Exhibit 10.1
SECURITIES EXCHANGE AGREEMENT
This
Securities Exchange Agreement (this “ Agreement
”) is dated as of June 13, 2008 between Retail Pro,
Inc., a Delaware corporation (the “ Company
”), and each purchaser identified on the signature pages
hereto (each, including its successors and assigns, a “
Purchaser
” and collectively, the “ Purchasers
”).
WHEREAS,
the Purchasers currently hold (i) a 9% Convertible Debenture
of the Company with an outstanding principal balance of
$912,336 issued in March 2004 (the “ March 2004
Note ”), (ii) a 7% Secured Convertible Note of
the Company with an outstanding principal balance of
$1,000,000 issued in June 2005 (the “ June 2005
Note ”), and (iii) a $675,000 Amended
and Restated Term Note with an aggregate outstanding principal
balance of $675,000 comprised of (x) $212,500 originally
loaned to the Company in November 2005 (the “
November 2005
Note Amount ”), (y) $212,500 originally loaned to
the Company in March 2006 (the “ March 2006 Note
Amount ”) and (z) $250,000 originally loaned to
the Company in October 2006 (the “ October 2006
Note Amount ”) (such debentures and notes,
collectively, the “ Original
Notes ”).
WHEREAS,
subject to the terms and conditions set forth in this
Agreement and pursuant to Sections 3(a)(9) and 4(2) of the
Securities Act of 1933, as amended (the “ Securities
Act ”), the Company desires to issue Debentures
and Warrants in exchange for the Original Notes and each
Purchaser, severally and not jointly, desires to receive
Debentures and Warrants in exchange for the Original Notes, as
more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained
in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and each Purchaser agree as
follows:
ARTICLE I.
DEFINITIONS
1.1
Definitions
. In addition to the terms defined elsewhere in
this Agreement: (a) capitalized terms that are not otherwise
defined herein have the meanings given to such terms in the
Debentures (as defined herein), and (b) the following terms
have the meanings set forth in this Section 1.1:
“
Acquiring
Person ” shall have the meaning ascribed to such
term in Section 4.7.
“
Action
” shall have the meaning ascribed to such term in
Section 3.1(j).
“
Affiliate
” means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in
and construed under Rule 405 under the Securities
Act.
“
Board of
Directors ” means the board of directors of the
Company.
“
Business
Day ” means any day except Saturday, Sunday, any
day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action
to close.
“
Closing
” means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.
“
Closing
Date ” means the Trading Day when all of the
Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to
(i) the Purchasers’ obligations to proceed with the
Closing and (ii) the Company’s obligations to deliver
the Securities have been satisfied or waived.
“
Commission
” means the United States Securities and Exchange
Commission.
“
Common
Stock ” means the common stock of the Company,
par value $0.0001 per share, and any other class of securities
into which such securities may hereafter be reclassified or
changed into.
“
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.
“
Company
Counsel ” means Solomon Ward Seidenwurm &
Smith, LLP, with offices located at 401 B Street, Suite 1200,
San Diego, California 92101.
“
Conversion
Price ” shall have the meaning ascribed to such
term in the Debentures.
“
Debentures
” means the 9% Secured Convertible Debentures due,
subject to the terms therein, 3 years from their date of
issuance, issued by the Company to the Purchasers hereunder,
in the form of Exhibit A
attached hereto.
“
Disclosure
Schedules ” shall have the meaning ascribed to
such term in Section 3.1.
“
Discussion
Time ” shall have the meaning ascribed to such
term in Section 3.2(f).
“
Evaluation
Date ” shall have the meaning ascribed to such
term in Section 3.1(r).
“
Exchange
Act ” means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated
thereunder.
“
Exempt
Issuance ” means the issuance of (a) shares of
Common Stock or options to employees, officers or directors of
the Company pursuant to any stock or option plan or agreement
duly adopted for such purpose by a majority of the
non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Securities issued
hereunder 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) securities issued pursuant to acquisitions
or strategic transactions approved by a majority of the
disinterested directors of the Company, other than 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.
“
FWS
” means Feldman Weinstein & Smith LLP with offices
located at 420 Lexington Avenue, Suite 2620, New York, New
York 10170-0002.
