Common Stock Purchase Agreement - InfoCure Corp. and Acqua Wellington North American Equities Fund Ltd.
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 1, 2000
BY AND BETWEEN
INFOCURE CORPORATION
AND
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
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TABLE OF CONTENTS
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PAGE
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ARTICLE I Definitions...................................................1
Section 1.1 Definitions...................................................1
ARTICLE II Purchase and Sale of Common Stock.............................3
Section 2.1 Purchase and Sale of Stock....................................3
Section 2.2 The Shares....................................................3
Section 2.3 Purchase Price and Closing....................................3
ARTICLE III Representations and Warranties................................3
Section 3.1 Representation and Warranties of the Company..................3
Section 3.2 Representation and Warranties of the Purchaser...............10
ARTICLE IV Covenants....................................................11
Section 4.1 Securities...................................................12
Section 4.2 Registration and Listing.....................................12
Section 4.3 Registration Statement.......................................12
Section 4.4 Compliance with Laws.........................................12
Section 4.5 Keeping of Records and Books of Account......................12
Section 4.6 Reporting Requirements.......................................12
Section 4.7 Effective Registration Statement.............................13
Section 4.8 No Stop Orders...............................................13
Section 4.9 Amendments to the Registration Statement.....................13
Section 4.10 Prospectus Delivery..........................................13
Section 4.11 Notice.......................................................14
ARTICLE V Conditions to Closing, Draw Downs and Call Options...........14
Section 5.1 Conditions Precedent to the Obligation of the Company to
Issue a Draw Down Notice or Grant a Call Option and Sell
the Shares...................................................14
Section 5.2 Conditions Precedent to the Obligation of the Purchaser
to Close.....................................................15
Section 5.3 Conditions Precedent to the Obligation of the Purchaser
to Accept a Draw Down or Call Option Grant and Purchase
the Shares...................................................16
ARTICLE VI Draw Down Terms; Call Option.................................17
Section 6.1 Draw Down Terms..............................................17
Section 6.2 Purchaser's Call Option......................................19
ARTICLE VII Termination..................................................20
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Section 7.1 Termination by Mutual Consent....................................20
Section 7.2 Other Termination................................................20
Section 7.3 Effect of Termination............................................20
ARTICLE VIII Indemnification.......................................................21
Section 8.1 General Indemnity................................................21
Section 8.2 Indemnification Procedures.......................................22
ARTICLE IX Miscellaneous...........................................................23
Section 9.1 Fees and Expenses................................................23
Section 9.2 Specific Enforcement, Consent to Jurisdiction....................23
Section 9.3 Entire Agreement; Amendment......................................24
Section 9.4 Notices..........................................................24
Section 9.5 Waivers..........................................................25
Section 9.6 Headings.........................................................25
Section 9.7 Successors and Assigns...........................................25
Section 9.8 Governing Law....................................................25
Section 9.9 Survival.........................................................25
Section 9.10 Counterparts.....................................................25
Section 9.11 Publicity........................................................25
Section 9.12 Severability.....................................................26
Section 9.13 Further Assurances...............................................26
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
August 1, 2000 by and between InfoCure Corporation, a Delaware corporation (the
"Company") and Acqua Wellington North American Equities Fund, Ltd., a company
organized under the laws of the Commonwealth of The Bahamas (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) "Call Option" shall have the meaning assigned to such term in
Section 6.2(a) hereof.
(b) "Commission" shall have the meaning assigned to such term in
Section 2.3 hereof.
(c) "Commission Filings" means the Company's Form 10-K for the fiscal
year ended December 31, 1999, as amended, Form 10-Q for the period ended March
31, 2000, the proxy statement for the Company's annual meeting of stockholders
filed May 25, 2000, the Registration Statement on Form S-4, No. 34880,
Registration Statement on Form S-3, No. 333-40704, and all other filings made by
the Company after the date hereof pursuant to the Securities Exchange Act of
1934.
(d) "Common Stock" shall have the meaning assigned to such term in
Section 2.1 hereof.
(e) "Draw Down Amount" means the actual amount of a Draw Down up to
$28,000,000, or such other amount mutually agreed upon by the Purchaser and the
Company.
(f) "Draw Down Discount Percentage" means (i) 94% if the Company's
Market Capitalization is equal to or greater than $100 million but less than
$250 million, (ii) 94.5% if the Market Capitalization is equal to or greater
than $250 million but less than $500 million, (iii) 95.0% if the Market
Capitalization is equal or greater than $500 million but less than $750 million,
(iv) 95.5% if the Market Capitalization is equal or greater than $750 million
but less than $1 billion, or (v) 96% if the Company's Market Capitalization is
equal to or greater than $1 billion. For purposes of this Agreement, "Market
Capitalization" shall be determined on the day preceding the Draw Down Pricing
Period and shall equal the product of (i) the closing bid price of the Common
Stock on such date and (ii) the Company's outstanding shares of Common Stock,
each as determined by Bloomberg Financial LP using the DES and HP Functions.
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(g) "Draw Down Exercise Date" shall have the meaning assigned to such
term in Section 5.1 hereof.
(h) "Draw Down Notice" shall have the meaning assigned to such term in
Section 6.1(i) hereof.
(i) "Draw Down Pricing Period" shall mean a period of eighteen (18)
consecutive trading days following a Draw Down Notice, or such other period
mutually agreed upon by the Purchaser and the Company.
(j) "Effective Date" shall mean the date the Registration Statement of
the Company covering the Shares being subscribed for hereby is declared
effective.
(k) "Investment Period " shall have the meaning assigned to such term
in Section 7.1 hereof.
(l) "Material Adverse Effect" shall mean any effect on the business,
results of operations, assets or financial condition of the Company that is
material and adverse to the Company and its subsidiaries, taken as a whole
and/or any condition, circumstance, or situation that would prohibit the Company
from entering into and performing any of its obligations under this Agreement in
any material respect.
(m) "Material Change in Ownership" shall mean that, as of any
particular measurement date, the officers and directors of the Company shall
beneficially own in the aggregate less than 2% of the outstanding Common Stock
of the Company, except that for purposes of making any such calculation, Common
Stock issued to the Purchaser pursuant to this Agreement shall not be included
in such calculation.
