ILINC COMMUNICATIONS, INC. (A DELAWARE CORPORATION) NOTE PURCHASE AGREEMENT

 

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                                                                  EXHIBIT 10.19

 

 

                           ILINC COMMUNICATIONS, INC.

 

                            (A DELAWARE CORPORATION)

 

                             NOTE PURCHASE AGREEMENT

 

This note purchase agreement (this "Agreement" or "Purchase Agreement") is made

and entered into on this 12th day of February, 2004, by and between iLinc

Communications, Inc. (formerly known as EDT Learning, Inc.), a Delaware

corporation having its principal place of business at 2999 North 44th Street,

Suite 650, Phoenix, Arizona ("the Company"), Katsinam Partners, LP, ("Katsinam")

an Arizona limited partnership whose address is 7377 East Doubletree Ranch Road,

Suite 290, Scottsdale, AZ 85258, Anthony Silverman, as Trustee of the Anthony

Silverman Trust, dated January 5, 2004 ("Silverman"), whose address is 7305 E.

Del Acero Drive, Scottsdale, AZ 85258, Stanley L. Schloz ("Schloz") as Trustee

of the Schloz Family 1998 Trust, whose address is 10050 East Sonoran Vista

Circle, Scottsdale, AZ 85255, Mountainview Canadian Opportunistic Growth Fund,

LP, a limited partnership organized under the laws of the Province of Ontario,

Canada ("Mountainview"), whose address is 69 Lord Seaton Road, Toronto, Ontario

M2P 1K6 Canada, Agger Fund LP, a Delaware limited partnership, whose address is

7878 East Belleview, Suite 800, Englewood, Colorado 80111 and Agger

Institutional Fund LP, a Delaware limited partnership, whose address is 7878

East Belleview, Suite 800, Englewood, Colorado 80111 (collectively referred to

as "Agger"). Katsinam, Silverman, Schloz, Mountainview, and Agger are sometimes

each separately called herein a "Lender" and collectively the "Lenders".

 

WHEREAS, the Company wishes to raise capital for general working capital

purposes from certain accredited investors pursuant to exemptions provided by

the federal securities laws by issuance of convertible promissory notes in the

aggregate principal balance of $500,000, pursuant to the terms and conditions of

this Agreement; and

 

WHEREAS, each undersigned Lender individually desires to purchase the

convertible promissory note (as defined herein below) from the Company in the

amount set forth herein opposite such Lender's name on the terms and conditions

of this Agreement; and

 

NOW THEREFORE, in consideration of the mutual promises and covenants contained

herein and for other good and valuable consideration, the receipt and

sufficiency of which is hereby acknowledged, the parties hereto hereby agree as

follows:

 

1. TRANSACTION

 

         1.1 FORM OF TRANSACTION. The Company, by due action of its Board of

Directors, has authorized the offer and sale to the Lenders, under this

Agreement, of a series of Convertible Notes (collectively the "Notes",

separately a ("Note") with the aggregate principal amount of all Notes totaling

$500,000, and with each Note convertible into shares of common stock of the

Company, $0.001 par value (the "Common Stock"). The form of the Note is attached

as Exhibit "A".

 

         1.2 THE LENDERS. The obligations of the Lenders to purchase Notes and

to make the representations, warranties and agreements contained in this

Agreement are several and not joint.

 

2. PURCHASE AND SALE

 

         2.1 NOTES. Subject to all of the terms and conditions of this

Agreement, the Company will issue and sell Notes to the Lenders as follows;

provided that all such terms and conditions are satisfied:

 

                 ---------------------------- -----------------

                            NAME                     AMOUNT

                  ---------------------------- -----------------

                        Katsinam                       $140,000

                 ---------------------------- -----------------

                       Silverman                       $135,000

                  ---------------------------- -----------------

                         Schloz                         $25,000

                 ---------------------------- -----------------

 

Note Purchase Agreement                                              Page 1 of 25

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                 ---------------------------- -----------------

                      Mountainview                     $100,000

                 ---------------------------- -----------------

                         Agger                          $100,000

                 ---------------------------- -----------------

                           Total Investment:           $500,000

                 ---------------------------- -----------------

 

Upon Silverman's written request, the Company will issue his Note (and the

Common Stock issuable upon the due conversion thereof, to the Custodian of an

IRA Account for his benefit.

