Table of Contents

 

		Page
	ARTICLE I
	Purchase; Closings
1.1	Purchase	1
1.2	Closing	1
ARTICLE II
Representations and Warranties
2.1	Disclosure	2
2.2	Representations and Warranties of the Company	3
2.3	Representations and Warranties of the Purchaser	8
ARTICLE III
Additional Agreements
3.1	Other Actions	11
3.2	Exchange Listing	12
3.3	Legend	12
3.4	Indemnity	13
3.5	Registration Rights	14
3.6	Reset.	22
3.7	Transfer Restrictions	23
ARTICLE IV
Termination
4.1	Termination	24
4.2	Effects of Termination	25
ARTICLE V
Miscellaneous
5.1	Survival	25
5.2	Standard	25
5.3	Amendment	25
5.4	Waivers	25
5.5	Counterparts and Facsimile	25
5.6	Governing Law	25
5.7	WAIVER OF JURY TRIAL	26
5.8	Notices	26
5.9	Entire Agreement, Etc	26
5.10	Other Definitions	27
5.11	Captions	27

 

 

5.12	Severability	27
5.13	No Third Party Beneficiaries	28
5.14	Time of Essence	28
5.15	Specific Performance	28

 

 

INDEX OF DEFINED TERMS

 

Term		Location of Definition
Affiliate		5.10(a)
Agreement		Preamble
Beneficially Own		3.1(d)
Beneficial Owner		3.1(d)
Benefit Plan		2.3(e)(4)
Board of Directors		2.2(c)(1)
business day		5.10(e)
Capitalization Date		2.2(b)
Closing		1.2(a)
Closing Date		1.2(a)
Common Stock		Recitals
Company		Preamble
Company Financial Statements		2.2(f)
Company Preferred Stock		2.2(b)
Company SEC Reports		2.2(g)
Company Subsidiary		2.2(c)
Convertible Preferred Stock		Recitals
Disclosure Package		3.5(a)(1)
Disclosure Schedule		2.1(a)
ERISA		2.3(e)(5)
Exchange Act		2.2(g)
Free Writing Prospectus		3.5(g)(2)
Fundamental Change		3.6(b)(1)
Governmental Entities		2.2(d)(1)
HOLA		2.2(a)
Holder		3.5(a)(3)
Holder Free Writing Prospectus		3.5(a)(4)
Holders’ Counsel		3.5(d)(2)
Indemnified Party		3.4(b)
indemnified person		3.5(g)(3)
indemnifying person		3.5(g)(3)
Liability		3.5(g)(1)
Liens		2.2(c)
Losses		3.4(a)
Market Price		3.6(b)(2)
Material Adverse Effect		2.1(b)
New Issuance Price		3.6(a)(1)
OTS		3.6(a)
person		5.10(f)
Preliminary Fundamental Change		3.6(b)(3)
Previously Disclosed		2.1(c)
Purchasers		Preamble
QIB		2.3(e)(1)

 

 

Term		Location of Definition
Reference Purchase Price		1.2(b)
Registrable Securities		3.5(a)(5)
Registration Expenses		3.5(d)(1)
Reset Event		3.6(a)(2)
Reset Issuance		3.6(a)(1)
Reset Price		3.6(a)(2)
SEC		2.1(c)
Shares		Recitals
Securities Act		2.2(g)(1)
Selling Holders		3.5(a)(6)
Series R Preferred Stock		2.2(b)
Shareholder Approval		3.1(b)
Shareholder Proposals		3.1(b)
Shelf Period		3.5(b)(1)
Shelf Registration		3.5(b)(1)
Shelf Registration Statement		3.5(b)(1)
Significant Subsidiary		2.2(c)
Subsidiary		2.2(c)
Transfer		3.7(a)
Triggering Fundamental Change		3.6(a)(2)
Underlying Security Price		3.6(b)(4)
Warrants		Recitals
WM Funding		2.2(b)
WMB		2.2(a)

 

 

Affiliate) as such Purchaser may have designated in writing to the Company not less than one business day prior to the Closing, against payment therefor by wire transfer by such Purchaser of immediately available United States funds to a bank account designated by the Company, for an aggregate purchase price equal to the amount set forth on such Purchaser’s signature page to this Agreement.