(n) "Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement as supplemented by any prospectus
filed with the Commission pursuant to Rule 424(b).
(o) "Registration Statement" shall mean the registration statement on
Form S-3, Commission File Number 333-40704 under the Securities Act, filed with
the Securities and Exchange Commission for the registration of the Shares, as
such Registration Statement may be amended from time to time.
(p) "Settlement Date" shall have the meaning assigned to such term in
Section 6.1(d) hereof.
(q) "Shares" shall mean the shares of Common Stock of the Company being
purchased hereunder.
(r) "Threshold Price" is the lowest price at which the Company may set
in the Draw Down Notice to sell Shares during a Draw Down Pricing Period (not
taking into account the Draw Down Discount Percentage during such Draw Down
Pricing Period).
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(s) "VWAP" shall mean the daily volume weighted average price (based on
a trading day from 9:30 a.m. to 4:00 p.m., eastern time) of the Common Stock of
the Company on the NASDAQ National Market as reported by Bloomberg Financial LP
using the AQR function.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
SECTION 2.1 Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to $60,000,000 of the
Company's common stock, $.001 par value per share (the "Common Stock"), based on
Draw Downs of up to $2,500,000 per Draw Down and up to an additional $60,000,000
of Common Stock based on Call Options of up to $2,500,000 per Draw Down Pricing
Period that the Company may grant to the Purchaser in the Company's sole
discretion. In no event shall the amount of Common Stock purchased by the
Purchaser exceed $28,000,000 per Draw Down unless otherwise mutually agreed upon
by the Purchaser and the Company.
SECTION 2.2 The Shares. The Company has authorized and has reserved and
covenants to continue to reserve, subject to Section 4.4(b) hereof, free of
preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock to
cover the Shares to be issued in connection with all Draw Downs.
SECTION 2.3 Purchase Price and Closing. The Company agrees to issue and
sell to the Purchaser and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchaser, agrees to purchase that number of the Shares to be issued in
connection with each Draw Down. The closing of the execution and delivery of
this Agreement shall take place at the offices of Parker Chapin LLP, The
Chrysler Building, 405 Lexington Avenue, New York, NY 10174 (the "Closing") at
10:00 a.m., eastern time, on (i) August __, 2000, or (ii) such other time and
place or on such date as the Purchaser and the Company may agree upon (the
"Closing Date"). Each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representation and Warranties of the Company. Subject to
disclosures made in the Commission Filings and exceptions set forth in the
disclosure schedule delivered to the Purchaser on the Closing Date (the
"InfoCure Disclosure Schedule"), the Company hereby makes the following
representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware and has the
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requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary except for any jurisdiction in
which the failure to be so qualified will not have a Material Adverse Effect.
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and, except as contemplated by Section 4.4(b), no
further consent or authorization of the Company or its Board of Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. This Agreement constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor's rights and remedies or by
other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of June 15, 2000 are set forth in the
Registration Statement. All of the outstanding shares of the Company's Common
Stock have been duly and validly authorized, and are fully paid and
non-assessable. Except as set forth in this Agreement, as of the date hereof no
shares of Common Stock are entitled to preemptive rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement, as of the date hereof there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company in order to sell restricted securities,
as of the date hereof, the Company is not a party to any agreement requiring the
Company to register any of its equity or debt securities under the Securities
Act after the date hereof. The Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of any shares of
the capital stock of the Company. The offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued prior
to the Closing complied with all applicable federal and state securities laws,
and no stockholder has a right of rescission or damages with respect thereto
which would have a Material Adverse Effect. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof (the "Charter"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
(d) Issuance of Shares. The Shares to be issued under this Agreement
have been duly authorized by all necessary corporate action and, when paid for
and issued in accordance with the terms hereof, the Shares shall be validly
issued and outstanding, fully paid and non-
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assessable, and the Purchaser shall be entitled to all rights accorded to a
holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company's Charter or
Bylaws, (ii) conflict with, or constitute a default (or an event which 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 of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares in accordance with the terms hereof (other than any
filings which may be required to be made by the Company with the Commission, or
the Nasdaq National Market subsequent to the Closing, and, any registration
statement which may be filed pursuant hereto); provided that, for purpose of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein.
(f) Commission Filings, Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and since January 1, 2000
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act. The Company has delivered or made
available to the Purchaser true and complete copies of the Commission Filings
filed with the Commission since December 31, 1999 and prior to the Closing Date.
The Company has not provided to the Purchaser any information which, according
to applicable law, rule or regulation, should have been disclosed publicly by
the Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement. The Form 10-K for the year ended
December 31, 1999 complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and the said Form 10-K did not contain any untrue statement of a
material fact or omit 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. The financial statements of the
Company included in the Commission Filings comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto. Such financial statements have
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been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements), and fairly present
in all material respects the financial position of the Company and its
subsidiaries as of 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 year-end audit adjustments).
(g) Subsidiaries. The Commission Filings or Section 3.1(g) of the
InfoCure Disclosure Schedule set forth each subsidiary of the Company as of the
date hereof, showing the jurisdiction of its incorporation or organization and
showing the percentage of each person's ownership of the outstanding stock or
other interests of such subsidiary. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. Except as set
forth in the Commission Filings, none of such subsidiaries is a "significant
subsidiary" as defined in Regulation S-X.
(h) No Material Adverse Effect. Since December 31, 1999, the Company
has not experienced or suffered any Material Adverse Effect.
(i) No Undisclosed Liabilities. The Company has no liabilities,
obligations, claims or losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary (including the
notes thereto) in conformity with GAAP not disclosed in the Commission Filings,
other than those incurred in the ordinary course of the Company's or its
subsidiaries respective businesses since December 31, 1999 and which,
individually or in the aggregate, do not or would not have a Material Adverse
Effect.
(j) No Undisclosed Events or Circumstances. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.