 

         2.2 CLOSING. The purchase by and sale to the Lenders of the Notes (the

"Closing") shall take place on February 12, 2004 at the offices of the Company

(such date being hereinafter called the "Closing Date"). At the Closing, the

Company shall deliver to the Lenders or their representative their respective

Notes and other items required to be delivered to the Lenders pursuant to this

Purchase Agreement. At the Closing, the Lenders shall tender to the Company

valid and sufficient funds represented from each respective Lender the principal

balance of the Lender's Note, and such other documents or items required to be

delivered to the Company pursuant to this Purchase Agreement.

 

3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY

 

As an inducement to the lenders to enter into this Agreement and to purchase and

pay for the respective Notes, the Company represents, warrants to the Lenders

and agrees that as of the Closing Date:

 

         3.1 DISCLOSURE DOCUMENTS. The Company has heretofore delivered to the

Lenders a copy of the Company's Annual Report on Form 10-K for the fiscal year

ended March 31, 2003, as filed with the Securities and Exchange Commission

("SEC"), every subsequent Report filed with the SEC pursuant to the Securities

Exchange Act of 1934, as amended (the "Exchange Act"), a certain draft Report on

Form 10-Q for the period ending December 31, 2003, and each press release or

other form of public announcements including without limitation all shareholder

communications (such Reports, draft and the exhibits annexed thereto, press

releases, public announcements and shareholder communications are called

collectively herein the "Disclosure Documents"). The Company has carefully

prepared the Disclosure Documents or has caused them to be so prepared. The

Disclosure Documents as of their respective dates are, true and correct and

shall not omit to state any material fact necessary to make the statements made

in the Disclosure Documents not misleading on and as of such date required to be

stated therein or necessary to make the statements therein, in light of the

circumstances under which they were made.

 

          3.2 VALID EXISTENCE. The Company was duly organized and is validly

existing as a corporation under the laws of Delaware and is duly qualified to do

business as a foreign corporation in Arizona and in each other jurisdiction

where such qualification is material to its business as presently or as proposed

to be conducted.

 

         3.3 AUTHORITY FOR AGREEMENT. This Agreement has been duly authorized by

all necessary corporate action of the Company and, when executed and delivered

by the Company, will be a legal, valid and binding obligation of the Company,

enforceable in accordance with its terms except to the extent that the enforce

ability hereof may be limited by bankruptcy, insolvency, reorganization,

moratorium or other laws affecting creditors' rights generally.

 

         3.4 VALIDITY OF NOTES. The Notes, when issued and paid for at the

Closing, will be duly authorized, validly existing obligations of the Company,

enforceable in accordance with their terms.

 

         3.5 VALIDITY OF COMMON STOCK. The shares of Common Stock issuable upon

the due conversion of the Notes will, when issued in accordance with the terms

of such Notes, constitute duly authorized, legally and validly issued shares of

Common Stock, fully paid and non-assessable.

 

         3.6 PERMITS AND CONSENTS. No consent, approval, qualification, order or

authorization of, or filing with, any local, state, or federal governmental

authority is required on the part of the Company in connection with the

Company's execution, delivery or performance of this Agreement, the offer, sale

or issuance of the Notes or the issuance of Common Stock upon conversion of the

Notes, except any notices of sale required to be filed with the SEC under

 

 

Note Purchase Agreement                                               Page 2 of 25

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Regulation D of the Securities Act of 1933 or such post-closing filings as may

be required under applicable state securities laws, which will be timely filed

within the applicable periods therefor.

