SERIES B-2
AND
WARRANT PURCHASE
AGREEMENT
among
Geokinetics Inc.,
Avista Capital Partners,
L.P.
and
Avista Capital Partners (Offshore),
L.P.
Dated as of July 28,
2008,
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TABLE OF
CONTENTS
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SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
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Computation of
Time Periods
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SECTION 2.
AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK
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Sale and
Purchase of the Preferred Stock and Warrants
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SECTION 3.
CONDITIONS TO CLOSING
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Representations
and Warranties
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Performance; No
Default under Other Agreements
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Consents,
Authorizations and Filings, Etc.
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Management
Rights Agreement
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SECTION 4.
REPRESENTATIONS AND WARRANTIES
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Due
Organization; Power and Authority
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Due
Authorization, Execution and Delivery
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Non-Contravention; Authorizations and
Approvals
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Financial
Statements; Securities Filings
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Absence of
Undisclosed Liabilities or Events
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No Actions or
Proceedings
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Intellectual
Property Rights
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Compliance with
Laws; Permits; Environmental Liabilities
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Labor and
Employment Matters
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SECTION 5.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
PURCHASERS
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Corporate
Power; Authorization; Enforceability
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No Actions or
Proceedings
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SECTION 6.
OTHER AFFIRMATIVE COVENANTS
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Allocation of
Purchase Price
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SECTION 7.
EXPENSES, INDEMNIFICATION AND CONTRIBUTION; TERMINATION
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Tax Treatment
of Indemnification Payments
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Benefit of
Agreement and Assignments
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No Waiver;
Remedies Cumulative
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Amendments,
Waivers and Consents
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Survival of
Covenants and Indemnities
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Governing Law;
Submission to Jurisdiction; Venue
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Survival of
Representations and Warranties
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EXHIBITS:
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Exhibit
A
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Form of
Certificate of Designation
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Exhibit
B
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Form of 2008
Warrants
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Exhibit
C
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Form of
Registration Rights Agreement
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Exhibit
D
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Form of
Opinion
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Exhibit
E
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Form of
Management Rights Agreement
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SCHEDULES:
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Schedule
2.2
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Information
relating to the Purchasers
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Schedule
4.2
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Primary and
fully diluted ownership of Capital Stock
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Schedule
4.3
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Company and
Subsidiaries
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Schedule
4.8
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Actions or
Proceedings
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Schedule
4.10
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Intellectual
Property
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Schedule
4.12(a)
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Employee
Benefit Plans
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Schedule
4.12(b)
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Multi Employer
Plans
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Schedule
4.12(c)
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Retiree Health
and Life Benefits
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Schedule
4.16
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Labor
Matters
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SERIES B-2 AND WARRANT PURCHASE
AGREEMENT
This SERIES B-2 AND WARRANT PURCHASE AGREEMENT
(this “ Agreement ”), dated as of July
28, 2008, among Geokinetics Inc., a Delaware corporation (the
“ Company ”), Avista Capital Partners,
L.P., a Delaware limited partnership (“ Avista
”), and Avista Capital Partners (Offshore), L.P., a Bermuda
limited partnership (“ Avista Offshore ”
and together with Avista the “ Purchasers
”).
WHEREAS, the Company desires to increase its
capital for the purpose of providing funds for additional equipment
purchases and other general corporate purposes;
WHEREAS, in connection with the transactions
contemplated hereby, the Company desires to amend its Certificate
of Incorporation, dated January 31, 1980, as amended (the “
Charter ”), in accordance with the General
Corporation Law of the State of Delaware (the “
DGCL ”), by filing an Amended Certificate of
Designation (the “ Certificate of Designation
”), on the date hereof and in the form attached hereto as
Exhibit A, with the office of the Secretary of State of the State
of Delaware, to create a new series of preferred stock of the
Company designated as Series B-2 Senior Convertible Preferred
Stock, par value $10.00 per share, having a liquidation preference
of $250.00 per share (the “ Series B-2 Preferred
Stock ”) , and to redesignate the Company’s
existing Series B Senior Convertible Preferred Stock, par value
$10.00 per share, as “ Series B-1 Preferred
Stock” (together with the Series B-2 Preferred Stock, the
“Series B Preferred Stock” );
WHEREAS, on the terms and subject to the
conditions hereinafter set forth, the Company desires to issue and
sell (i) 120,000 shares of Series B-2 Preferred Stock and (ii)
warrants (the “ 2008 Warrants ”) to
purchase up to an aggregate of 240,000 shares of the Company's
Common Stock, par value $0.01 per share (the “ Common
Stock ”), to Purchasers, and Purchasers desire to
purchase and acquire the Series B-2 Preferred Stock and the 2008
Warrants from the Company; and
WHEREAS, the Purchasers and the Company intend
to enter into that certain Amended and Restated Registration Rights
Agreement (as defined herein) which will set forth certain
registration rights with respect to the Series B-2 Preferred
Stock.