(k) Indebtedness. The Commission Filings set forth as of March 31, 2000
all outstanding secured and unsecured Indebtedness of the Company, or for which
the Company has commitments. For the purposes of this Agreement, "Indebtedness"
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of
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$100,000 due under leases required to be capitalized in accordance with GAAP.
The Company is not in default with respect to any Indebtedness.
(l) Title to Assets. The Company has good and marketable title to all
of its real and personal property reflected in the Commission Filings, free of
any mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated in the Commission Filings or such that
could not reasonably be expected to cause a Material Adverse Effect.
(m) Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto or
thereto. There is no action, suit, claim, investigation or proceeding pending
or, to the knowledge of the Company, threatened, against or involving the
Company, or any of its properties or assets which, if adversely determined, is
reasonably likely to result in a Material Adverse Effect.
(n) Compliance with Law. The business of the Company has been and is
presently being conducted in accordance with all applicable federal, state and
local governmental laws, rules, regulations and ordinances, except as such that
do not cause a Material Adverse Effect. The Company has all franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals necessary for the conduct of its business as now being conducted
unless the failure to possess such franchises, permits, licenses, consents and
other governmental or regulatory authorizations and approvals, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(o) Certain Fees. No brokers, finders or financial advisory fees or
commissions will be payable by the Company with respect to the transactions
contemplated by this Agreement.
(p) Disclosure. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchaser by or on behalf of the Company in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not misleading.
(q) Operation of Business. The Company owns or possesses all patents,
trademarks, service marks, trade names, copyrights, licenses and authorizations
as set forth in the Commission Filings and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted
without any conflict with the rights of others, except to the extent set forth
in the Commission Filings or that a Material Adverse Effect could not reasonably
be expected to result from such conflict.
(r) Environmental Compliance. Except as disclosed in the Commission
Filings, the Company has obtained all approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person,
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that are required under any Environmental Laws except where the failure to do so
would not have a Material Adverse Effect. "Environmental Laws" shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not individually or in the
aggregate have a Material Adverse Effect, to the best of the Company's
knowledge, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
that violate or could reasonably be expected to violate any Environmental Law
after the Closing or that could reasonably be expected to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.
(s) Material Agreements. The Company has filed all written or oral
contracts, instruments, agreements, commitments, obligations, plans or
arrangements which were required to be filed with the Commission as an exhibit
to any filings made by the Company pursuant to the Securities Exchange Act of
1934 since December 31, 1999 (collectively, the "Material Agreements"). The
Company has in all material respects performed all the obligations required to
be performed to date under the foregoing agreements, has received no notice of
default and, to the best of the Company's knowledge is not in default under any
Material Agreement now in effect, the result of which could reasonably be
expected to cause a Material Adverse Effect.
(t) Transactions with Affiliates. There are no loans, leases,
agreements, contracts, royalty agreements, management contracts or arrangements
or other continuing transactions exceeding $100,000 between (a) the Company, or
any of its customers (excluding agreements related to the purchase or lease of
the Company's products) or suppliers on the one hand, and (b) on the other hand,
any officer, employee, consultant or director of the Company, or any person who
would be covered by Item 404(a) of Regulation S-K or any corporation or other
entity controlled by such officer, employee, consultant, director or person.
(u) Securities Act of 1933. The Company has complied in all material
respects with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Shares hereunder.
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(i) Each Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the provisions of the Securities Act. The
Commission has not issued any order preventing or suspending the use of any
Prospectus.
(ii) The Company meets the requirements for the use of
Form S-3 under the Securities Act. The Registration Statement in the form in
which it became effective and also in such form as it may be when any
post-effective amendment thereto became effective and the Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule 424(b)
under the Securities Act, complied in all material respects with the provisions
of the Securities Act and did not at any such times contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in the light of the circumstances under which they made) not
misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to the
Purchaser furnished to the Company in writing by or on behalf of the Purchaser
through you expressly for use therein.
(iii) The Company has not distributed and, prior to the
completion of the distribution of the Shares, will not distribute any offering
material in connection with the offering and sale of the Shares other than the
Registration Statement, the Prospectus or other materials, if any, permitted by
the Securities Act.
(v) Employees. As of the date hereof, the Company has no collective
bargaining arrangements or agreements covering any of its employees. The Company
has filed all compensatory plans, contracts or arrangements available to
employees, officers or directors which was required to be filed with the
Commission as an exhibit to a filing made by the Company pursuant to the
Securities Exchange Act of 1933.
(w) Use of Proceeds. The proceeds from the sale of the Shares will be
used by the Company for the purposes set forth in the Prospectus under the
caption "Use of Proceeds".
(x) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan by the Company which is or would have a
Material Adverse Effect. The execution and delivery of this Agreement and the
issue and sale of the Shares will not involve any transaction which is subject
to the prohibitions of Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986,
as amended, provided that, if any of the Purchaser, or any person or entity that
owns a beneficial interest in any of the Purchaser, is an "employee pension
benefit plan" (within
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the meaning of Section 3(2) of ERISA) with respect to which the Company is a
"party in interest" (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.
As used in this Section 3.1(y), the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or by any trade or business, whether or not incorporated, which,
together with the Company, is under common control, as described in Section
414(b) or (c) of the Code.
(z) Acknowledgment Regarding Purchaser's Purchase of Shares. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's purchase of the
Shares.
SECTION 3.2 Representation and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the Commonwealth of the Bahamas.
(b) Authorization and Power. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Purchaser, its
Board of Directors or stockholders is required. This Agreement constitutes, or
shall constitute when executed and delivered, a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of, creditor's rights and remedies or by other equitable principles
of general application.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser's charter documents or bylaws or (ii) conflict with,
or constitute a default (or an event which 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 of any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose or lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is on
or by which any of its respective properties or assets are bound or (iv) result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or
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governmental agency applicable to the Purchaser or its properties, except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the Purchaser to
enter into and perform its obligations under this Agreement in any material
respect. The Purchaser is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or to purchase the Shares in accordance with the terms
hereof, provided that for purposes of the representation made in this sentence,
the Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
(d) Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares. Purchaser understands that it (and not the Company)
shall be responsible for its own tax liabilities that may arise as a result of
this investment or the transactions contemplated by this Agreement.
