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SECURITIES PURCHASE
AGREEMENT
This
Securities Purchase Agreement (this "Agreement") is made and
entered into as of September 14, 2004 among Interpool, Inc., a
Delaware corporation (the "Company"), and the investors signatory
hereto (each a "Purchaser" and collectively the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act"), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the
Purchasers, and the Purchasers, severally and not jointly, desire
to purchase from the Company, certain securities of the Company, 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 of the Purchasers agree as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions . In addition
to the terms defined elsewhere in this Agreement, the following
terms have the meanings indicated in this Article I:
"2003
10-K" means the Company's Annual Report for the fiscal year ended
December 31, 2003 filed on form 10-K with the Commission.
"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 144. With respect to a Purchaser, any
investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.
"Closing"
means the closing of the purchase and sale of the Securities
pursuant to Section 2.1 on the Closing Date.
"Closing Date" means September 14, 2004.
"Code"
means the Internal Revenue Code of 1986, as amended to the date
hereof from time to time hereafter, and any successor statute.
"Commission"
means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value
$.001 per share, or such securities into which such stock shall
hereafter be classified.
"Common Stock Equivalents" means any rights, warrants, options,
convertible securities, exchangeable securities or other securities
or debt of any kind that may be at any time convertible into,
exchangeable for or otherwise give the holder thereof the right to
receive shares of Common Stock.
"Company
Counsel" means Stroock & Stroock & Lavan LLP.
"Controlling Stockholder Letter" means the letter, dated as of the
date of this Agreement and attached hereto as Exhibit H, signed by
each of Martin Tuchman, Warren L. Serenbetz and Hickory
Enterprises, L.P.
"Controlling Stockholders" means Martin Tuchman, Warren L.
Serenbetz, Radcliff Group, Inc., Hickory Enterprises, L.P., Warren
L. Serenbetz, Jr., Arthur L. Burns, Paul H. Serenbetz, Stuart W.
Serenbetz and Clay R. Serenbetz.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which (i) is sponsored,
maintained or contributed to by, or required to be contributed to
by, the Company, any of its Subsidiaries or any of their respective
ERISA Affiliates or (ii) is or was subject to Title IV of
ERISA and was during the preceding six years sponsored, maintained
or contributed to by, or required to be contributed by, the
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates.
"Environmental Claim" means any investigation, written notice,
notice of violation, claim, action, suit, proceeding, demand,
abatement order or other order or directive (conditional or
otherwise), by any governmental authority or any other Person,
arising (i) pursuant to or in connection with any actual or alleged
violation of, or liability under, any Environmental Law; (ii) in
connection with any Release or threatened Release of or exposure to
Hazardous Material; or (iii) in connection with any actual or
alleged damage, injury, threat or harm to, natural resources or the
environment.
"Environmental Laws" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them),
statutes, ordinances, orders, rules, regulations, judgments,
governmental authorizations, or any other requirements of
governmental authorities (i) imposing liability or establishing
standards for conduct for the preservation and protection of the
environment; (ii) relating to any activity involving Hazardous
Materials; or (iii) occupational safety and health, industrial
hygiene or land use, in any manner applicable to the Company or any
of its Subsidiaries or any Facility.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA
Affiliate" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code of which that
Person is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Code of which that Person is a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or
(o) of the Code of which that Person, any corporation described in
clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of the Company or any
of its Subsidiaries shall continue to be considered an ERISA
Affiliate of the Company or any such Subsidiary within the meaning
of this definition with respect to the period such entity was an
ERISA Affiliate of the Company or such Subsidiary and with respect
to liabilities arising after such period for which the Company or
such Subsidiary could be liable under the Internal Revenue Code or
ERISA.