 

         3.7 NO CONFLICTING RIGHTS. The Company is not presently under any

obligation and has not granted any rights to register any of its presently

outstanding securities under the Securities Act of 1933, except those granted to

the holders of the Company's securities listed on Schedule 3.7 attached hereto.

The holders of the outstanding Common Stock and Preferred Stock of the Company

are not entitled to pre-emptive or other rights to subscribe for the Notes. This

transaction does not give rise to any rights relating to the registration of any

shares of Common Stock, except as provided in Section 6, below.

 

         3.8 COMPLIANCE WITH AGREEMENTS. The Company is not in violation or

default in any material respect of any material mortgage, indenture, agreement,

instrument or contract to which it is a party or by which it is bound. To the

best of its knowledge, the Company is not in violation or default, of any state

or federal judgment, order, writ, decree, statute, rule, regulation or

restriction applicable to the Company. The execution, delivery and performance

by the Company of this Agreement and the Notes and the consummation of the

transactions contemplated hereby, will not result in any violation or cause be

in material conflict with or constitute, with or without the passage of time or

giving of notice, either a material default of any material mortgage, indenture,

agreement or contract to which the Company is a party or the creation of any

material lien, charge or encumbrance upon any assets of the Company or the

suspension, revocation, impairment, forfeiture or nonrenewable of any material

permit, license, authorization or approval applicable to the Company, its

business or operations or any of its assets.

 

         3.9 NO MATERIAL ADVERSE CHANGE. There has not been, since the date of

the Company's most recent report to the SEC under the Exchange Act, any event or

condition of any type that has materially adversely affected the business,

properties, prospects or financial condition of the Company (a "Material Adverse

Change").

 

          3.10 QUISIC ASSETS. The use by the Company of the assets acquired by

the Company from Quisic Corporation, a California corporation ("Quisic"),

including without limitation those described in a certain Assets Purchase

Agreement dated the 14th day of June, 2002 between the Company and Quisic are

not material to the business and prospects of the Company and the loss of such

assets by rescission of the transaction between Quisic and the Company would not

be materially adverse to the Company, its business or prospects, provided

however that such loss could result in a violation or default of existing

license agreements related to those assets.

 

         3.11 LITIGATION COUNSEL. The Company is being represented by the law

firm of Seyfarth Shaw, of Los Angeles, California and by no other counsel in the

cause entitled WEATHERSBY, ET AL. VS. QUISIC CORPORATION, et al., Case No.

BC284645 in the Superior Court of the State of California, County of Los Angeles

(the "Weathersby Case"), and by the law firm of Kornstein Veisz Wexler &

Pollard, LLP, of New York, NY and by no other counsel in the Supreme Court of

the State of New York, County of New York in the cause entitled KEPNER-TREGOE,

INC. VS. QUISIC CORPORATION, ET. AL. , Index No. 601865/03 in the Supreme Court

of the State of New York, County of New York (the "Kepner Case").

 

4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE LENDERS

 

Each Lender, for himself or itself and not for any other Lender, hereby

represents and warrants to and agrees with the Company as follows (provided that

such representations, warranties, and agreements do not diminish or obviate the

representations, warranties, and agreements of the Company set forth in this

Agreement):

 

         4.1 AUTHORITY. Such Lender has full power and authority to enter into

this Agreement which, when executed and delivered, will constitute his or its

valid and legally binding obligation.

 

 

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         4.2 PURCHASE FOR OWN ACCOUNT. The Notes and the Common Stock issuable