NOW, THEREFORE, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND
ACCOUNTING TERMS
1.1 Definitions
. As used herein, defined terms used herein shall have
the meanings specified herein unless the context otherwise
requires:
“ Accredited Investor
” means any Person that is an “accredited
investor” within the meaning of Rule 501(a) under the
Securities Act.
“ Applicable Law ”
means all laws, statutes, treaties, rules, codes (including
building codes), ordinances, regulations, certificates, orders and
licenses of, and interpretations by, any Governmental Authority and
judgments, decrees, injunctions, writs, permits, orders or like
governmental action of any Governmental Authority (including
environmental laws and those pertaining to health or safety)
applicable to the Company or any of its Subsidiaries or any of
their property or operations.
“ Audit Date ” is
defined in Section 4.6(a) .
“ Capital Stock ”
means (i) in the case of a corporation, corporate or capital stock,
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate or capital stock, (iii) in the
case of a limited liability company, membership units (whether
common or preferred), (iv) in the case of a partnership,
partnership interests (whether general or limited) and (v) any
other equivalent ownership interest or participation that confers
on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
“ Certificate of Designation
” is defined in the recitals.
“ Charter ” is defined
in the recitals.
“ Closing ” is defined
in Section 2.3 .
“ Closing Date ” is
defined in Section 2.3 .
“ Closing Payment ”
shall mean 2% of the Purchase Price.
“ Code ” means the
Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
“ Common Stock ” is
defined in the recitals.
“ Convert Shares ”
means the shares of the Company’s Common Stock issuable upon
conversion of the Preferred Stock.
“ DGCL ” is defined in
the recitals.
“ Enforceability Exceptions
” means, with respect to any specified obligation, any
limitations on the enforceability of such obligation due to
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium, and other similar laws
of general applicability relating to or affecting creditors’
rights or general equity principles (including public policies) or
except as rights to indemnification or contribution may be limited
by Federal, state, provincial or territorial securities
laws.
“ Environmental Permits
” is defined in Section 4.15(b) (i) .
“ Exchange Act ” is
defined in Section 4.6(b) .
“ ERISA Affiliate ” is
defined in Section 4.12(b) .
“ Financial Statements
” is defined in Section 4.6(a) .
“ Financing Documents
” means collectively, this Agreement, the Certificate of
Designation, the Registration Rights Agreement, the 2008 Warrants,
and all certificates, instruments and other documents made or
delivered in connection herewith and therewith.
“ GAAP ” means
generally accepted accounting principles, as applied in the United
States.
“ HSR Act ” is defined
in Section 3.5 .
“ Indemnitees ” is
defined in Section 7.2 .
“ Intellectual Property
” means (a) all inventions and discoveries (whether
patentable or unpatentable and whether or not reduced to practice),
and all patents, patent applications and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, corporate names and domain names, together with all
translations, adaptations and combinations thereof and including
all goodwill associated therewith, (c) all copyrights and all
applications, registrations and renewals in connection therewith,
(d) all mask works and all applications, registrations and renewals
in connection therewith, (e) all know-how, trade secrets and
confidential business information, whether patentable or
unpatentable and whether or not reduced to practice (including
ideas, research and development, know-how, formulas, compositions
and manufacturing and production process and techniques, technical
data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information and business and marketing
plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, (h) all
copies and tangible embodiments thereof (in whatever form or
medium) and (i) all licenses and agreements in connection
therewith.
“ IRS ” means the
Internal Revenue Service.
“ Legal Proceeding ”
means any judicial, administrative or arbitral actions, suits,
mediation, investigation, inquiry, proceedings or claims (including
counterclaims) by or before a Governmental Authority.