"ERISA
Event" means (i) a "reportable event" material to any Person within
the meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those for
which the provision for 30-day notice to the PBGC has been waived
by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of
the Code) or the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any
Pension Plan except any such failure or imposition attributable to
an error made in good faith which results in the imposition of
liability or a Lien on Company and its Subsidiaries and their
respective ERISA Affiliates of an immaterial amount, so long as
such error, failure and imposition are promptly corrected after
discovery of such error by Company or any of its Subsidiaries or
the failure to make any required contribution of a material amount
to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of
ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan
resulting in material current liability to the Company, any of its
Subsidiaries or any of their respective Affiliates pursuant to
Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any
event or condition that would reasonably be expected to constitute
grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of
material liability on the Company, any of its Subsidiaries or any
of their respective ERISA Affiliates pursuant to Section 4062(e) or
4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of the Company, any of its Subsidiaries
or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if it would reasonably be
expected that Company or any of its Subsidiaries will incur
material liability therefor (in excess of the contribution that
would otherwise have been due absent such withdrawal), or the
receipt by the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an
act or omission which could reasonably be expected to give rise to
the imposition on the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates of material fines, penalties,
taxes or related charges under Chapter 43 of the Code or under
Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA
in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim with a reasonable likelihood of success (other than
routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against
the Company, any of its Subsidiaries or any of their respective
ERISA Affiliates in connection with any Employee Benefit Plan if
such assertion or the liability with respect thereto would
reasonably be expected to be material to any Person; (x) receipt
from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code) to qualify under
Section 401(a) of the Code, or the failure of any trust forming
part of any Pension Plan to qualify for exemption from taxation
under Section 501(a) of the Code; in either case if such failure
would reasonably be expected to be material to any Person or (xi)
the imposition of a Lien pursuant to Section 401(a)(29) or 412(n)
of the Code or pursuant to ERISA with respect to any Pension
Plan.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended.
"Existing Notes" means the Company's 7.35% Notes due 2007 and the
Company's 7.20% Notes due 2007.
"Facilities"
means any and all real property (including, without limitation, all
buildings, fixtures or other improvements located thereon) now or
hereafter owned, leased, operated or used by the Company or any of
its Subsidiaries (but only as to portions thereof actually owned,
leased, operated or used) or any of their respective Affiliates
that are directly or indirectly controlled by the Company.
"Fully-Diluted
Basis" means, as of any time, a calculation that gives effect to
the issuance of (i) all shares of Common Stock at the time issuable
upon exchange, exercise or conversion of all Common Stock
Equivalents at that time outstanding and (ii) all shares of Common
Stock at that time reserved for issuance pursuant to stock option
or stock grant or similar programs.
"Hazardous
Materials" means any chemical, material or substance, the
generation, use, storage, transportation or disposal of which, or
the exposure to which, is prohibited, limited or regulated pursuant
to an Environmental Law or which may or could pose a hazard to the
health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor
environment.
"Indenture"
means the Indenture, dated as of the date of this Agreement, by and
between the Company and the Trustee, in the form of
Exhibit A.
"Investor Rights Agreement" means the Investor Rights Agreement,
dated as of the date of this Agreement, among the Company and each
of the Purchasers, in the form of Exhibit D.
"Liens"
has the meaning specified in Section 3.1(a).
"Material
Adverse Effect" has the meaning specified in
Section 3.1(b).
"Multiemployer
Plan" means a Plan which is a "multiemployer plan" as defined in
Section 3(37) of ERISA.
"Notes"
means the Company's 6% Senior Notes due 2014.
"Notes
Effective Date" means the date that the Notes Registration
Statement is first declared effective by the Commission.
"Notes
Registration Rights Agreement" means the Notes Registration Rights
Agreement, dated as of the date of this Agreement, among the
Company and the Purchasers, in the form of Exhibit C.
"Notes
Registration Statement" means a registration statement meeting the
requirements set forth in the Notes Registration Rights
Agreement.
"PBGC"
means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Pension
Plan" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Code or Section 302 of
ERISA.
"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.
"Purchasers'
Counsel" means Latham & Watkins LLP.