 

(c)   Closing Conditions .

 

(1)   The respective obligations of each Purchaser on the one hand, and the Company, on the other hand, to consummate the Closing is subject to the fulfillment or written waiver by the applicable Purchaser and the Company prior to the Closing of the following conditions:

 

(A)   no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the Closing;

 

(B)   the shares of Common Stock to be issued at the Closing shall have been authorized for listing on the New York Stock Exchange or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance; and

 

(C)   the Company shall have issued and sold shares of capital stock on or after the date hereof and on or prior to the Closing Date and received aggregate proceeds in respect thereof (including the proceeds to be received from such Purchaser) of not less than $4.9 billion in the aggregate; provided , that for purposes of this clause (C), to the extent there exist at Closing contractual obligations of purchasers to deliver funds in respect of any such sales within not more than 14 days following Closing, the funds subject to such contractual obligations shall be considered to be proceeds received for purposes of this provision.

 

(2)   The obligation of each Purchaser to consummate the purchase of Shares and Warrants to be purchased by it at the Closing is also subject to the fulfillment or written waiver by such Purchaser prior to the Closing of each of the following conditions:

 

(A)   the Company shall have performed in all material respects all obligations required to be performed by it at or prior to Closing; and

 

(B)   such Purchaser shall have received a certificate signed on behalf of the Company by a senior executive officer certifying to the effect that the conditions set forth in Section 1.2(c)(2)(A) has been satisfied.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

2.1   Disclosure . (a)  On or prior to the date hereof, the Company delivered to each Purchaser and each Purchaser delivered to the Company a schedule (“Disclosure Schedule”) setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an

 

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exception to one or more representations or warranties contained in Section 2.2 with respect to the Company, or in Section 2.3 with respect to such Purchaser, or to one or more of its covenants contained in Article III.

 

(b)  As used in this Agreement, any reference to any fact, change, circumstance or effect being “material” with respect to the Company means such fact, change, circumstance or effect is material in relation to the business, results of operations or financial condition of the Company and the Company Subsidiaries taken as a whole. As used in this Agreement, the term “ Material Adverse Effect ” means any circumstance, event, change, development or effect that, individually or in the aggregate, (1) is material and adverse to the business, results of operations or financial condition of the Company and Company Subsidiaries taken as a whole or (2) would materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Closing; provided, however, that in determining whether a Material Adverse Effect has occurred, there shall be excluded the following: (A) changes in generally accepted accounting principles or regulatory accounting principles applicable to banks, savings associations or their holding companies, (B) changes in laws, rules and regulations of general applicability or interpretations thereof by Governmental Entities, (C) actions or omissions of the Company taken in accordance with the terms of this Agreement, (D) changes in general economic, monetary or financial conditions, including changes in prevailing interest rates, credit markets, secondary mortgage market conditions or housing price appreciation/depreciation trends, (E) changes in the market price or trading volumes of the Common Stock or the Company’s other securities, (F) the failure of the Company to meet any internal or public projections, forecasts, estimates or guidance (including guidance as to “earnings drivers”) for any period ending on or after December 31, 2007, (G) changes in global or national political conditions, including the outbreak or escalation of war or acts of terrorism, and (H) the public disclosure of this Agreement or the transactions contemplated hereby.

 

(c)  “ Previously Disclosed ” means information (1) set forth on the Disclosure Schedule or (2)  publicly disclosed by the Company in the Company SEC Reports filed by it with or furnished to the Securities and Exchange Commission ( “SEC” ) and publicly available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).