“ Material ” means
material in relation to the business, condition (financial or
otherwise), properties or results of operation of the Company and
its Subsidiaries taken as a whole.
“ Material Adverse Effect
” shall mean (a) a material adverse effect on the
business, assets, liabilities, operations, prospects or condition
(financial or otherwise) or operating results of the Company and
the Subsidiaries, taken as a whole, (b) a material impairment
of the ability of any party to perform any of its obligations under
any Financing Document to which it is or will be a party or
(c) a material impairment of any rights of or benefits
available to the Purchasers under any Financing
Document.
“ Order ” means any order, injunction, judgment,
doctrine, decree, ruling, writ, assessment or arbitration award of
a Governmental Authority.
“ Ordinary Course of
Business ” means the ordinary and usual course of
day-to-day operations of the business of the Company and the
Subsidiaries through the date hereof consistent with past
practice.
“ Permits ” means any
approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Authority.
“ Permitted Exceptions
” means (i) all defects, exceptions, restrictions, easements,
rights of way and encumbrances disclosed in policies of title
insurance which have been delivered to the Purchasers; (ii)
statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity
of which is being diligently contested in good faith by appropriate
proceedings, provided an appropriate reserve has been established
therefor in the Financial Statements in accordance with GAAP; (iii)
mechanics’, carriers’, workers’, and
repairers’ Liens arising or incurred in the Ordinary Course
of Business that are not material to the business, operations and
financial condition of the Company Property so encumbered and that
are not resulting from a breach, default or violation by the
Company or any of the Subsidiaries of any contract or law; (iv)
zoning, entitlement and other land use and environmental
regulations by any Governmental Authority, provided that such
regulations have not been violated; and (v) liens and security
interests created or permitted by the senior most indebtedness of
the Company or the Subsidiaries in existence as of the Closing
Date.
“ Plan ” is defined in
Section 4.12(a) .
“ Property ” is
defined in Section 4.15(b)(iii) .
“ Purchase Price ” is
defined in Section 2.2 .
“ Purchasers ” is
defined in the preamble to this Agreement.
“ Registration Rights
Agreement ” means the Amended and Restated
Registration Rights Agreement, dated as of the date hereof, among
Company and the Purchasers, in the form attached hereto as
Exhibit B as amended, supplemented, restated or otherwise
modified from time to time.
“ Responsible Officer
” means (i) with respect to the Company, the chairman, the
chief executive officer, the president, the chief financial officer
thereof, and (ii) with respect to the Company or any Subsidiary
(other than the Company), any duly authorized officer
thereof.
“ Rule 144 ” means
Rule 144 under the Securities Act (or any successor provision), as
it may be amended from time to time.
“ SEC ” is defined in
Section 4.6(b) .
“ SEC Documents ” is
defined in Section 4.6(b) .
“ Securities Act ”
means the Securities Act of 1933, as amended.
“ Software ” means any
and all computer programs, whether in source code or object code;
databases and compilations, whether machine readable or otherwise;
descriptions, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing; and all
documentation including user manuals and other training
documentation related to any of the foregoing.
“ Solvent ” means,
with respect to any Person as of the date of any determination,
that on such date (a) such Person as of such date generally is able
to pay its debts and other liabilities, contingent obligations and
other commitments as they become absolute and mature in the normal
course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature
and (c) such Person is not engaged in a business or a transaction,
and is not about to engage in a business or a transaction, for
which such Person’s property would constitute unreasonably
small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be
conducted following the Closing Date. In computing the
amount of contingent liabilities at any time, such liabilities
shall be computed as the amount that, in light of the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured
liability.
“ Series B Preferred Stock
” is defined in the recitals.
“ Series B-1 Preferred Stock
” is defined in the recitals.
“ Series B-2 Preferred Stock
” is defined in the recitals.
“ Subsidiary ” means
any Person of which (i) a majority of the outstanding share
capital, voting securities or other equity interests are owned,
directly or indirectly, by the Company or (ii) the Company is
entitled, directly or indirectly, to appoint a majority of the
board of directors, board of managers or comparable body of such
Person.