"Release"
means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of any Hazardous Material into the
environment (including the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous
Material), including the movement of any Hazardous Material through
the air, soil, surface water or groundwater.
"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.
"Securities"
means the Notes, Warrants and the Warrant Shares.
"Securities
Act" means the Securities Act of 1933, as amended.
"Stockholder
Voting Agreement" means the Stockholder Voting Agreement dated as
of the date of this Agreement by and among the Company and the
Controlling Stockholders.
"Subsidiary"
means any subsidiary of the Company that is required to be listed
in Schedule 3.1(a).
"Trading
Day" means (a) any day on which the Common Stock is traded on its
primary Trading Market, or (b) if the Common Stock is not then
listed or quoted on any national securities exchange, market or
trading or quotation facility, then a day on which trading occurs
on The New York Stock Exchange (or any successor thereto).
"Trading
Market" means the New York Stock Exchange or any national
securities exchange, market or trading or quotation facility on
which the Common Stock is listed or quoted.
"Transaction
Documents" means this Agreement, the Indenture, the Notes, the
Warrant Agreement, the Warrants, the Stockholder Voting Agreement,
the Notes Registration Rights Agreement, the Investor Rights
Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"Trustee"
means U.S. Bank National Association.
"Warrant"
means each Common Stock purchase warrant, issued pursuant to the
Warrant Agreement (defined herein) issued to each Purchaser at the
Closing.
"Warrant
Agent" means U.S. Bank National Association.
"Warrant
Agreement" means the warrant agreement dated as of the date of this
Agreement, by and between the Company and the Warrant Agent, in the
form of Exhibit B.
"Warrant
Shares" means the shares of Common Stock issuable upon exercise of
the Warrants.
"Warrant
Shares Effective Date" means the date the Warrant Shares
Registration Statement is first declared effective by the
Commission.
"Warrant
Shares Registration Statement" means a registration statement
meeting the requirements set forth in the Investor Rights Agreement
and covering the resale of the Warrant Shares by the Purchasers or
their assignees (together with the Notes Registration Statement,
the "Registration Statements").
ARTICLE II.
PURCHASE AND SALE
2.1. Closing . Subject to the
terms and conditions set forth in this Agreement, at the Closing,
the Company shall issue and sell to the Purchasers, and the
Purchasers shall, severally and not jointly, purchase from the
Company, the principal amount of Notes and the number of Warrants
as set forth in Schedule I opposite the name of each such Purchaser
at the purchase price set forth therein. The Closing shall take
place at the offices of Purchasers' Counsel immediately following
satisfaction or waiver of the conditions set forth in Article V of
this Agreement or at such other location or time as the parties may
agree.
2.2. Closing Deliveries .
(a) At
the Closing, the Company shall deliver or cause to be delivered to
each Purchaser the following:
(i) this Agreement duly executed by
the Company;
(ii) a duly executed Note or Notes (in
such denominations as the Purchasers request);
(iii) a Warrant, registered in the
name of such Purchaser, pursuant to which such Purchaser shall have
the right to acquire on the terms set forth therein the number of
Warrant Shares set forth on Schedule I;
(iv) the legal opinion of Company
Counsel addressed to the Purchasers, satisfactory to Purchasers'
Counsel and in form of Exhibit E;
(v) the legal opinion of the General
Counsel of the Company addressed to the Purchasers, satisfactory to
Purchasers' Counsel and in form of Exhibit F;
(vi) the Indenture duly executed by
the Company and the Trustee;
(vii) the Warrant Agreement duly
executed by the Company and the Warrant Agent;
(viii) the Notes Registration Rights
Agreement duly executed by the Company;
(ix) the Investor Rights Agreement
duly executed by the Company;
(x) the Stockholder Voting Agreement
duly executed by the Company and each of the Controlling
Stockholders and each of their respective Affiliates; and
(xi) a Controlling Stockholder Letter
duly executed by each of Martin Tuchman, Warren L. Serenbetz and
Hickory Enterprises, L.P.