upon the due conversion of the Notes ("the Securities") will be acquired for

investment for the respective account of each Lender and not with a view to the

resale or distribution of any part thereof, and such Lender has no present

intention of selling, granting any participation in or otherwise distributing

the same; and has no contract, undertaking, agreement or arrangement with any

person to sell, transfer or grant participating to any third person with respect

to any of the Securities. Nothing in this paragraph 4.2, however, limits the

right of such Lender to have the Securities registered as provided in Section 6

of this Agreement. Each respective Lender has substantial experience in

evaluating and investing in private placement transactions of securities in

companies similar to the Company so that the Lender is capable of evaluating the

merits and risks of its own investment in the securities of the Company, and has

the capacity to protect its own interests. The undersigned Lender has carefully

reviewed the Company's public filings, the Disclosure Documents together with

all other documents and information furnished by the Company in connection

herewith. Each Lender must bear the economic risk of its investment. Each Lender

understands that while the Company intends to seek registration of the Common

Stock underlying the Note, there can be no assurance that until such

registration any exemption from registration under the Securities Acts will be

available and further that, even if available, such exemption may not allow

Lender to transfer all or any portion of the Common Stock received upon

conversion of the Note. Lender has not engaged any broker or finder in

connection with this Agreement or the transactions contemplated hereby.

 

         4.3 ACCREDITED INVESTORS. Katsinam, Silverman and Schloz are each

familiar with the definition of "Accredited Investor" under the Securities Act

of 1933, as amended (the "Securities Act") and the regulations promulgated

thereunder, specifically Rule 501 of Regulation D and do hereby represent to the

Company that they are Accredited Investors. The term "net worth" as used in this

paragraph means the excess of the Lender's assets over his liabilities and, if

included among his assets, his principal residence is valued at fair market

value. Silverman and Schloz each represent and warrant that his net worth, or

joint net worth together with his spouse, exceeds $1,000,000. Katsinam

represents and warrants that each of its members is an Accredited Investor.

Schloz separately represents and warrants that the Schloz Family 1998 Trust is a

revocable "grantor trust" for the benefit of himself and his spouse.

 

         4.4 MOUNTAINVIEW. Mountainview separately represents and warrants that

(a) it is a limited partnership, duly organized and existing under the laws of

the Province of Ontario, Canada, (b) that it is familiar with the definition of

"Accredited Investor" under the Securities Act, (c) that it is experienced in

making investments where qualification as an Accredited Investor is required,

(d) that each of its members is an Accredited Investor as defined under the

Securities Act and, (e) upon consultation with qualified legal counsel in

Ontario, (i) that it is satisfied as to the full observance of the laws of

Ontario and Canada with respect to the offer and sale of the Notes and the

Common Stock issuable upon the due conversion thereof and (ii) that its

subscription and payment therefor will not violate any applicable securities or

other laws of Ontario or Canada.

 

         4.5 AGGER. Each Agger LP separately represents and warrants that (a) it

is a limited liability company, duly organized and existing under the laws of

the State of Delaware, (b) that it is familiar with the definition of

"Accredited Investor" under the Securities Act, (c) that it is experienced in

making investments where qualification as an Accredited Investor is required,

(d) that each of its members is an Accredited Investor as defined under the

Securities Act and, (e) upon consultation with qualified legal counsel in

Delaware, (i) that it is satisfied as to the full observance of the laws of

Delaware and the United States with respect to the offer and sale of the Notes

and the Common Stock issuable upon the due conversion thereof and (ii) that its

subscription and payment therefor will not violate any applicable securities or

other laws of Delaware or the United States.

 

         4.6 RESTRICTED SECURITIES. The undersigned Lenders acknowledges that

the securities that will be received will not have been registered under the

Securities Act of 1933 (the "1933 Act") or qualified under applicable state

securities laws, and that the transferability thereof is restricted by the

registration provisions of the 1933 Act as well as such state laws. Based upon

the representations if each respective Lender concerning his Accredited Investor

 

 

Note Purchase Agreement                                              Page 4 of 25