“ Tax ” or “
Taxes ” shall mean (i) any and all
federal, state, local or foreign taxes, charges, fees, imposts,
levies or other assessments, including all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever;
(ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection
with any item described in clause (i); and (iii) any
liability in respect of any items described in clauses (i)
and/or (ii) payable by reason of Contract, assumption, transferee
liability, operation of law, Treasury Regulation section
1.1502-6(a) (or any predecessor or successor thereof or any
analogous or similar provision under law) or otherwise.
“ Tax Return ” means
any return, report or statement (whether federal, state, local or
foreign) required to be filed with respect to any Tax (including
any elections, declarations, schedules or attachments thereto, and
any amendment thereof) including any information return, claim for
refund, amended return or declaration of estimated Tax, and
including, where permitted
or required, combined, consolidated or unitary
returns for any group of entities that includes the Company, any of
the Subsidiaries, or any of their Affiliates.
“ Taxing Authority ”
means the IRS and any other governmental authority responsible for
the administration of any Tax.
“ Technology ” means,
collectively, designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, results of research and development,
Software, tools, data, inventions, apparatus, creations,
improvements, works of authorship and other similar materials, and
all recordings, graphs, drawings, reports, analyses, and other
writings, and any other embodiments of the above, in any form
whether or not specifically listed herein, and all related
technology, that are used, incorporated, or embodied in or
displayed by any of the foregoing or used in the design,
development, reproduction, sale, marketing, maintenance or
modification of any of the foregoing
“ 2008 Warrants ” is
defined in the recitals.
1.2 Computation of
Time Periods . For purposes of computation of
periods of time hereunder, the word “from” means
“from and including” and the words “to” and
“until” each mean “to but
excluding.”
1.3 Terms
Generally . Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns,
and (c) the word “including” shall mean
“including without limitation.”
1.4 Accounting
Terms . Accounting terms used but not otherwise
defined herein shall have the meanings provided, and be construed
in accordance with, GAAP.
SECTION 2. AUTHORIZATION
AND ISSUANCE OF PREFERRED STOCK
2.1 Authorization
of Issue . On or prior to the execution and delivery
of this Agreement: (i) the Company will authorize the issue and
sale of the Series B-2 Preferred Stock and the 2008 Warrants; and
(ii) adopt and file the Certificate of Designation with the
Secretary of State of Delaware.
2.2 Sale and
Purchase of the Preferred Stock and Warrants
. Subject to the terms and conditions of this Agreement,
the Company will issue and sell to each of the Purchasers, and each
of the Purchasers will purchase from the Company, at the Closing
provided for in Section 2.3 , the Series B-2 Preferred Stock
and 2008 Warrants, for an aggregate purchase price equal to
$30,000,000 (the “ Purchase Price ”), in
such proportions as set forth on Schedule 2.2
. The Purchase Price shall be paid by the Purchasers by
wire transfer of immediately available funds to an account
designated by the Company. At the Closing the Company
shall pay each Purchaser
2.3 its proportionate
share of the Closing Payment as set forth on Schedule 2.2 ,
via wire transfer of immediately available funds pursuant to the
instructions set forth on Schedule 2.2 .
2.4 Closing
. The sale and purchase of the Preferred Stock shall
occur at the offices of Chamberlain, Hrdlicka, White, Williams
& Martin, 1200 Smith Street, 14th Floor, Houston,
Texas 77002, at 10:00 a.m. local time, at a closing (the “
Closing ”) on July ____, 2008. The
date upon which the Closing occurs shall be referred to herein as
the “ Closing Date ”.
2.5 Stock
Certificates . At the Closing, the Company shall
deliver to the Purchasers duly endorsed certificates representing
the Series B-2 Preferred Stock with such number of shares allocated
to each Purchaser as set forth on Schedule 2.2.
SECTION 3. CONDITIONS TO
CLOSING
Each
Purchaser’s obligation to purchase and pay for the Series B-2
Preferred Stock and 2008 Warrants to be purchased by it at the
Closing is subject to the reasonable satisfaction or waiver by it
prior to or at the Closing of each of the conditions specified
below in this Section 3 :
3.1 Representations
and Warranties . Each of the representations and
warranties of the Company in this Agreement that are qualified as
to materiality or Material Adverse Effect shall be true and correct
and each of the representations and warranties of the Company in
this Agreement that are not so qualified shall be true and correct
in all material respects on or as of the Closing Date as if made on
and as of the Closing Date (unless stated to relate to a specific
earlier date, in which case such representations and warranties
qualified as to materiality or Material Adverse Effect shall be
true and correct and those not qualified shall be true and correct
in all material respects as of such earlier date).