“
GAAP
” shall have the meaning ascribed to such term in
Section 3.1(h).
“
Indebtedness
” shall have the meaning ascribed to such term in
Section 3.1(aa).
“
Intellectual
Property Rights ” shall have the meaning ascribed
to such term in Section 3.1(o).
“
Legend Removal
Date ” shall have the meaning ascribed to such
term in Section 4.1(c).
“
Liens
” means a lien, charge, security interest, encumbrance,
right of first refusal, preemptive right or other
restriction.
“
Knowledge of the
Company ”, “ the
Company’s Knowledge ” and terms and phrases
of similar import, whether or not capitalized, means (i)
actual knowledge, awareness or belief possessed the executive
officers of the Company, and (ii) the knowledge, awareness or
belief that the executive officers would have possessed by
using reasonable care and diligence under the
circumstances.
“
Material Adverse
Effect ” shall have the meaning assigned to such
term in Section 3.1(b).
“
Material
Permits ” shall have the meaning ascribed to such
term in Section 3.1(m).
“
Maximum
Rate ” shall have the meaning ascribed to such
term in Section 5.17.
“
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.
“
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.
“
Purchaser
Party ” shall have the meaning ascribed to such
term in Section 4.10.
“
Required
Approvals ” shall have the meaning ascribed to
such term in Section 3.1(e).
“
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 Underlying Shares issuable upon
exercise in full of all Warrants or conversion in full of all
Debentures (and shares issuable as payment of interest under
the Debentures), ignoring any conversion or exercise limits
set forth therein, and assuming that the Conversion Price is
at all times on and after the date of determination 75% of the
then Conversion Price on the Trading Day immediately prior to
the date of determination.
“
Rule
144 ” means Rule 144 promulgated by the
Commission 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 Commission having substantially the
same effect as such Rule.
“
SEC
Reports ” shall have the meaning ascribed to such
term in Section 3.1(h).
“
Securities
” means the Debentures, the Warrants, the Warrant Shares
and the Underlying Shares.
“
Securities
Act ” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated
thereunder.
“
Security
Agreement ” means the Security Agreement, dated
the date hereof, among the Company and the Purchasers, in the
form of Exhibit D
attached hereto.
“
Security
Documents ” shall mean the Security Agreement,
the Subsidiary Guarantees and any other documents and filing
required thereunder in order to grant the Purchasers a first
priority security interest in the assets of the Company and
the Subsidiaries as provided in the Security Agreement,
including all UCC-1 filing receipts.
“
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
3.1(a) and shall, where applicable, include any direct
or indirect subsidiary of the Company formed or acquired after
the date hereof.
“
Subsidiary
Guarantee ” means the Subsidiary Guarantee, dated
the date hereof, by each Subsidiary in favor of the
Purchasers, in the form of Exhibit E
attached hereto.
“
Trading
Day ” means a day on which the principal Trading
Market 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.
“
Transaction
Documents ” means this Agreement, the Debentures,
the Warrants, the Security Agreement, the Subsidiary
Guarantee, all exhibits and schedules thereto and hereto and
any other documents or agreements executed in connection with
the transactions contemplated hereunder.
“
Transfer
Agent ” means Corporate Stock Transfer, the
current transfer agent of the Company with a mailing address
of 3200 Cherry Drive South, Ste. 430, Denver, CO 80209 and a
facsimile number of (303) 777-7363, and any successor transfer
agent of the Company.
“
Underlying
Shares ” means the shares of Common Stock issued
and issuable upon conversion or redemption of the Debentures
and upon exercise of the Warrants and issued and issuable in
lieu of the cash payment of interest on the Debentures in
accordance with the terms of the Debentures.
“
Variable Rate
Transaction ” shall have the meaning ascribed to
such term in Section 4.13(a).
“
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 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 listed or 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 Purchasers of a majority in interest of the
Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
“
Warrants
” means, collectively, the Common Stock purchase
warrants delivered to the Purchasers at the Closing in
accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable immediately and have a term of exercise equal to 4
years, in the form of Exhibit C
attached hereto.