 

2.2   Representations and Warranties of the Company . Except as Previously Disclosed, the Company represents and warrants to the Purchasers as of the date of this Agreement that:

 

(a)   Organization and Authority . The Company is a corporation duly organized and validly existing under the laws of the State of Washington, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would have a Material Adverse Effect, and has the corporate power and authority to own its properties and assets and to carry on its business as it is now being conducted. The Company is duly registered as a savings and loan holding company under the Home Owners’ Loan Act, as amended (“ HOLA ”). Washington Mutual Bank

 

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(“ WMB ”) is duly organized and in good standing as a federal savings association under HOLA and its deposits are insured by the Federal Deposit Insurance Corporation to the fullest extent permitted by law.  WMB is a member in good standing of the Federal Home Loan Bank of San Francisco.

 

(b)   Capitalization .   The authorized capital stock of the Company consists of 1,600,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, no par value, of the Company (the “ Company Preferred Stock” ).  As of the close of business on March 31, 2008 (the “ Capitalization Date ”), there were 882,140,637 shares of Common Stock outstanding and 3,000,500 shares of Preferred Stock outstanding, consisting of 500 shares of Series K Perpetual Non-cumulative Floating Rate Preferred Stock and 3,000,000 shares of 7.75% Series R Non-cumulative Perpetual Convertible Preferred Stock (the “ Series R Preferred Stock ”).  As of the close of business on the Capitalization Date, no shares of Common Stock or Preferred Stock were reserved or to be made available for issuance, except for (1) (A) 83,311,421 shares of Common Stock reserved or to be made available for issuance upon the exercise of options to purchase Common Stock, (B) 2,186,394 share of Common Stock reserved or to be made available for issuance upon the vesting of restricted stock units and (C) 949,369 shares of Common Stock reserved or to be made available for issuance upon the vesting of performance share awards, (2) 834,322 shares of Common Stock reserved or to be made available for issuance under the 2002 Employee Stock Purchase Plan, (3) 563 shares of Common Stock reserved or to be made available for issuance upon conversion of the Company’s 2.75% Convertible Cash to Accreting Senior Notes due March 15, 2016, (4) 1,176,502 shares of Common Stock reserved or to be made available for issuance upon conversion of the Company’s 4% Convertible Senior Notes due May 15, 2008, (5) 141,176,471 shares of Common Stock reserved or to be made available for issuance upon conversion of the Series R Preferred Stock, (6) 29,242,092 shares of Common Stock reserved or to be made available for issuance pursuant to the Company’s Trust Warrants issued pursuant to the Warrant Agreement, dated as of April 30, 2001 between the Company and The Bank of New York, (7) approximately 11,900,000 shares of Common Stock reserved or to be made available for issuance pursuant to Litigation Warrants issued pursuant to the Amended and Restated Warrant Agreement, dated as of March 11, 2003 between the Company and Mellon Investor Services LLC, (8) 700,000 shares of Company Preferred Stock designated as Series RP Preferred Stock, par value $0.01 per share, reserved or to be made available for issuance upon the exercise of rights granted under the Rights Agreement, dated as of December 20, 2000, between the Company and Mellon Investor Services, L.L.C., (9) 1,250 shares of Series I Perpetual Non-cumulative Fixed-to-Floating Rate Preferred Stock reserved or to be made available for issuance upon conversion of the Series 2006-A Convertible Preferred Securities issued by Washington Mutual Preferred Funding LLC (“ WM Funding ”), (10) 750 shares of Series J Perpetual Non-cumulative Fixed Rate Preferred Stock reserved or to be made available for issuance upon conversion of the Series 2006-B Convertible Preferred Securities of WM Funding, (11) 500 shares of Series L Perpetual Non-cumulative Fixed-to-Floating Rate Preferred Stock reserved or to be made available for issuance upon conversion of the Series 2006-C Convertible Preferred Securities of WM Funding, (12) 500 shares of Series M Perpetual Non-cumulative Fixed-to-Floating Rate Preferred Stock reserved or to be made available for issuance upon conversion of the Series 2007-A Convertible Preferred Securities of

 

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WM Funding, and (13) 1,000 shares of WM Series N Non-cumulative Fixed-to-Floating Rate Preferred Stock reserved or to be made available for issuance upon conversion of the Series 2007-B Convertible Preferred Securities of WM Funding.  All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.