3.2 Performance; No
Default under Other Agreements . The Company shall
have performed and complied in all material respects with all
agreements and covenants contained herein required to be performed
or complied with by it prior to or at the Closing (or such
compliance shall have been waived on terms and conditions
reasonably satisfactory to each Purchaser).
3.3 Officer
Certificate . The Company shall have delivered to
each Purchaser an Officers’ Certificate, dated as of the
Closing Date, in a form reasonably satisfactory to Avista,
certifying as to Company’s certificate of incorporation and
bylaws, the incumbency and signatures of certain officers of the
Company and other corporate proceedings of the Company relating to
the authorization, execution, delivery and performance of this
Agreement and the other Financing Documents to which the Company is
a party and that the conditions specified in Section 3
(other than Section 3.3 ) have been fulfilled, except as to
matters which require the approval or satisfaction of the
Purchasers.
3.4 Material
Adverse Effect . There shall not have occurred or
become known to the Purchasers any event, development or
circumstance with respect to the Company or its
3.5 Subsidiaries since
March 31, 2008 that has caused or could reasonably be expected to
cause a Material Adverse Effect.
3.6 Consents,
Authorizations and Filings, Etc . All material
governmental and third party approvals necessary in connection with
the Financing Documents, and the continuing operations of the
Company and its Subsidiaries shall have been obtained and be in
full force and effect (including any required filings pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
“ HSR Act ”) made with the Federal Trade
Commission and the United States Department of Justice), and all
applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose material adverse conditions
on the Series B-2 Preferred Stock.
(a) There shall be no
inquiry, injunction, restraining order, action, suit or proceeding
instituted or entered or any statute or rule proposed, enacted or
promulgated by any Governmental Authority or any other Person
which, in the reasonable opinion of the Purchasers, individually or
in the aggregate, has or would reasonably be expected to have a
Material Adverse Effect or which seeks to enjoin or seek
substantial damages against the Company or its Subsidiaries or any
of the Purchasers as a result of the issuance and sale of the
Preferred Stock.
(b) The Board of
Directors of the Company shall have granted all necessary approvals
to the transactions contemplated by this Agreement and the
conversion of the Series B-2 Preferred Stock into Convert Shares in
order to satisfy DGCL Section 203 with respect to such
transactions.
3.7 Payment of
Expenses . At the Closing, each Purchaser and one
counsel for the Purchasers shall have received from the
Company all other fees required to be paid, and, in accordance with
Section 7 , all reasonable costs and expenses for which
invoices have been presented.
3.8 Legal
Opinion . At the Closing, Chamberlain, Hrdlicka,
White, Williams & Martin shall have delivered to the Purchasers
an opinion, dated as of the Closing Date, in the form of Exhibit
3.7 .
3.9 Management
Rights Agreement . At the Closing, the Company shall
have delivered to Avista a Management Rights Agreement dated as of
the Closing Date, in the form of Exhibit 3.8 .
SECTION 4. REPRESENTATIONS
AND WARRANTIES
The Company represents and warrants to the
Purchasers that:
4.1 Due
Organization; Power and Authority . The Company and
each domestic Subsidiary of the Company (a) is a corporation or a
limited partnership duly incorporated or formed, as the case may
be, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, (b) is duly
qualified as a foreign corporation or extra provincial partnership
or a foreign partnership, as the case may be, to transact business
and
4.2 is in good
standing in each jurisdiction in which such qualification is
required, (c) has full corporate or partnership, as the case may
be, power and authority to own, lease and operate its properties
and to conduct its businesses as they are currently conducted, and
(d) has full corporate or partnership, as the case may be, power
and authority to enter into and perform its obligations under each
of the Financing Documents to which it is a party.