“
Warrant
Shares ” means the shares of Common Stock
issuable upon exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1
Closing
. On the Closing Date, upon the terms and subject
to the conditions set forth herein, concurrent with the
execution and delivery of this Agreement by the parties
hereto, the Company shall issue to each Purchaser, in exchange
for such Purchaser’s Original Notes, a Debenture in the
aggregate principal amount of such Purchaser’s Original
Notes, and Warrants as set forth in Section
2.2(a). At the Closing, the Company shall deliver
to each Holder their respective Debenture and Warrants and the
other items set forth in Section 2.2 issuable at the Closing,
upon which the Original Notes shall be canceled and retired
without any conversion thereof or any payment made or due with
respect thereto. Upon satisfaction of the
conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of FWS, or such other location as
the parties shall mutually agree.
2.2
Deliveries
(a) On
the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following:
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(i)
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this
Agreement duly executed by the Company;
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(ii) a
legal opinion of Company Counsel, in a form reasonably
acceptable, and addressed to the Purchasers;
(iii) a
Debenture with a principal amount equal to the March 2004 Note
plus accrued but unpaid interest on all of the Original Notes
in the amount of $231,952.81, registered in the name of such
Purchaser (the “ March 2004
Exchange Debenture ”);
(iv) a
Debenture with a principal amount equal to the June 2005 Note,
registered in the name of such Purchaser (the “
June
2005 Exchange Debenture ”);
(v) a
Debenture with a principal amount equal to the November 2005
Note Amount, registered in the name of such Purchaser (the
“ November 2005
Exchange Debenture ”);
(vi) a
Debenture with a principal amount equal to the March 2006 Note
Amount, registered in the name of such Purchaser (the “
March 2006
Exchange Debenture ”);
(vii) a
Debenture with a principal amount equal to the October 2006
Note Amount, registered in the name of such Purchaser (the
“ October 2006
Exchange Debenture ”);
(viii) a
Warrant registered in the name of such Purchaser to purchase
up to 1,000,000 shares of Common Stock, with an exercise price
equal to $0.08 , subject to
adjustment therein; and
(ix) the
Security Agreement, duly executed by the Company and each
Subsidiary, along with all of the Security Documents,
including the Subsidiary Guarantee, duly executed by the
parties thereto;
(b) On
the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
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(i)
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this
Agreement duly executed by such Purchaser; and
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(ii) the
Security Agreement duly executed by such
Purchaser.
2.3
Closing
Conditions .
(a) The
obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being
met:
(i) the
accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained
herein;
(ii) all
obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall
have been performed; and
(iii) the
delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in
connection with the Closing are subject to the following
conditions being met:
(i) the
accuracy in all material respects when made and on the Closing
Date of the representations and warranties of the Company
contained herein (except as qualified and limited by the
Disclosure Schedules);
(ii) all
obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have
been performed;
(iii) the
delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(v) from
the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the
Commission or the Company’s principal Trading
Market (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to
the Closing Date, trading in securities generally as reported
by Bloomberg L.P. shall not have been suspended or limited, or
minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading
Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity of
such magnitude in its effect on, or any material adverse
change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable
or inadvisable to purchase the Securities at the
Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1
Representations
and Warranties of the Company . Except as
set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify and
limit any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes
the following representations and warranties to each Purchaser
(which representations and warranties are supplemented by the
Company’s SEC Reports). Any disclosure or
exception set forth in the Disclosure Schedules shall be
deemed to apply to any representation or warranty
to which it is applicable regardless of whether or not such
representation or warranty is specifically referenced or
cross-referenced.
(a)
Subsidiaries
. All of the direct and indirect subsidiaries of
the Company are set forth on Schedule
3.1(a) . The Company owns, directly or
indirectly, all of the capital stock or other equity interests
of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the
Company has no subsidiaries, all other references to the
Subsidiaries or any of them in the Transaction Documents shall
be disregarded.
(b)
Organization and
Qualification . The Company, and except as
may be set in the Disclosure Schedules 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,
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 nor default in any material respect
of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or
charter documents. Except as may be set forth in
the Disclosure Schedules, 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: (i) a material adverse effect on the
legality, validity or enforceability of any Transaction
Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on
a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “ Material Adverse
Effect ”) and except as set forth in the
Disclosure Schedules, 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.
