascribed to such term in Section 4.8.
“
Indemnifiable Losses ” shall have the meaning ascribed
to such term in Section 9.1.
“ Intellectual Property ”
means (i) all proprietary rights, privileges and priorities
provided under U.S., state and foreign law relating to U.S. and
foreign patents and patent applications, trademarks, service marks
and registrations thereof and applications therefor, copyrights and
copyright registrations and applications, mask works and
registrations thereof, know-how, and trade secrets;
(ii) proprietary inventions, discoveries, ideas, technology,
data, information, and processes; (iii) proprietary drawings,
designs, licenses, computer programs and software, and technical
information including but not limited to proprietary information
embodied in material specifications, processing instructions,
equipment specifications, product specifications, confidential
data, electronic files, research notebooks, invention disclosures,
research and development reports and the like related thereto; and
(iv) all amendments, modifications, and improvements to any of
the foregoing.
“ Intellectual Property Rights
” shall have the meaning ascribed to such term in Section
4.15.
“ Knowledge ” means actual
knowledge of a fact or the knowledge which such person could
reasonably be expected to have based on reasonable inquiry. The
knowledge of an entity shall include the knowledge of the
individuals who are executive officers of such entity at the time
in question.
“
Legend Removal Date ” shall have the meaning ascribed
to such term in Section 6.10(c).
“ Liens ” means liens,
mortgages, charges, security interests, claims, voting trusts,
pledges, encumbrances, options, assessments, restrictions, or
third-party or spousal interests of any nature.
“ Mandatory Conversion Notice
” shall have the meaning ascribed to such term in Section
2.2(b).
“ Mandatory Conversion Notice Date
” shall have the meaning ascribed to such term in
Section 2.2(b).
“ Material Adverse Effect ”
means any effect that may be materially adverse to (a) the
business, operations, results of operations, prospects, assets
(including intangible assets), liabilities or condition (financial
or otherwise) of the Company and its Affiliates, taken as a whole,
or (b) the ability of the Company to perform its obligations
under this Agreement or any of the Transaction Documents or any
other agreement or instrument to be entered into in connection with
this Agreement.
“
Material Permits ” shall have the meaning ascribed to
such term in Section 4.13.
“
Note ” shall have the meaning ascribed to such term in
Section 2.1.
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“ Person ” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“ Plan ” or “
Plans ” shall have the meaning ascribed to such term
in Section 4.35.
“ Proceeding ” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“ Product Liability ” means
any liability, claim or expense, including but not limited to
attorneys’ fees and medical expenses, arising in whole or in
part out of a breach of any express or implied product warranty by
the Company, strict liability in tort, negligent manufacture of
product, negligent provision of services, product recall, or any
other allegation of liability arising from the design, testing,
manufacture, packaging, labeling (including instructions for use),
or sale of products.
“
Prospectus ” shall have the meaning ascribed to such
term in Section 9.1.
“
Purchase Price ” shall have the meaning ascribed to
such term in Section 2.1.
“
Purchased Securities ” means the Convertible Note and
the Conversion Shares.
“ Registration Statement ”
means a registration statement meeting the requirements set forth
in Section 6.12 below and covering the resale by the Investor
of the Conversion Shares. The term “Registration
Statement” shall include any preliminary or final prospectus,
exhibit, supplement or amendment included in or relating to such
Registration Statement.
“
Required Approvals ” shall have the meaning ascribed
to such term in Section 4.5.
“ Required Minimum ” means,
as of any date, the maximum aggregate number of shares of Common
Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Conversion Shares issuable
upon exercise or conversion in full of all Notes, ignoring any
conversion or exercise limits set forth therein.
“ Rule 144 ” means
Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.
“
Schedule of Exceptions ” shall have the meaning
ascribed to such term in Article 4.
“ SEC ” means the United
States Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
“ SEC
Reports ” shall have the meaning ascribed to such term in
Section 4.8.
“ Securities Act ” means the
United States Securities Act of 1933, as amended, and all
regulations promulgated thereunder.
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“ Short Sales ” means all
“short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed
to include the location and/or reservation of borrowable shares of
Common Stock).
“ Subsidiary ” means any
subsidiary of the Company as set forth on Schedule 4.1
and shall, where applicable, include any subsidiary of the Company
formed or acquired after the date hereof.
“
Threshold Period ” shall have the meaning ascribed to
such term in Section 2.2(b).