4.3
Capitalization . After giving effect to the sale
of the Series B-2 Preferred Stock and the 2008 Warrants to the
Purchasers, at the Closing, (i) the authorized number of shares of
Capital Stock of the Company will consist only of 100,000,000
common shares (the “ Common Stock ”), of
which 10,396,018 shares have been issued and are outstanding, (ii)
2,500,000 preferred shares, of which only (x) 257,526 shares of
Series B-1 Preferred Stock and (y) the Series B-2 Preferred Stock
sold to the Purchasers pursuant to this Agreement will have been
issued and outstanding as of the Closing Date, and (iii) no shares
of any class of the Capital Stock of the Company will be held by
the Company in its treasury or by the Company’s
Subsidiaries. Upon consummation of the sale of the
Series B-2 Preferred Stock and the 2008 Warrants to the Purchasers,
all of the issued and outstanding shares of Capital Stock of the
Company shall have been duly authorized and validly issued, fully
paid and nonassessable and shall be free of preemptive rights
except as set forth in the Certificate of
Designation. Upon consummation of the sale of the Series
B-2 Preferred Stock and the 2008 Warrants to the Purchasers, except
as set forth on Schedule 4.2 and other than the Series B
Preferred Stock, the 2008 Warrants and employee stock options under
the 2002 Stock Awards Plan and the 2007 Stock Awards Plan of the
Company, there shall be no securities of the Company or any of its
Subsidiaries that will be convertible into or exchangeable for
shares of any Capital Stock of the Company or any of its
Subsidiaries, and no options, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which will
obligate the Company or any of its Subsidiaries to issue, transfer
or sell any shares of Capital Stock of, or other interests in, the
Company or any of its Subsidiaries. Except as set forth
on Schedule 4.2 , upon consummation of the sale of the
Series B-2 Preferred Stock and the 2008 Warrants to the Purchasers,
there shall be no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of Capital Stock of the Company or any of its Subsidiaries
and none of the Company or any of its Subsidiaries shall have any
awards or options outstanding under any stock option plans or
agreements or any other outstanding stock-related
awards. As of the Closing Date and immediately after the
Closing, except as set forth on Schedule 4.2 and other than
the Series B Preferred Stock, none of the Company or any of its
Subsidiaries will have any obligation to issue, transfer or sell
any shares of Capital Stock of the Company or its
Subsidiaries. Except as set forth on Schedule 4.2, there
are no voting trusts or other agreements or understandings to which
the Company or any of its Subsidiaries is a party with respect to
the holding, voting or disposing of Capital Stock of the Company or
any of its Subsidiaries. Except as set forth on
Schedule 4.2 , none of the Company or any of its
Subsidiaries has any outstanding bonds, debentures, notes or other
obligations or other securities that entitle the holders thereof to
vote with the shareholders of the Company or any of its
Subsidiaries on any matter or which are convertible into or
exercisable for securities having such a right to vote.
4.4
Subsidiaries . Schedule 4.3 correctly
states (a) the name of each of the Company’s direct and
indirect Subsidiaries, and (b) the name of each registered holder
of each class of outstanding Capital Stock or other securities of
each of the Company’s respective direct and indirect
Subsidiaries and the nature and number of such securities held by
such holder. Each
4.5 issued and
outstanding share of Capital Stock of each direct and indirect
Subsidiary of the Company (a) has been duly authorized and validly
issued and is fully paid and nonassessable and free of preemptive
rights and (b) except for any Equity Interests not owned directly
or indirectly by the Company as shown on Schedule 4.3
is owned by the Company, directly or through its direct and
indirect Subsidiaries, free and clear of any Lien other than the
liens established under the Financing Documents and other Permitted
Exceptions.
4.6 Due
Authorization, Execution and Delivery .
(a) Agreement
. This Agreement has been duly authorized, executed and
delivered by the Company and, when duly executed and delivered by
the Purchasers in accordance with its terms, will constitute a
valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to the
Enforceability Exceptions.
(b) Series B-2
Preferred Stock and the Convert Shares . The Series
B-2 Preferred Stock has been duly authorized and, when issued as
provided herein, will be validly issued, free of preemptive rights
and free from all taxes, liens, charges and security interests
known to or created by the Company and no personal liability will
attach to the ownership thereof. When the Convert Shares
are issued pursuant to a conversion of the Series B-2 Preferred
Stock, the Convert Shares will be validly issued, fully paid and
nonassessable, free of preemptive rights and free from all taxes,
liens, charges and security interests known to or cre