(c)
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, the Board of Directors or the Company’s
stockholders in connection therewith other than in connection
with the Required Approvals. Each Transaction
Document to which it is a party 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.
(d)
No
Conflicts . The execution, delivery and
performance by the Company of the Transaction Documents and
the consummation by it to which it is a party 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, (iii) subject to the Required Approvals and to the
Company’s Knowledge, 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 a 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.
(e)
Filings,
Consents and Approvals . Except as may be
set forth in the Disclosure Schedules, the Company is not
required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other
governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filings required
pursuant to Section 4.6, and (ii) the filing of Form D with
the Commission and such filings as are required to be made
under applicable state securities laws (collectively, the
“ Required
Approvals ”).
(f)
Issuance of the
Securities . The 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 and under
federal and /or state securities laws. The
Underlying 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 a number of shares of
Common Stock for issuance of the Underlying Shares at least
equal to the Required Minimum on the date hereof.
(g)
Capitalization
. The capitalization of the Company is as set forth
on Schedule
3.1(g) , which Schedule
3.1(g) shall also include the number of shares of
Common Stock owned beneficially, and of record, 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 pursuant to
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
and/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 which has not been
waived. Other than as set forth in the Disclosure
Schedules or in the SEC Reports, except as a result of the
purchase and sale of the 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. Other than as set forth in the Disclosure
Schedules or in the SEC Reports, the issuance and sale of the
Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the
Purchasers) 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 stockholder, the Board of Directors or
others is required for the issuance and sale of the
Securities. Other than set forth in the Disclosure
Schedules or in the SEC Reports, there are no stockholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the
Company is a party or, to the Knowledge of the Company,
between or among any of the Company’s
stockholders.
(h)
SEC
Reports; Financial Statements . Except (i)
as may be set forth in the Disclosure Schedules and (ii) for
those filings on Form 8-K the failure of which to file timely
or at all would not have a Material Adverse Effect, 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. Except as set forth in the Disclosure
Schedules, 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. To its
Knowledge, the Company has never been an issuer subject to
Rule 144(i) under the Securities Act. Except as set forth in
the Disclosure Schedules, 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 Commission 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.
(i)
Material
Changes . Except as set forth in the
Disclosure Schedules, 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) trade payables and accrued
expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required
to be reflected in the Company’s financial statements
pursuant to GAAP or disclosed in filings made with the
Commission, (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
stockholders 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 before
the Commission any request for confidential treatment of
information. Except for the issuance of the
Securities contemplated by this Agreement or as set forth on
Schedule
3.1(i) , 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.
(j)
Litigation
. Except as set forth in the Disclosure Schedules,
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 Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result
in a Material Adverse Effect. Except as set forth
in the Disclosure Schedules, neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. Except as set
forth in the Disclosure Schedules, there has not been, and to
the Knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of
the Company. The Commission 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.
(k)
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,
and the Company and its Subsidiaries believe that their
relationships with their employees are good. Except
as may be set forth in the Disclosure Schedules, 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. To the Knowledge of the Company 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.
(l)
Compliance
. Except as set forth in the Disclosure Schedules
or in the SEC Reports, 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.
(m)
Regulatory
Permits . To the Knowledge of the Company,
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.
(n)
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 set forth in the
SEC Reports 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 to the Company’s Knowledge held by them
under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance.
(o)
Patents and
Trademarks . To the Knowledge of the
Company, 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 as described
in the SEC Reports as necessary or material for use in
connection with their respective businesses and which the
failure to so have could reasonably be expected to 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 as
presently 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.
(p)
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 in an amount set
forth on Schedule
3.1(p) . The Company has no Knowledge that
either the Company or any Subsidiary will not be able to renew
its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business without a
significant increase in cost due to an increased risk profile
of the Company or any Subsidiary.
(q)
Transactions
with Affiliates and Employees . Except as
set forth in the SEC Reports, none of the officers or
directors of the Company and, to the Knowledge of the Company,
none of the employees of the Company is presently a party to
any transaction with the Company or any Subsidiary (other than
for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or,
to the Knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial
interes
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