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status, and agreements being made by the undersigned herein, this transaction is

being done pursuant to an exemption from such registration provided by Section

4(2) of the 1933 Act and Regulation D promulgated thereunder and applicable

state securities law qualification exemptions. Each Lender acknowledges that he

or it has been granted a reasonable time prior to the date hereof during which

such Lender has had the opportunity to obtain such additional information as

Lender deemed necessary to permit Lender to make an informed decision with

respect to the investment contemplated. Each Lender represents and warrants that

such Lender (i) has reviewed such other documents and obtained such other

information from the Company as Lender deems necessary to make an informed

investment decision; (ii) has had access to all relevant documents, instruments,

books, and other records of or pertaining to the Company and has had the

opportunity to ask questions of and receive answers from management and of the

Company; and (iii) is fully aware of the current business prospects, financial

condition, and operating history relating to the Company. Other than the

representations and warranties provided in this Agreement, Lender warrants that

no representations, statements or inducements were made and that Lender is not

relying upon any representations other than those contained in the Disclosure

Document, this Agreement or the attachments hereto. The Lenders understand that

none of the Securities may be sold, transferred, or otherwise disposed of

without registration under the Securities Act of 1933 or an exemption therefrom

and that in the absence of an effective registration statement covering the

Securities or an available exemption from registration under the Securities Act,

the Securities must be held indefinitely.

 

          4.7 LEGENDS. To the extent applicable, the Note and any certificate

evidencing any of the common stock issuable upon the due conversion thereof will

be endorsed with legends substantially in the following form:

 

                  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED

                  UNDER THE SECURITIES ACT OF 1993, AS AMENDED, AND MAY NOT BE

                  SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS

                  AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS

                  RECEIVED AN OPINION OF COUNSEL, OR OTHER EVIDENCE SATISFACTORY

                  TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT

                  REQUIRED.

 

         4.8 No Short Sales. Each Lender agrees that until the expiration of two

years from the Closing Date and while the Lender holds shares of the Company's

Common Stock from conversion of the Note, such Lender will not sell, transfer or

otherwise dispose of its Common Stock through a put or other short sale

arrangement.

 

5. CONDITIONS TO THE OBLIGATIONS OF THE LENDERS

 

The respective obligations of the Lenders to purchase Notes under this Agreement

are subject to the fulfillment on or before the Closing of each of the following

conditions:

 

         5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties

of the Company contained in Section 3 shall be true and correct as of the

Closing Date.

 

         5.2 NO DETERIORATION. Nothing shall have occurred since the date of the

Disclosure Documents that has or may reasonably be expected to affect materially

adversely the Company, its assets or its business

 

         5.3 [This Section Deleted and Reserved.]

 

         5.4 OFFICER CERTIFICATES. The President and the Chief Financial Officer

of the Company shall have delivered at the Closing a certificate, substantially

in the form shown by Exhibit "B" attached hereto, to the effect that the Company

has complied with all agreements, obligations and conditions required of it

pursuant to this Agreement.

 

 

Note Purchase Agreement                                              Page 5 of 25

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         5.5 OPINION OF COUNSEL. Lenders shall have received from Jackson &

Walker, counsel for the Company, a written opinion, dated the Closing Date, in

form and substance satisfactory to the Lenders and their counsel, an opinion as

to the execution and delivery of this Agreement and the other documents and

agreements to be executed pursuant hereto, the good standing and authority of

the Company, the enforceability of this Agreement and the other agreements and

documents to be executed in connection herewith, and the due authorization as to

the issuance of the Notes.

 

         5.6 SATISFACTION WITH INQUIRIES. The Lenders shall be satisfied with

the results of their inquiries into the Company and its business and affairs,

including without limitation, the status of all executive employment agreements

to which the Company is a party and the status, as outstanding or terminated, of

all rights, options and warrants for the purchase of any of the Company's

securities that were in the past awarded or purported to be awarded to any

executive employee of the Company.