(b) At
the Closing, each Purchaser shall deliver or cause to be delivered
to the Company the following:
(i) the purchase price indicated below
such Purchaser's name on the signature page of this Agreement, in
United States dollars and in immediately available funds, by wire
transfer to an account designated in writing by the Company for
such purpose;
(ii) this Agreement duly executed by
such Purchaser;
(iii) the Notes Registration Rights Agreement duly executed by such
Purchaser; and
(iv) the Investor Rights Agreement
duly executed by such Purchaser.
2.3. Allocation of Purchase Price. It
is hereby agreed that, for purposes of Treasury Regulations
1.1273-2(h), (i) the aggregate "issue price" of the investment unit
consisting of the Notes and Warrants is $150,000,000, (ii) the
aggregate fair market value and the aggregate purchase price of the
Notes is $127,500,000, and (iii) the aggregate fair market value
and aggregate purchase price of the Warrants is $22,500,000. The
Company and each of the Purchasers agree to use the foregoing issue
price, purchase prices and fair market values for U.S. federal
income tax purposes with respect to this transaction (unless
otherwise required by a final determination by the Internal Revenue
Service or a court of competent jurisdiction).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. Representations and
Warranties of the Company . The Company hereby makes the
following representations and warranties to the Purchasers as of
the date hereof:
(a)
Subsidiaries . The Company has no subsidiaries other than
those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns all of the capital stock of each
Subsidiary free and clear of any lien, charge, security interest,
encumbrance, right of first refusal or other restriction
(collectively, "Liens"), and all 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. If the Company has no subsidiaries, then references in the
Transaction Documents to the Subsidiaries will be disregarded.
(b)
Organization and Qualification . Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter
documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not,
individually or in the aggregate, reasonably be expected to (i)
materially adversely affect the legality, validity or
enforceability of any Transaction Document, (ii) have or result in
a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) adversely
impair the Company's ability to perform fully on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or
(iii), a "Material Adverse Effect").
(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 thereunder. The execution
and delivery of each of the Transaction Documents by the Company
and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the
part of the Company and no further corporate action is required by
the Company, its Board of Directors or its stockholders. Each of
the Transaction Documents has been (or upon delivery will be) duly
executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the legally valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforcement of such
Transaction Documents may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditor's rights generally or by general equitable principles
(regardless of whether considered in a proceeding in equity or at
law).
(d)
No Conflicts . The execution and delivery of the Transaction
Documents by the Company, the consummation by the Company of the
transactions contemplated thereby and the performance of its
obligations under the Transaction Documents, including the issuance
and delivery of the Notes, Warrants and Warrant Shares 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
(the "Organizational 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, 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, except
for such conflicts, defaults or rights that would not reasonably be
expected to have a Material Adverse Effect, (iii) 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 for such violations that
would not reasonably be expected to have a Material Adverse Effect,
(iv) result in or require the creation or imposition of any Lien
upon any of the properties or assets of the Company or any
Subsidiary, except for such Liens that would not reasonably be
expected to have a Material Adverse Effect, (v) require any
approval of stockholders, partners or members or any approval or
consent of any person under any contractual obligation of the
Company, except for such approvals or consents obtained on or
before the Closing Date and except as set forth on Schedule 3.1(d)
or (vi) give rise to any preemptive rights, rights of first refusal
or other similar rights on behalf of any person under any
applicable law or any provision of the Organizational Documents or
any material agreement or other instrument to which the Company or
any Subsidiary is bound.
(e)
Filings, Consents and Approvals . Assuming the accuracy of
the representations and warranties of the Purchasers contained in
Section 6 and their compliance with the agreements set forth
therein, neither the Company nor any Subsidiary is 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 under Section 4.5, (ii) the filing with
the Commission of each of the Notes Registration Statement and the
Warrant Shares Registration Statement, (iii) an application(s) to a
Trading Market for the listing of the Warrant Shares for trading
thereon in the time and manner required thereby, (iv) filings under
any state blue sky laws and (v) the qualification of the Indenture
under the Trust Indenture Act.