 

(c)   Company’s Subsidiaries .  Exhibit 21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 sets forth a correct and complete list of the Company Subsidiaries, including the Company’s Significant Subsidiaries.  Each of the Company’s Significant Subsidiaries is duly organized and validly existing under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified or in good standing would have a Material Adverse Effect.  The Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock of or all other equity interests in each of the Company Subsidiaries, free and clear of any liens, charges, encumbrances, adverse rights or claims and security interests whatsoever (“ Liens ”), and all of such shares are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.  As used herein, “Subsidiary” means, with respect to any person, any corporation, partnership, joint venture, limited liability company or other entity (1) of which such person or a subsidiary of such person is a general partner or (2) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity is directly or indirectly owned by such person and/or one or more subsidiaries thereof; “Company Subsidiary” means any Subsidiary of the Company; and “Significant Subsidiary” means, with respect to any person, any Subsidiary that would constitute a “significant Subsidiary” of such person within the meaning of Rule 1-02 of Regulation S-X of the SEC.

 

(d)   Authorization . (1) The Company has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by the board of directors of the Company (the “ Board of Directors ”). Subject to such approvals of federal, state, local and foreign authorities, agencies, courts, commissions or other entities, including stock exchanges and other self-regulatory organizations (collectively, “ Governmental Entities ”) referred to in Section 2.2(d), and assuming due authorization, execution and delivery by the applicable Purchaser, this Agreement is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors generally or by general equitable principles (whether applied in equity or at law).  No vote of the Company’s shareholders is required for the execution and delivery by the Company of this Agreement, the performance by it of its obligations hereunder or the consummation by it of the transactions contemplated hereby, except that the Shareholder

 

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Approvals are required in connection with the conversion of the Convertible Preferred Stock and the exercise of the Warrants.

 

(2)  Neither the execution and delivery by the Company of this Agreement, nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (i) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of the material properties or assets of the Company or any Company Subsidiary under any of the terms, conditions or provisions of (A) its articles of incorporation or bylaws (or similar governing documents) or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which it may be bound, or to which the Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (ii) subject to compliance with the statutes and regulations referred to in Section 2.2(e), violate any statute, rule or regulation or, to the knowledge of the Company, any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties or assets, except in the case of clauses (i)(B) and (ii) for such violations, conflicts and breaches as would not reasonably be expected to have a Material Adverse Effect.

 

(e)   Governmental Consents . Other than as Previously Disclosed, and the securities or blue sky laws of the various states, no material notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting periods, is necessary for the consummation by the Company of the transactions contemplated by this Agreement.

 

(f)   Financial Statements . The consolidated balance sheets of the Company and the Company Subsidiaries as of December 31, 2007 and 2006 and the related consolidated statements of income, shareholders’ equity and cash flows for the three years ended December 31, 2007, together with the notes thereto (collectively, the “ Company Financial Statements ”) included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the SEC, have been prepared in accordance with generally accepted accounting principles applied on a consistent basis and present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries as of the dates set forth therein and the consolidated results of operations and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

 

(g)   SEC Reports . (1) Since December 31, 2005, the Company and each Company Subsidiary has filed all material reports, registration statements, proxy statements and other documents, together with any required amendments thereto, that it was required to file with any SEC (the foregoing, collectively, the “ Company SEC Reports ”). As of its date (or if amended prior to the date of this Agreement, as of the date of such amendment), each Company SEC Report did not contain an untrue statement of a

 

6

 

material fact or omit to state a material fact necessary in order to make the statements made in it, in the light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

 

(2)  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or their accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a Material Adverse Effect. The Company (A) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to the Company, including the consolidated Company Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Board of Directors (x) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

 

(h)   Offering of Securities . Neither the Company nor any person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Shares and Warrants to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC thereunder) which might subject the offering, issuance or sale of any of the Shares or Warrants to the Purchasers pursuant to this Agreement to the registration requirements of the Securities Act.