“ Trading Day ” means a day
on which the Nasdaq Stock Market (or such other Trading Market on
which the Company’s Common Stock is then traded) is open for
trading.
“ Trading Market ” means the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.
“ VWAP ” means, for any date,
the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
for trading as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b) if the OTC Bulletin Board is not a Trading Market,
the volume weighted average price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin Board;
(c) if the Common Stock is not then quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then
reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases,
the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company.
Section 1.2 Definitional Provisions
.
(a) The words “hereof,”
“herein,” and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provisions of this
Agreement.
(b) The terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa.
Terms referring to a masculine gender shall be deemed to refer to
the feminine or neuter genders, as applicable.
(c) References to an “Exhibit”
or to a “Schedule” are, unless otherwise specified, to
one of the Exhibits or Schedules attached to or referenced in this
Agreement, and references to an “Article” or a
“Section” are, unless otherwise specified, to one of
the Articles or Sections of this Agreement.
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(d) The term “person” includes
any individual, partnership, joint venture, corporation, limited
liability company, trust, entity, unincorporated organization or
government or any department or agency thereof.
(e) The term “dollars” or
“$” shall refer to the currency of the United States of
America.
(f) All
references to time shall refer to Atlanta, Georgia time.
ARTICLE
II
PURCHASE AND SALE OF CONVERTIBLE NOTES
Section 2.1 Purchase and Sale of
Notes . Subject to the terms and conditions of this Agreement,
the Investor agrees to purchase at the Closing, and the Company
agrees to sell and issue to the Investor at the Closing, a Note, in
substantially the form attached hereto as Exhibit A , in the
original principal amount of $5,000,000 (the “ Note
”), at a purchase price equal to 100% of the principal amount
thereof (the “ Purchase Price ”).
Section 2.2 Note Conversion
.
(a) Optional Conversion . The Investor
may, at its option, purchase shares of the Company’s Common
Stock by converting amounts outstanding under the Note or, if
applicable, the Additional Note and the Subsequent Note, at the
applicable Conversion Price as provided therein (in each case, a
“ Note Conversion Closing ”). At each Note
Conversion Closing, the Company shall issue certificates
representing any shares purchased under this Section 2.2 in a
form acceptable to the Investor and Investor’s counsel, and
the Investor shall pay the Conversion Price of $50.00 per share
(subject to adjustment as provided therein) for such shares by
surrendering the applicable Note(s) to the Company.
(b) Company Option . The company at its
option may decide to pay the Investor cash in lieu of a share
conversion. The company at its sole discretion, would have the
option to pay the Investor the closing price of the shares on the
day when the investor notified the Company, about its intent to
convert the note. The company would have 7 business days to settle
the cash payment to the Investor, unless it decides not pay cash
and instead settle in shares priced at $50 per share.
Section 2.3 Use of Proceeds . The
Company shall use the cash proceeds of the sale of the Notes
(a) for the Company’s strategic acquisition and working
capital needs and (b) to pay any bank debts that the company
might have at this time.
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Section 3.1 Closing . The purchase
and sale of the Notes shall take place at the offices of the
Company, at 10:00 a.m., on August 25, 2009 (the “
Closing ”). At the Closing, the Company shall deliver
to the Investor the Note that the Investor is purchasing against
delivery to the Company by the Investor of a check or wire transfer
in the amount of $5,000,000.00 payable to the Company’s order
(or by wire of funds in such amount to the Company’s
designated bank account).
Section 3.2 Closing Deliveries
.
(a) Company Deliveries . On the Closing
Date, the Company shall deliver or cause to be delivered to the
Investor the following:
(i) this
Agreement duly executed by the Company; and
(ii) a Note registered in the name of the
Investor in the principal amount of $5,000,000.
(b) Investor Deliveries . On the Closing
Date, the Investor shall deliver or cause to be delivered to the
Company the following:
(i) this
Agreement duly executed by the Investor; and
(ii) the payment of the Purchase Price by
the Investor, in the manner specified in Section 3.1
above.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Attached hereto as Schedule A is the
Schedule of Exceptions containing sections numbered to correspond
to the sections of this Article 4 (the “ Schedule of
Exceptions ”). Except as specifically set forth in the
corresponding section of such Schedule of Exceptions (or in any
other section of the Schedule of Exceptions so long as the
applicability of such disclosure to the particular representation
and warranty which such disclosure is intended to modify is
reasonably apparent), the Company and its Affiliates hereby
represents and warrants to the Investor as follows as of the date
hereof and as of the Closing Date:
Section 4.1 Organization and
Qualification . The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite
power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be
expected to result in a Material Adverse Effect, and no Proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
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Section 4.2 Authorization;
Enforcement . The Company has the requisite corporate power and
authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on
the part of the Company and no further action is required by the
Company, its board of directors or its shareholders in connection
therewith other than in connection with the Required Approvals (as
defined in Section 4.5 below). Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.