(e) Investment Risks. The Purchaser has reviewed the information set
forth in the Prospectus under the caption "Risk Factors", and understands that
an investment in the Company's Common Stock involves substantial risks. By
virtue of the Purchaser's experience in evaluating and investing in transactions
of securities in companies similar to the Company, the Purchaser is capable of
evaluating the merits and risks of the Purchaser's investment in the Company and
has the capacity to protect Purchaser's own interests.
(f) Selling Restriction. The Purchaser has the right to sell shares of
the Company's Common Stock equal in number to the number of the Shares to be
purchased pursuant to this Agreement during a Draw Down Pricing Period. The
Purchaser covenants, however, that prior to and during the term of the Draw Down
Pricing Period, neither the Purchaser nor any of its affiliates nor any entity
managed by the Purchaser will ever be in a net short position with respect to
the shares of the Common Stock of the Company in any accounts directly or
indirectly managed by the Purchaser or any affiliate of the Purchaser or any
entity managed by the Purchaser. The Purchaser shall not sell shares of the
Company's Common Stock in block lots or through any derivative transactions. The
Purchaser shall not sell any Shares on any trading day in excess of 20% of the
day's trading volume of the Company's Common Stock. Such volume shall be as
reported by Bloomberg Financial LP, using the HP function for such trading day.
ARTICLE IV
COVENANTS
The Company covenants with the Purchaser as follows, which covenants
are for the benefit of the Purchaser and its permitted assignees.
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SECTION 4.1 Securities. The Company shall notify the
Commission and the Nasdaq National Market, if applicable, in accordance with
their rules and regulations, of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Shares to the Purchaser or subsequent holders.
SECTION 4.2 Registration and Listing. The Company will
take all action necessary to cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in
all respects with its reporting and filing obligations under the Exchange Act,
and will not take any action or file any document (whether or not permitted by
the Securities Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing or
trading of its Common Stock and the listing of the Shares purchased by
Purchaser hereunder on the Nasdaq National Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Nasdaq National Market.
SECTION 4.3 Registration Statement. Before the Company
shall issue a Draw Down Notice, the Company shall have caused a sufficient
number of shares of Common Stock to be authorized and registered to cover the
Shares to be issued in connection with this Agreement.
SECTION 4.4 Compliance with Laws.
(a) The Company shall comply with all applicable laws,
rules, regulations and orders, noncompliance with which could have a Material
Adverse Effect.
(b) The Company will not be obligated to issue and the
Purchaser will not be obligated to purchase any shares of the Company's Common
Stock which would result in the issuance under this Agreement of more than
nineteen and nine-tenths percent (19.9%) of the issued and outstanding shares
of the Company's Common Stock.
SECTION 4.5 Keeping of Records and Books of Account. The
Company shall keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied, reflecting
all financial transactions of the Company and its subsidiaries, and in which,
for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
SECTION 4.6 Reporting Requirements. Upon request, the
Company shall furnish the following to the Purchaser so long as such Purchaser
shall be obligated hereunder to purchase Shares:
(a) Quarterly Reports filed with the Commission on Form
10-Q as soon as available, and in any event within 45 days after the end of
each of the first three fiscal quarters of the Company; and
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(b) Annual Reports filed with the Commission on Form 10-K
as soon as available, and in any event within 90 days after the end of each
fiscal year of the Company.
SECTION 4.7 Effective Registration Statement. If, at the
time this Agreement is executed and delivered, it is necessary for the
Registration Statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, the Company will
endeavor to cause the Registration Statement or such post-effective amendment
to become effective as soon as reasonably practicable and will advise the
Purchaser promptly and, if requested by the Purchaser, will confirm such advice
in writing, when it receives notice that the Registration Statement or such
post-effective amendment has become effective.
SECTION 4.8 No Stop Orders. The Company will advise the
Purchaser promptly and, if requested by the Purchaser, will confirm such advice
in writing: (i) of its receipt of notice of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prospectus or
for additional information; (ii) of its receipt of notice of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) of its becoming aware of the happening of any event,
which makes any statement of a material fact made in the Registration Statement
or the Prospectus (as then amended or supplemented) untrue or which requires
the making of any additions to or changes in the Registration Statement or the
Prospectus (as then amended or supplemented) in order to state a material fact
required by the Securities Act or the regulations thereunder to be stated
therein or necessary in order to make the statements therein not misleading, or
of the necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make commercially reasonable
efforts to obtain the withdrawal of such order at the earliest possible time.
SECTION 4.9 Amendments to the Registration Statement.
The Company will not (i) file any amendment to the Registration Statement or
make any amendment or supplement to the Prospectus of which the Purchaser shall
not previously have been advised or (ii) so long as, in the reasonable opinion
of counsel for the Purchaser, a Prospectus is required to be delivered in
connection with sales by any Purchaser or dealer, file any information,
documents or reports pursuant to the Exchange Act without delivering a copy of
such information, documents or reports to the Purchaser, promptly following
such filing.
SECTION 4.10 Prospectus Delivery. The Company shall file
a prospectus supplement to its Registration Statement on the first business day
immediately following the end of each Draw Down Pricing Period, and will
deliver to the Purchaser, without charge, in such quantities as reasonably
requested by the Purchaser, copies of each form of Prospectus and prospectus
supplement on each Settlement Date. The Company consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or Blue Sky laws of
the jurisdictions in which the Shares may be sold by the Purchaser, in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus is required by the Securities Act to be
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<PAGE> 17
delivered in connection with sales of the Shares. If during such period of time
any event shall occur that in the judgment of the Company or in the opinion of
counsel for the Purchaser is required to be set forth in the Prospectus (as
then amended or supplemented) or should be set forth therein in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to supplement or amend the
Prospectus to comply with the Securities Act or any other law, the Company will
forthwith prepare and, subject to the provisions of Section 4.9 above, file
with the Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Purchaser a reasonable number of copies thereof.
SECTION 4.11 Notice. The Company shall promptly notify
the Purchaser that (i) a Material Adverse Effect or Material Change in
Ownership has occurred or (ii) the Company has entered into an Other Financing
(as defined in Section 6.1(k)).