 

         5.7 REPRESENTATION LETTERS. The Lenders shall have received letters

addressed to them and in form and substance acceptable to them, from Kornstein,

Veisz, Wexler, & Pollard, LLP, ("New York Counsel") and from Seyfarth Shaw

("California Counsel"), litigation legal counsel to the Company, containing the

following: (a) details relating to all matters of pending or threatened

litigation, claims or assessments that such firm is handling on behalf of the

Company, including (i) a description of the nature of each matter, (ii) the

progress of each matter to date, (iii) how the Company has responded or intends

to respond in terms of pleadings or other public court filings and (iv) an

evaluation of the likelihood of an unfavorable outcome and an estimate of the

amount or range of potential loss; (b) the knowledge, if any of such firm of

other asserted or unasserted possible claims that such firm believes are

probable of assertion and should be disclosed in accordance with Statement of

Financial Accounting Standards No. 5 ("FASB 5"); (c) confirmation that if such

firm has formed a professional conclusion that the Company should disclose or

consider disclosure of such possible claims, it will, as a matter of

professional responsibility to the Company and its shareholders, so advise the

Company and will consult with the Company concerning the question of such

disclosure and the applicable requirements of Statement of FASB 5; (d) a

statement of the nature of and reasons for any limitation on the response of

such firm. On or about May 29, 2003, California Counsel wrote a letter to the

Company's auditors discussing the facts and circumstances surrounding the

Weathersby Case in the form required by this Section 5.7. Lenders have had

direct communications with California Counsel concerning the Weathersby Case,

and thereafter have requested from California Counsel that they directly receive

a like letter concerning specifically the Weathersby Case in accordance with

this Section 5.7 (a "Weathersby Representation Letter"). However, California

Counsel is unable to tender that Weathersby Representation Letter before

Closing, but intends to tender the Weathersby Representation Letter as soon as

practicable after the Closing Date. As an inducement to Closing and to assure

compliance with this Section 5.7, the Company and Lenders agree that: (x) if the

Weathersby Representation Letter is not tendered before the expiration of ten

(10) business days of the Closing Date, or (y) if the Weathersby Representation

Letter is tendered and within it states facts and circumstances that are

materially different than those represented by California Counsel concerning the

Weathersby Case, then (after notice by Lenders of breach of the foregoing and

failure to cure such breach within five (5) business days of the receipt of such

notice), and only in that event and unless already converted, Lenders shall be

repaid out of the Peacock Offering Proceeds, but if the Peacock Offering is not

consummated, then the Maturity Date of the Notes shall be April 15, 2005.

 

6. REGISTRATION RIGHTS The Company covenants and agrees as follows:

 

         6.1 DEFINITIONS. For purposes of this Section 6:

 

                  (a) The term "Holder" means any person owning or having the

right to acquire Registrable Securities pursuant to the Note or upon the

conversion thereof.

 

                  (b) The terms "register," "registered" and "registration"

refer to a registration effected by preparing and filing a registration

 

 

Note Purchase Agreement                                              Page 6 of 25

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statement or similar document in compliance with the Securities Act, and such

registration statement or document becoming effective.

 

                  (c) The term "Registrable Securities" means the (i) Common

Stock issuable or issued upon the conversion of any Note and (ii) any Common

Stock issued (or issuable upon the conversion or exercise of any warrant, right,

or other security which is issued) as a dividend or other distribution with

respect to, or in exchange for or in replacement of shares referenced in (i) and

(ii) above, but excluding in all cases, however, any Registrable Securities sold

by a person in a transaction in which his rights under this Section 6 are not

assigned.

 

                  (d) The number of shares of "Registrable Securities then

outstanding" shall be determined by the number of shares of Common Stock

outstanding which are, and the number of shares of Common Stock issuable

pursuant to then exercisable or convertible securities which are, Registrable

Securities.

 

                  (e) The term "SEC" means the United States Securities and

Exchange Commission.

 

All other capitalized terms used in this Section, which are not defined herein,

shall have the meaning otherwise given in this Agreement.