 

(i)   Status of Shares . The shares of Common Stock, shares of Convertible Preferred Stock and Warrants to be issued pursuant to this Agreement have been duly authorized by all necessary corporate action. When issued and sold against receipt of the consideration therefor as provided in this Agreement, such shares of Common Stock, Convertible Preferred Stock and Warrants will be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be subject to preemptive rights of any other shareholder of the Company. The shares of Common Stock issuable upon the conversion of the Convertible Preferred Stock and the exercise of the Warrants will, upon receipt of the Shareholder Approvals and filing of the related Articles of Amendment to the Company’s Restated and Amended Articles of Incorporation with the Washington Secretary of State, have been duly authorized by all necessary corporate action and when so issued upon such conversion or exercise will be validly issued, fully paid and nonassessable, will not subject the holders thereof to

 

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personal liability and will not be subject to preemptive rights of any other shareholder of the Company.

 

(j)   Litigation and Other Proceedings .  There is no pending or, to the knowledge of the Company, threatened, claim, action, suit, investigation or proceeding, against the Company or any Company Subsidiary, nor is the Company or any Company Subsidiary subject to any order, judgment or decree, in each case except as would not reasonably be expected to have a Material Adverse Effect.

 

(k)   Compliance with Laws . The Company and each Company Subsidiary have all material permits, licenses, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company or such Company Subsidiary. The conduct by the Company and each Company Subsidiary of their business as presently conducted does not violate or infringe any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license or regulation in any material respect. Neither the Company nor any Company Subsidiary is in material default under any order, license, regulation, demand, writ, injunction or decree of any Governmental Entity. The Company and the Company Subsidiaries currently are complying with all applicable federal, state, local and foreign laws, regulations, rules, judgments, injunctions or decrees, except to the extent any noncompliance would not reasonably be expected to have a Material Adverse Effect.

 

2.3   Representations and Warranties of the Purchaser .  Each Purchaser, severally and not jointly, hereby represents and warrants to the Company that as of the date of this Agreement:

 

(a)   Organization and Authority .  Such Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially adversely affect such Purchaser’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis, and such Purchaser has the corporate or other power and authority to own its properties and assets and to carry on its business as it is now being conducted.

 

(b)   Authorization . (1)  Such Purchaser has the corporate or other power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by such Purchaser and the consummation of the transactions contemplated hereby have been duly authorized by the Purchaser’s board of directors, general partner or managing members, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required. This Agreement is a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,

 

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moratorium, reorganizations or similar laws affecting creditors generally or by general equitable principles (whether applied in equity or at law).

 

(2)   Other than the securities or blue sky laws of the various states, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the consummation by such Purchaser of the transactions contemplated by the this Agreement.

 

(c)   Ownership .  As of the date of this Agreement, such Purchaser and its Affiliates are the owners of record or the Beneficial Owners of the number of shares of Common Stock or securities convertible into or exchangeable for Common Stock set forth on such Purchaser’s signature page.

 

(d)   Financial Capability . Such Purchaser currently has available funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement

 

(e)   Purchase for Investment .

 

(1)   Such Purchaser (and any investor account for which it is purchasing Shares and Warrants) is either (i) a qualified institutional buyer as defined under Rule 144A under the Securities Act (“ QIB ”) or (ii) an institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act, and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares and Warrants, and such Purchaser (and any investor account for which it is purchasing Shares and Warrants) is able to bear the economic risk of its investment and can afford a complete loss of its investment.