Section 4.3 No Conflicts . The
execution, delivery and performance of the Transaction Documents by
the Company, the issuance and sale of the Purchased Securities and
the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals (as defined in
Section 4.5 below), conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or any Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or
asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse
Effect.
Section 4.4 Issuance of the
Securities . The Purchased Securities are duly authorized and,
when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the
Transaction Documents. The Conversion Shares, when issued in
accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Company has reserved
from its duly authorized capital stock the maximum number of shares
of Common Stock issuable pursuant to this Agreement and the other
Transaction Documents.
8
Section 4.5 Capitalization . The
capitalization of the Company includes the number of shares of
Common Stock owned of record, and, to the knowledge of the Company,
beneficially, by Affiliates of the Company as of the date hereof.
The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than
the exercise of employee stock options under the Company’s
stock option plans, the issuance of shares of Common Stock to
employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
the Transaction Documents. Except as set forth on the Schedule of
Exceptions or as a result of the purchase and sale of the Purchased
Securities, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Purchased Securities will not obligate the
Company to issue shares of Common Stock or other securities to any
Person (other than the Investor) and will not result in a right of
any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities.
All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and none of
such outstanding shares was issued in violation of any preemptive
rights or similar rights to subscribe for or purchase securities.
No further approval or authorization of any shareholder, the Board
of Directors of the Company or others is required for the issuance
and sale of the Purchased Securities. There are no stockholder
agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company
is a party (other than those contemplated in connection with the
Transaction Documents) or, to the knowledge of the Company, between
or among any of the Company’s shareholders.
Section 4.6 SEC Reports; Financial
Statements . The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the
foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to
herein as the “ SEC Reports ”) on a timely basis
or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a
consistent basis during the periods involved (“ GAAP
”), except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and
fairly present in all material respects the financial position of
the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.
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Section 4.7 Material Changes;
Undisclosed Events, Liabilities or Developments . Since the
date of the latest audited financial statements included within the
SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof, (i) there has been no
event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) decreasing its revolving line of
credit with Bank of America N.A. to a total of $20,000,000,
(B) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and
(C) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed
in filings made with the SEC, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending issues before the
SEC except a question regarding the change of control provision in
the previous convertible note signed with the investor that the
investor has retroactively deleted. Except for the issuance of the
Purchased Securities contemplated by this Agreement or as set forth
on Schedule 4.9 , no event, liability or development
has occurred or exists with respect to the Company or its
Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by
the Company under applicable securities laws at the time this
representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this
representation is made.
Section 4.8 Litigation . There is no
action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“ Action ”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the
Transaction Documents or the Purchased Securities or
(ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action which has
resulted in a final judgment involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge
of the Company, 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. The SEC has not issued
any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under
the Exchange Act or the Securities Act.
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Section 4.9 Labor Relations . No
material labor dispute exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such
employee’s relationship with the Company or such Subsidiary,
and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the
continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 4.10 Compliance . Neither
the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the
environment, except in each case as could not have or reasonably be
expected to result in a Material Adverse Effect.
Section 4.11 Regulatory Permits .
The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not reasonably be
expected to result in a Material Adverse Effect (“
Material Permits ”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
Section 4.12 Title to Assets . The
Company and the Subsidiaries have good and marketable title in fee
simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to
the business of the Company and the Subsidiaries, in each case free
and clear of all Liens, except for Liens that do not materially
affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company and the Subsidiaries and Liens for the payment of federal,
state or other taxes, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance in all material
respects.
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Section 4.13 Patents and Trademarks
. The Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the
“ Intellectual Property Rights ”). Neither the
Company nor any Subsidiary has received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of
any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do
so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 4.14 Insurance . The Company
and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not
limited to, directors and officers insurance coverage at least
equal to the aggregate Subscription Amount. Neither the Company nor
any Subsidiary has any reason to believe that it will not be able
to renew it
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