 

         6.2 REQUEST FOR REGISTRATION.

 

         (a) If the Company shall receive at any time after the Closing Date, a

written request from the Holders of forty-nine percent (49%) or greater of the

Registrable Securities then outstanding that the Company file a registration

statement under the Securities Act covering the registration of any part of the

Registrable Securities then outstanding, then the Company shall:

 

                  (i) within ten (10) calendar days of the receipt thereof, give

written notice of such request to all Holders; and

 

                  (ii) use its best efforts to effect as soon as practicable,

and in any event within sixty (60) calendar days of the receipt of such request,

the filing of a registration statement under the Securities Act covering all

Registrable Securities which the Holders request to be registered, subject to

the limitations of paragraph 6.2(b), within two hundred ten (210) business days

of the mailing of such notice by the Company, provided, however, that the

Holders may not utilize this demand right more than once in any twelve-month

period after the Closing Date.

 

         (b) If the Holders initiating the registration request hereunder

("Initiating Holders") intend to distribute the Registrable Securities covered

by their request by means of an underwriting, they shall so advise the Company

as a part of their request made pursuant to paragraph 6.2(a) and the Company

shall include such information in the written notice referred to in paragraph

6.2(a)(i). The underwriter will be selected by a majority in interest of the

Initiating Holders and shall be reasonably acceptable to the Company. In such

event, the right of any Holder to include his Registrable Securities in such

registration shall be conditioned upon such Holder's participation in such

underwriting and the inclusion of such Holder's Registrable Securities in the

underwriting (unless otherwise mutually agreed by a majority in interest of the

Initiating Holders and such Holder) to the extent provided herein. All Holders

proposing to distribute their securities through such underwriting shall

(together with the Company as provided in paragraph 6.4(e)) enter into an

underwriting agreement in customary form with the underwriter or underwriters

selected for such underwriting.

 

         (c) Notwithstanding the foregoing, if the Company shall furnish to

Holders requesting a registration statement pursuant to this paragraph 6.2, a

certificate signed by the Chief Executive Officer of the Company stating that in

the good faith judgment of the Board of Directors of the Company, it would be

seriously detrimental to the Company and its shareholders for such registration

statement to be filed and it is therefore essential to defer the filing of such

registration statement, the Company shall have the right to defer taking action

with respect to such filing for a period of not more than sixty (60) calendar

 

 

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days after receipt of the request of the Initiating Holders; provided, however,

that the Company may not utilize this right more than once in any twelve-month

period.

 

         (d) In addition, the Company shall not be obligated to effect, or to

take any action to effect, any registration pursuant to this paragraph 6.2:

 

                  (i) After the Company has effected one registration pursuant

to this paragraph 6.2 and such registration has been declared or ordered

effective; or

 

                  (ii) After the Closing Date, if the Company has filed and had

declared effective a registration statement with respect to the sale of all of

the Registrable Securities and has kept such registration statement effective

until the expiration of two hundred ten (210) calendar days after the effective

date of such registration statement. Notwithstanding the foregoing, the above

period for maintenance of effectiveness of the 210-day period set forth in this

paragraph 6.2(d)(ii) shall be extended for a period of time equal to the period

a Holder refrains from selling any securities included in such registration at

the request of an underwriter of the Common Stock.

 

         6.3 COMPANY ("PIGGYBACK") REGISTRATION. If at any time commencing on

the Closing Date (but without any obligation to do so) the Company proposes to

register (including for this purpose a registration effected by the Company for

shareholders other than the Holders) any of its stock or other securities under

the Securities Act in connection with the public offering of such securities

solely for cash (other than a registration of securities to be offered by

employees pursuant on employee benefit plan on Form S-8, or a registration in

connection with an exchange offer or any acquisition or a registration on any

form which does not include substantially the same information as would be

required to be included in a registration statement covering the sale of the

Registrable Securities), the Company shall, each such time, give each Holder

written notice of such proposed registration at least thirty (30) days prior to

filing the registration statement respecting such proposed registration. Upon

the written request of any Holder given within twenty (20) days after mailing of

such notice by the Company in accordance with this Agreement, the Company shall

cause to be registered under the Securities Act all of the Registrable

Securities that each such Holder has requested to be registered.