 

(2)   Such Purchaser understands and agrees on behalf of itself and on behalf of any investor account for which it is purchasing Shares and Warrants, and each subsequent holder of a Security by its acceptance thereof will be deemed to agree, that the Shares and Warrants are being offered in a transaction not involving any public offering within the meaning of the Securities Act, that the Shares and Warrants have not been and, except as contemplated by Section 3.5, will not be, registered under the Securities Act and that, unless the Shares and Warrants are sold in a registered offering under the Securities Act, (i) such Purchaser may offer, sell, pledge or otherwise transfer any of the Shares and Warrants only to a person whom the seller reasonably believes is a QIB in a transaction not involving a public offering and (ii) if prior to the expiration of the applicable holding period specified in Rule 144(k) of the Securities Act (or any successor provision) such Purchaser decides to offer, resell, pledge or otherwise transfer any Shares or Warrants, such Shares or Warrants may be offered, resold, pledged or otherwise transferred only (A) to a person whom the seller reasonably believes is a QIB in a transaction not involving a public offering, (B) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), (C) pursuant to an effective registration statement under the Securities Act, or (D) to the Company or one of its subsidiaries, in each of cases (A) through (D) in accordance with any applicable

 

9

 

securities laws of any State of the United States, and that (iii) such Purchaser will, and each subsequent holder is required to, notify any subsequent purchaser of the Shares or Warrants from it of the resale restrictions referred to in (i) and (ii) above, as applicable, and will provide the Company and the transfer agent such certificates and other information as they may reasonably require to confirm that the transfer by it complies with the foregoing restrictions, if applicable.

 

(3)   Such Purchaser acknowledges that it (i) has conducted its own investigation of the Company, (ii) has had access to the Company’s public filings with the Securities and Exchange Commission and to such financial and other information as it deems necessary to make its decision to purchase the Shares and Warrants, and (iii) has been offered the opportunity to ask questions of the Company and received answers thereto, as it deemed necessary in connection with the decision to purchase the Shares and Warrants.

 

(4)   The Shares and Warrants to be purchased by such Purchaser are not being acquired, directly or indirectly, with the assets of any “employee benefit plan” (a “Benefit Plan” ) within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) or, if the assets of a Benefit Plan are being used, directly or indirectly, for such acquisition, neither the acquisition nor holding of such Shares and Warrants will result in a nonexempt prohibited transaction under ERISA or the Internal Revenue Code of 1986, as amended.

 

(5)   Such Purchaser is acquiring the Shares and Warrants for its own account, and not with a view toward, or for sale in connection with, any distribution thereof in violation of any federal or state securities or “blue sky” law, or with any present intention of distributing or selling such Shares or Warrants in violation of the Securities Act.

 

(6)   Such Purchaser understands that (i) the Shares and Warrants are being offered and sold without registration under the Securities Act in a transaction that is exempt from the registration requirements of that Act, (ii) such exemption depends, in part, on the accuracy and truthfulness of the foregoing representations of such Purchaser and (iii) the Company will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements and agrees that if any of the representations and acknowledgements deemed to have been made by it by its purchase of the Shares and Warrants is no longer accurate, it shall promptly notify the Company. If such Purchaser is acquiring Shares and Warrants as a fiduciary or agent for one or more investor accounts, such Purchaser represents that is has sole investment discretion with respect to each such account and it has full power to make the foregoing representations, acknowledgements and agreements on behalf of such account.

 

(7)   Such Purchaser understands that nothing in this Agreement, the Company SEC Reports or any other materials presented to such Purchaser in connection with the purchase and sale of the Shares and Warrants constitutes legal, tax or investment advice. Such Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares and Warrants and has made its own assessment and has satisfied itself concerning

 

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the relevant tax and other economic considerations relevant to its investment in the Shares and Warrants.

 

ARTICLE III

ADDITIONAL AGREEMENTS

 

3.1   Other Actions . (a)   Each Purchaser, on the one hand, and the Company, on the other hand, will cooperate and consult with the other and use reasonable best efforts to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, and the expiration or termination of any applicable waiting periods, necessary or advisable to consummate the transactions contemplated by this Agreement, and to perform the covenants contemplated by this Agreement.

 

(b)   Unless this Agreement has been terminated pursuant to Secti