ARTICLE V
CONDITIONS TO CLOSING, DRAW DOWNS AND CALL OPTIONS
SECTION 5.1 Conditions Precedent to the Obligation of
the Company to Issue a Draw Down Notice or Grant a Call Option and Sell the
Shares. The obligation hereunder of the Company to issue a Draw Down Notice or
grant a Call Option and sell the Shares to the Purchaser is subject to the
satisfaction or waiver, at or before each Draw Down or Call Option request (the
"Draw Down Exercise Date"), of each of the conditions set forth below. These
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser shall be true
and correct in all material respects as of the date when made and as of each
Draw Down Exercise Date and each Settlement Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date.
(b) Registration Statement. The Company shall have Shares
registered under the Registration Statement which are valued at an amount equal
to or in excess of the number of Shares issuable pursuant to such Draw Down
Notice or Call Option. The Registration Statement registering the Shares shall
have been declared effective by the Commission and shall have been amended or
supplemented, as required, to disclose the sale of the Shares prior to each
Settlement Date, as applicable.
(c) Performance by the Purchaser. The Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at or prior to each
Settlement Date.
(d) No Injunction. No statute, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or
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<PAGE> 18
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement at or
prior to each Settlement Date.
(e) No Suspension, Etc. Trading in the Company's Common
Stock shall not have been suspended by the Commission or the Nasdaq National
Market (except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to such Draw Down
Exercise Date and applicable Settlement Date), and, at any time prior to each
Draw Down Exercise Date, trading in securities generally as reported on the
Nasdaq National Market shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by the Nasdaq National 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 or crisis of such magnitude in its effect
on, or any material adverse change in any financial market which, in each case,
in the judgment of the Company, makes it impracticable or inadvisable to issue
the Shares.
(f) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company, or any of the officers, directors or
affiliates of the Company seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
SECTION 5.2 Conditions Precedent to the Obligation of
the Purchaser to Close. The obligation hereunder of the Purchaser to enter this
Agreement is subject to the satisfaction or waiver, at or before the Closing,
of each of the conditions set forth below. These conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at any time in its
sole discretion.
(a) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing.
(b) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(c) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company, or any of the officers, directors or
affiliates of the Company seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
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(d) Opinion of Counsel, Etc. At the Closing, the
Purchaser shall have received an opinion of counsel to the Company, dated the
date of Closing, in the form of Exhibit A hereto, and such other certificates
and documents as the Purchaser or its counsel shall reasonably require incident
to the Closing.
SECTION 5.3 Conditions Precedent to the Obligation of
the Purchaser to Accept a Draw Down or Call Option Grant and Purchase the
Shares. The obligation hereunder of the Purchaser to accept a Draw Down or Call
Option grant and to acquire and pay for the Shares on the Settlement Date is
subject to the satisfaction or waiver, at or before each Draw Down Exercise
Date and each Settlement Date, as applicable, of each of the conditions set
forth below. The conditions are for the Purchaser's sole benefit and may be
waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of the representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of
the Draw Down Exercise Date and Settlement Date, as applicable, as though made
at that time, except for representations and warranties that speak as of a
particular date.
(b) Registration Statement. The Company shall have Shares
registered under the Registration Statement which are valued at an amount equal
to or in excess of the number of Shares issuable pursuant to such Draw Down
Notice or Call Option. The Registration Statement registering the Shares shall
have been declared effective by the Commission and shall have been amended or
supplemented, as required, to disclose the sale of the Shares prior to the
Closing Date or each Settlement Date, as applicable.
(c) No Suspension. Trading in the Company's Common Stock
shall not have been suspended by the Commission or the Nasdaq National Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to each Draw Down Exercise
Date), and, at any time prior to such Draw Down Exercise Date, trading in
securities generally as reported by the Nasdaq National Market shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by the Nasdaq National 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 or crisis
of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of the Purchaser, makes
it impracticable or inadvisable to purchase the Shares.
(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Draw Down Exercise Date and
the Settlement Date and shall have delivered the Compliance Certificate
substantially in the form attached hereto as Exhibit B.
(e) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or
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governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(f) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company, or any of the officers, directors or
affiliates of the Company seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(g) Material Adverse Effect; Material Change in Ownership
No Material Adverse Effect or Material Change in Ownership shall have occurred.
ARTICLE VI
DRAW DOWN TERMS; CALL OPTION
SECTION 6.1 Draw Down Terms. Subject to the satisfaction
of the conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue a
Draw Down Notice with respect to a draw down (a "Draw Down") during each Draw
Down Pricing Period of up to $2,500,000 if the Threshold Price is equal to
$3.00 and an additional $1,500,000 for every $2.00 increase in the Threshold
Price above $3.00, up to a maximum Threshold Price of $37.00, for a maximum
Draw Down Amount during each Draw Down Pricing Period of up to $28,000,000;
provided, that the Company may, in its sole discretion, issue a Draw Down
Notice with respect to any Draw Down Amount at any Threshold Price or any Draw
Down Discount Percentage pursuant to terms mutually agreed upon by the
Purchaser and the Company, which Draw Down the Purchaser will be obligated to
accept. Prior to issuing any Draw Down Notice, the Company shall have Shares
registered under the Registration Statement which are valued at an amount equal
to or in excess of the Draw Down Amount.
(b) The number of Shares to be issued in connection with
each Draw Down shall be equal to the sum of the quotients (for each trading day
of the Draw Down Pricing Period for which the VWAP equals or exceeds the
Threshold Price) of (x) 1/18th (or such other fraction based on the length of
the Draw Down Pricing Period) of the Draw Down Amount divided by (y) the
applicable Draw Down Discount Percentage multiplied by the VWAP of the Common
Stock for such trading day.
(c) Only one Draw Down shall be allowed in each Draw Down
Pricing Period.
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(d) The number of Shares purchased by the Purchaser with
respect to each Draw Down shall be determined on a daily basis during each Draw
Down Pricing Period and settled on the second business day following the end of
each Draw Down Pricing Period (the "Settlement Date").