 

         6.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 6

to effect the registration of any Registrable Securities, the Company shall use

its best efforts to, as expeditiously as reasonably possible:

 

         (a) Prepare and file with the SEC a registration statement with respect

to such Registrable Securities and use its best efforts to cause such

registration statement to become effective, and, keep such registration

statement current and effective for a period of up to the earlier of two hundred

seventy (270) calendar days or until the distribution contemplated in the

Registration Statement has been completed; provided, however, that such period

shall be extended for a period of time equal to the period a Holder refrains

from selling any securities included in such registration at the request of an

underwriter of the Common Stock.

 

         (b) Prepare and file with the SEC such amendments and supplements to

such registration statement and the prospectus used in connection with such

registration statement as may be necessary to comply with the provisions of the

Securities Act with respect to the disposition of all securities covered by such

registration statement.

 

         (c) Furnish to the Holders such numbers of copies of a prospectus,

including a preliminary prospectus, in conformity with the requirements of the

Securities Act, and such other documents as they may reasonably request in order

to facilitate the disposition of Registrable Securities owned by them.

 

         (d) Register and qualify the securities covered by such registration

statement under such other securities or blue sky laws of such jurisdictions as

shall be reasonably requested by the Holders; provided that in no event shall

the Company be required to qualify to do business in any state or to take any

action which would subject it to general or unlimited service of process in any

state where it is not now so subject.

 

 

Note Purchase Agreement                                               Page 8 of 25

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         (e) In the event of any underwritten public offering, enter into and

perform its obligations under an underwriting agreement with terms generally

satisfactory to the managing underwriter of such offering. Each Holder

participating in such underwriting shall also enter into and perform its

obligations under such an agreement.

 

         (f) Notify each Holder of Registrable Securities covered by such

registration statement at any time when a prospectus relating thereto is

required to be delivered under the Securities Act of the happening of any event

as a result of which the prospectus included in such registration statement, as

then in effect, includes an untrue statement of a material fact or omits to

state a material fact required to be stated therein or necessary to make the

statements therein not misleading in the light of the circumstances then

existing.

 

         (g) Cause all such Registrable Securities registered pursuant hereunder

to be listed on each securities exchange on which similar securities issued by

the Company are then listed.

 

         (h) Provide a transfer agent and registrar for all Registrable

Securities registered pursuant hereunder and a CUSIP number for all such

Registrable Securities, in each case not later than the effective date of such

registration.

 

         (i) Furnish, at the request of any Holder requesting registration of

Registrable Securities pursuant to this Section 6, on the date that such

Registrable Securities are delivered to the underwriters for sale in connection

with a registration pursuant to this Section 6, if such securities are being

sold through underwriters, or, if such securities are not being sold through

underwriters, on the date that the registration statement with respect to such

securities becomes effective, (I) an opinion, dated on such date, of the counsel

representing the Company for the purposes of such registration, in form and

substance as is customarily given to underwriters in an underwritten public

offering, addressed to the underwriters, if any, and to the Holders requesting

registration of Registrable Securities and (ii) a letter dated such date, from

the independent certified public accountants of the Company, in form and

substance as is customarily given by independent certified public accountants to

underwriters in an underwritten public offering, addressed to the underwriters,

if any, and to the Holders requesting registration of Registrable Securities.

 

         6.5 FURNISH INFORMATION. It shall be a condition precedent to the

obligations of the Company to take any action pursuant to this Section 6, that

the selling Holders shall furnish to the Company such information regarding

themselves, the Registrable Securities held by them, and on the intended method

of disposition of such securities as shall be required to effect the

registration of their Registrable Securities.

 

         6.6 EXPENSES OF REGISTRATION. All expenses incurred in connection with

any registration, filing or qualification pursuant to this Section 6, including

without limitation, all registration, filing and qualification fees, printers'

and accounting fees, and fees and disbursements of counsel for the Company, but

excluding underwriter's commissions and fees and any fees of others employed by

a selling Holder, shall be borne by the Company.

 

         6.7 UNDERWRITING REQUIREMENTS. In connection with an