(f)
Issuance of the Securities . The Securities are duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens and shall not be
subject to preemptive rights or similar rights of stockholders. The
Company has reserved from its duly authorized capital stock a
sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants. The Warrants are initially exercisable
for 8,333,333 Warrant Shares which will constitute 19.976% of the
Company's Common Stock on a Fully-Diluted Basis immediately after
the Closing.
(g)
Default of Indebtedness . The Company is not in default in
the payment of the principal of or interest (i) on any indebtedness
or (ii) under any instrument or agreement under or subject to which
any indebtedness has been issued and no event has occurred under
the provisions of any such instrument or agreement which with or
without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder,
except for such defaults for which the Company has obtained an
effective waiver at least through December 31, 2004.
(h)
No Default . The Company is not in default in the payment or
performance of any of its material contractual obligations where
such default could reasonably be expected to have a Material
Adverse Effect or the Company has obtained an effective waiver with
respect to any such default.
(i)
Registration of Securities . Except pursuant to the Notes
Registration Rights Agreement and the Investor Rights Agreement,
the Company has not entered into any agreement to register its debt
or equity securities under the Securities Act.
(j)
Use of Proceeds . The proceeds from the sale of the
Securities hereunder will be used at the Closing to repay at par
not less than $46.0 million of the Existing Notes held by the
Purchasers and to pay the all costs and expenses associated with
the transactions contemplated by this Agreement, with the remainder
used for general corporate purposes.
(k)
Capitalization . The authorized capital stock of the Company
consists of (a) one hundred million (100,000,000) shares of Common
Stock of which, as of September 1, 2004, 27,604,746 shares were
outstanding, and (b) one million (1,000,000) shares of preferred
stock, none of which shares are currently outstanding. The Company
currently has only one class of Common Stock. Except as disclosed
on Schedule 3.1(k), there are no outstanding Common Stock
Equivalents or other rights, agreements or arrangements of any
character under which the Company is or may be obligated to issue
any equity securities of any kind (whether or not presently
convertible into or exercisable or exchangeable for shares of
capital stock of the Company). All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and
nonassessable and have been issued in compliance with all
applicable securities laws. No securities of the Company are
entitled to preemptive or similar rights, and no Person has any
right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of
the purchase and sale of the Securities and except as disclosed in
the 2003 10-K, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into 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 securities or rights
convertible or exchangeable into shares of Common Stock. The issue
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 such securities.
(l)
SEC Reports; Financial Statements . The Company has filed
all reports required to be filed by it under 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 to file such material) (the foregoing
materials being collectively referred to herein as the "SEC
Reports" and, together with the Schedules to this Agreement, the
"Disclosure Materials"), except for the Company's quarterly reports
for the three-month periods ended March 31, 2004, and June 30, 2004
which the Company intends to file prior to December 31, 2004. As of
their respective dates, the SEC Reports complied in all material
respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, 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 light of the circumstances under which they were made,
not misleading, except to the extent financial statements contained
in reports other than the 2003 10-K have been restated. The
financial statements of the Company included in the 2003 10-K
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 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 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. All material agreements to
which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject
have been filed as exhibits to the SEC Reports to the extent
required under the Exchange Act.
(m)
Material Changes . Except as specifically disclosed in the
2003 10-K, since December 31, 2003, (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 required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (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.
(n)
Litigation . Except as set forth in the SEC Reports or on
Schedule 3.1(n), there has been 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, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as set forth in the 2003 10-K or on Schedule
3.1(n), 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 SEC has not issued any stop order or
other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.
(o)
Labor Relations . Except as set forth in the 2003 10-K, no
material