(e) There shall be a minimum of five (5) trading days
between Draw Downs, unless otherwise mutually agreed upon between the Purchaser
and the Company.
(f) There shall be a maximum of twenty four (24) monthly
Draw Downs during the term of this Agreement.
(g) Each Draw Down will expire on the last trading day of
each Draw Down Pricing Period.
(h) If the VWAP on a given trading day is less than the
Threshold Price, then the total amount of the Draw Down for the relevant Draw
Down Pricing Period will be reduced by 1/18th (or such other fraction based on
the length of the Draw Down Pricing Period). Notwithstanding anything in the
foregoing to the contrary, for each trading day during the Draw Down Pricing
Period that the VWAP is less than the Threshold Price, the Purchaser may elect
in its sole discretion to purchase Shares at the Threshold Price at the end of
such Draw Down Pricing Period. At no time shall the Threshold Price be set
below $3.00, unless mutually agreed upon by the Company and the Purchaser. If
trading in the Company's Common Stock is suspended for any reason for more than
three (3) hours in any trading day, at the Purchaser's option, the price of the
Common Stock shall be deemed to be below the Threshold Price for that trading
day and the Draw Down for the relevant Draw Down Pricing Period shall be
reduced by 1/18th (or such other fraction based on the length of the Draw Down
Pricing Period).
(i) The Company must inform the Purchaser via facsimile
transmission as to the Draw Down Amount the Company wishes to exercise before
commencement of trading on the first trading day of the Draw Down Pricing
Period (the "Draw Down Notice"), substantially in the form attached hereto as
Exhibit C. In addition to the Draw Down Amount, the Company shall set the
Threshold Price with each Draw Down Notice and shall designate the first
trading day of the Draw Down Pricing Period.
(j) On each Settlement Date, the Company shall deliver
the Shares purchased by the Purchaser to the Purchaser or to The Depositary
Trust Company ("DTC") on the Purchaser's behalf via the Deposit Withdrawal
Agent Commission system ("DWAC"), and upon receipt of the Shares, the Purchaser
shall cause payment therefor to be made to the account designated by the
Company by wire transfer of immediately available funds provided that the
Shares are received no later than 1:00 p.m., eastern time, or next day
available funds if the Shares are received thereafter.
(k) If during any Draw Down Pricing Period, the Company
shall enter into any other equity financing agreement (the "Other Financing")
the primary purpose of which is to raise financing for the Company, the
Purchaser may in its sole discretion (i) purchase the Draw Down Amount of
shares of Common Stock and/or exercise Call Options granted during such Draw
Down Pricing Period on the terms at which the Company issued shares of Common
Stock
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<PAGE> 22
in the Other Financing during such Draw Down Pricing Period, (ii) purchase the
Draw Down Amount of shares of Common Stock and/or exercise Call Options granted
during such Draw Down Pricing Period in accordance with the terms of this
Agreement, or (iii) elect not to purchase any Shares during such Draw Down
Pricing Period. The Purchaser shall notify the Company of its election on the
business day preceding the Settlement Date.
(l) If on the Settlement Date, the Company fails to
deliver the Shares to be purchased by the Purchaser, and such failure continues
for ten (10) trading days, the Company shall pay, in cash or restricted shares
of Common Stock, at the option of the Purchaser, as liquidated damages and not
as a penalty to the Purchaser an amount equal to two percent (2%) of the Draw
Down Amount for the initial thirty (30) days and each additional thirty (30)
day period thereafter until such failure has been cured, which shall be pro
rated for such periods less than thirty (30) days (the "Periodic Amount"). Cash
payments to be made pursuant to this clause (l) shall be due and payable
immediately upon demand in immediately available cash funds. Certificates
evidencing the restricted shares of Common Stock shall be delivered immediately
upon demand. The parties agree that the Periodic Amount represents a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of damages that may be incurred by the Purchaser if the Company fails to
deliver the Shares on the Settlement Date. If the Purchaser elects to receive
shares of Common Stock instead of cash, the Purchaser shall have the right to
demand registration once within twelve (12) months of the date of issuance of
such shares of Common Stock and piggyback registration rights if the Company
files a separate registration statement.
SECTION 6.2 Purchaser's Call Option.
(a) During each Draw Down Pricing Period, the Company at
its sole discretion may grant to the Purchaser the right to exercise multiple
call options of up to the applicable Draw Down Amount (a "Call Option"). The
amount of the Call Option shall be set forth in the Draw Down Notice. For each
trading day during a Draw Down Pricing Period, the Purchaser may exercise a
Call Option by providing notice to the Company of the exercise of a Call Option
(the "Call Option Notice"), substantially in the form attached hereto as
Exhibit D. The total amount of Call Options exercised by the Purchaser shall
not exceed $60,000,000 in the aggregate.
(b) The number of shares of Common Stock to be issued in
connection with each Call Option shall equal the quotient of (i) the amount of
the Call Option exercised and (ii) the product of the applicable Draw Down
Discount Percentage and the greater of (A) the VWAP for the Common Stock on the
day the Purchaser issues its Call Option Notice and (B) the Threshold Price.
(c) Each Call Option exercised shall be settled on the
applicable Settlement Date.
(d) The Threshold Price designated by the Company in its
Draw Down Notice shall apply to each Call Option.
(e) For each Call Option that the Purchaser exercises
pursuant to this Section 6.2, the Purchaser must issue via facsimile a Call
Option Notice to the Company no later than 6:00
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p.m. (eastern time) on the day such Call Option is exercised. If the Purchaser
does not exercise a Call Option by 6:00 p.m. (eastern time) on the last day of
the applicable Draw Down Pricing Period, the Purchaser's Call Options with
respect to that Draw Down Pricing Period shall terminate.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination by Mutual Consent. The term of
this Agreement shall be the earlier of (i) twenty eight (28) months from the
date of execution of this Agreement (the "Investment Period") and (ii) the date
that all of the Shares registered under the Registration Statement have been
issued and sold. This Agreement may be terminated at any time by mutual consent
of the parties.
SECTION 7.2 Other Termination. The Company shall inform
the Purchaser, and the Purchaser shall have the right to terminate this
Agreement within the subsequent thirty (30) days (the "Event Period"), if (x)
the Company enters into any equity financing which provides for (i) the
issuance of Common Stock or securities convertible, exercisable or exchangeable
into Common Stock at a discount to the then current market price of the Common
Stock, (ii) a mechanism for the reset of the purchase price of the Common Stock
to below the then current market price of the Common Stock, or (iii) the
issuance of Common Stock with warrants, which have an exercise price such that
together with the price of the Common Stock would result in the issuance of
shares of Common Stock at a per share price below the then current market price
of the Common Stock, or (y) an event resulting in a Material Adverse Effect or
Material Change in Ownership has occurred. The Purchaser may terminate this
Agreement upon one (1) day's notice during the Event Period. Notwithstanding
7.2(x)(i) and 7.2(x)(iii), the Company may enter into an equity financing in
connection with any strategic alliance, strategic partnership or equipment
financing which provides for the issuance of (i) Common Stock or securities
convertible, exercisable or exchangeable into Common Stock at a discount to the
then current market price of the Common Stock or (ii) Common Stock with
warrants, which have an exercise price such that together with the price of
Common Stock would result in the issuance of shares of Common Stock at a per
share price below the then current market price of the Common Stock.
SECTION 7.3 Effect of Termination. In the event of
termination by the Company or the Purchaser, written notice thereof shall
forthwith be given to the other party and the transactions contemplated by this
Agreement shall be terminated without further action by either party. If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this
Agreement shall become void and of no further force and effect, except as
provided in Section 9.9. Nothing in this Section 7.3 shall be deemed to release
the Company or the Purchaser from any liability for any breach under this
Agreement, or to impair the rights of the Company and the Purchaser to compel
specific performance by the other party of its obligations under this
Agreement.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 General Indemnity.
(a) Indemnification by the Company. The Company will
indemnify and hold harmless the Purchaser and each person, if any, who controls
the Purchaser within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act from and against any losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all attorney's fees) to which the Purchaser and each person,
if any, who controls the Purchaser may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement relating to Common
Stock being sold to the Purchaser (including the any prospectus supplement
filed in connection with the transactions contemplated hereunder (the
"Prospectus Supplement") which are a part of it), or any amendment or
supplement to it, or (ii) the omission or alleged omission to state in that
Registration Statement or any document incorporated by reference in the
Registration Statement, a material fact required to be stated therein or
necessary to make the statements therein not misleading.
The Company will reimburse the Purchaser and each such controlling
person promptly upon demand for any legal or other costs or expenses reasonably
incurred by or the controlling person in investigating, defending against, or
preparing to defend against any such claim, action, suit or proceeding, except
that the Company will not be liable to the extent a claim or action which
results in a loss, claim, damage, liability or expense arises out of, or is
based upon, an untrue statement, alleged untrue statement, omission or alleged
omission, included in any Prospectus or Prospectus Supplement or any amendment
or supplement to the Prospectus or Prospectus Supplement in reliance upon, and
in conformity with, written information furnished by the Purchaser to the
Company for inclusion in the Prospectus or Prospectus Supplement.
(b) Indemnification by the Purchaser. The Purchaser will
indemnify and hold harmless the Company, each of its directors and officers,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act from and against
any expenses (including reasonable costs of defense and investigation and all
attorneys fees) to which the Company and each director, officer and person, if
any, who controls the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus or Prospectus Supplement or any amendment or supplement to it or
(ii) the omission or alleged omission to state in any Prospectus or Prospectus
Supplement or any amendment or supplement to it a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, the untrue statement, alleged untrue
statement, omission or alleged omission was made in reliance upon, and in
conformity with, written information furnished by the Purchaser to the Company
for inclusion in the Prospectus or Prospectus Supplement or an amendment or
supplement to it, and
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<PAGE> 25
the Purchaser will reimburse the Company and each such director, officer or
controlling person promptly upon demand for any legal or other costs or
expenses reasonably incurred by the Company or the other person in
investigating, defending against, or preparing to defend against any such
claim, action, suit or proceeding.
SECTION 8.2 Indemnification Procedures. Promptly after a
person receives notice of a claim or the commencement of an action for which
the person intends to seek indemnification under paragraph (a) or (b) of
Section 8.1, the person will notify the indemnifying party in writing of the
claim or commencement of the action, suit or proceeding, but failure to notify
the indemnifying party will not relieve the indemnifying party from liability
under paragraph (a) or (b) of Section 8.1, except to the extent it has been
materially prejudiced by the failure to give notice. The indemnifying party
will be entitled to participate in the defense of any claim, action, suit or
proceeding as to which indemnification is being sought, and if the indemnifying
party acknowledges in writing the obligation to indemnify the party against
whom the claim or action is brought, the indemnifying party may (but will not
be required to) assume the defense against the claim, action, suit or
proceeding with counsel satisfactory to it. After an indemnifying party
notifies an indemnified party that the indemnifying party wishes to assume the
defense of a claim, action, suit or proceeding the indemnifying party will not
be liable for any legal or other expenses incurred by the indemnified party in
connection with the defense against the claim, action, suit or proceeding
except that if, in the opinion of counsel to the indemnifying party, one or
more of the indemnified parties should be separately represented in connection
with a claim, action, suit or proceeding the indemnifying party will pay the
reasonable fees and expenses of one separate counsel for the indemnified
parties. Each indemnified party, as a condition to receiving indemnification as
provided in Paragraph (a) or (b) or Section 8.1, will cooperate in all
reasonable respects with the indemnifying party in the defense of any action or
claim as to which indemnification is sought. No indemnifying party will be
liable for any settlement of any action effected without its prior written
consent. No indemnifying party will, without the prior written consent of the
indemnified party, effect any settlement of a pending or threatened action with
respect which an indemnified party is, or is informed that it may be, made a
party and for which it would be entitled to indemnification, unless the
settlement includes an unconditional release of the indemnified party from all
liability and claims which are the subject matter of the pending or threatened
action.
If for any reason the indemnification provided for in this Agreement
is not available to, or is not sufficient to hold harmless, an indemnified
party in respect of any loss or liability referred to in paragraph (a) or (b)
of Section 8.1, each indemnifying party will, in lieu of indemnifying the
indemnified party, contribute to the amount paid or payable by the indemnified
party as a result of the loss or liability, (i) in the proportion which is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and by the indemnified party on the other from the sale of
stock which is the subject of the claim, action, suit or proceeding which
resulted in the loss or liability or (ii) if that allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits of the sale of stock, but also the relative fault of the
indemnifying party and the indemnified party with respect to the statements or
omissions which are the subject of the claim, action, suit or proceeding that
resulted in the loss or liability, as well as any other relevant equitable
considerations.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Fees and Expenses.
(a) The Purchaser and the Company shall each pay its
respective fees and expenses related to the transactions contemplated by this
Agreement; provided, that the Company shall pay, at the Closing, all reasonable
attorneys fees and expenses, inclusive of disbursements and out-of-pocket
expenses, incurred by the Purchaser of up to $50,000 in connection with the
preparation, negotiation, execution and delivery of this Agreement. In
addition, the Company shall pay all reasonable fees and expenses incurred by
the Purchaser in connection with any amendments, modifications or waivers of
this Agreement or incurred in connection with the enforcement of this
Agreement, including, without limitation, all reasonable attorneys fees and
expenses. The Company shall pay all stamp or other similar taxes and duties
levied in connection with issuance of the Shares pursuant hereto.
(b) If on the fourteenth (14th) month anniversary of this
Agreement, the Company has not requested Draw Downs in an aggregate amount of
$15,000,000, the Company shall pay the Purchaser a fee consisting of (x) an
amount equal to $750,000 in cash, and (ii) warrants to purchase 125,000 Shares
at an exercise price of 110% of the VWAP of the Common Stock on the date of
execution of this Agreement. The Purchaser shall have the right to demand
registration once within twelve (12) months of the date of issuance of such
warrants and piggyback registration rights if the Company files a separate
registration statement.
SECTION 9.2 Specific Enforcement, Consent to
Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in the State of New York for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in
an inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Purchaser consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section shall affect or limit any
right to serve process in any other manner permitted by law.
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<PAGE> 27
SECTION 9.3 Entire Agreement; Amendment. This Agreement
contains the entire understanding of the parties with respect to the matters
covered hereby and, except as specifically set forth herein, neither the
Company nor the Purchaser makes any representations, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought.
SECTION 9.4 Notices. Any notice, demand, request, waiver
or other communication required or permitted to be given hereunder shall be in
writing and shall be effective (a) upon hand delivery, by telex (with correct
answer back received), telecopy or facsimile at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: InfoCure Corporation
1765 The Exchange, Suite 500
Atlanta, Georgia 30339
Tel. No.: (770) 221-9990
Fax No.: (770)
Attention:
With copies to: King & Spalding
191 Peachtree Street
Atlanta, GA 30303-1763
Tel. No: (404) 572-4600
Fax No.: (404) 572- 5147
Attention: John J. Kelley III
If to the Purchaser: Acqua Wellington North American
Equities Fund, Ltd.
c/o Fortis Fund Services (Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P. O. Box SS-6238
Nassau, Bahamas
Tel. No: (242) 394-2700
Fax No.: (242) 394-9667
Attention: Anthony L.M. Inder Rieden
With copies to: Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Tel. No: (212) 704-6000
Fax No: (212)704-6288
Attention: Christopher S. Auguste
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<PAGE> 28
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.
SECTION 9.5 Waivers. No waiver by either party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any other provisions, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
SECTION 9.6 Headings. The article, section and
subsection headings in this Agreement are for convenience only and shall not
constitute a part of this Agreement for any other purpose and shall not be
deemed to limit or affect any of the provisions hereof.
SECTION 9.7 Successors and Assigns. The Purchaser may
not assign this Agreement to any person without the prior consent of the
Company, which consent will not be unreasonably withheld. This Agreement shall
be binding upon and inure to the benefit of the parties and their successors
and assigns. The parties hereto may not amend this Agreement or any rights or
obligations hereunder without the prior written consent of the Company and each
Purchaser to be affected by the amendment. After Closing, the assignment by a
party to this Agreement of any rights hereunder shall not affect the
obligations of such party under this Agreement.
SECTION 9.8 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to the choice of law provisions.
SECTION 9.9 Survival. The representations and warranties
of the Company and the Purchaser contained in Article III and the covenants
contained in Article IV shall survive the execution and delivery hereof and the
Closing until the termination of this Agreement, and the agreements and
covenants set forth in Article VIII of this Agreement shall survive the
execution and delivery hereof and the Closing hereunder.
SECTION 9.10 Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same instrument and shall become effective when counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart. In the event
any signature is delivered by facsimile transmission, the party using such
means of delivery shall cause four additional executed signature pages to be
physically delivered to the other parties within five days of the execution and
delivery hereof.
SECTION 9.11 Publicity. The Company shall not issue any
press release or otherwise make any public statement or announcement with
respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement without the prior written
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<PAGE> 29
consent of the Purchaser. In the event the Company is required by law or the
Nasdaq Marketplace Rules to issue a press release or otherwise make a public
statement or announcement with respect to this Agreement or the transaction
contemplated hereby, the Company shall consult with the Purchaser on the form
and substance of such press release.
SECTION 9.12 Severability. The provisions of this
Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of
the provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Agreement, and this Agreement shall be reformed and construed as if
such invalid or illegal or unenforceable provision, or part of such provision,
had never been contained herein, so that such provisions would be valid, legal
and enforceable to the maximum extent possible.
SECTION 9.13 Further Assurances. From and after the date
of this Agreement, upon the request of the Purchaser or the Company, each of
the Company and the Purchaser shall execute and deliver such instrument,
documents and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officer as of the date first
above written.
INFOCURE CORPORATION
By: /s/ Richard E. Perlman
-------------------------------------------------
Name:
Title:
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ Anthony L. M. Inder Rieden
-------------------------------------------------
Name:
Title: Director