Document:

exhibit10-2.htm

Exhibit 10.2

 

THIRD AMENDMENT TO SECOND AMENDED

 

AND RESTATED CREDIT AGREEMENT

 

 

THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the "Third Amendment to Credit Agreement," or this "Amendment") is entered into effective as of November 16, 2010, among VANGUARD NATURAL GAS, LLC, a limited liability company formed and existing under the laws of the Commonwealth of Kentucky ("Borrower"), and CITIBANK, N.A., as Administrative Agent and L/C Issuer (the "Administrative Agent"), and the financial institutions executing this Amendment as Lenders.

 

R E C I T A L S

 

A.           Borrower, the financial institutions signing as Lenders, and the Administrative Agent are parties to a Second Amended and Restated Credit Agreement dated as of August 31, 2009, as amended by a First Amendment to Second Amended and Restated Credit Agreement dated as of October 14, 2009, and as amended by a Second Amendment to Second Amended and Restated Credit Agreement dated as of June 1, 2010 (collectively, the "Original Credit Agreement").

 

B.           The parties desire to amend the Original Credit Agreement as hereinafter provided.

 

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Same Terms.  All terms used herein which are defined in the Original Credit Agreement shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.  In addition, (i) all references in the Loan Documents to the "Agreement" shall mean the Original Credit Agreement, as amended by this Amendment, as the same shall hereafter be amended from time to time, and (ii) all references in the Loan Documents to the "Loan Documents" shall mean the Loan Documents, as amended by this Amendment, as the same shall hereafter be amended from time to time.  In addition, the following terms have the meanings set forth below:

 

"Effective Date" means November 16, 2010.

 

"Intercreditor Agreement" means the Lien Subordination and Intercreditor Agreement substantially in the form of Exhibit G attached hereto.

 

"Intercreditor Agreement Effective Date" means the date on which the conditions specified in Section 3 are satisfied (or waived as provided therein), to occur not later than December 31, 2010.

 

"Modification Papers" means this Amendment, the Guarantor Confirmation Letters, the ENP Interests Pledge Agreement and all of the other certificates, documents and agreements executed in connection with the transactions contemplated by this Amendment.

 

2. Conditions Precedent to Effective Date.  This Amendment shall become effective as of the Effective Date upon satisfaction of each of the following conditions, unless waived by the Administrative Agent in its discretion:

 

  

1

  

A. Amendment Fee.  Borrower shall have paid to the Administrative Agent for the benefit of the Lenders an amendment fee of $562,500.

 

B. Third Amendment to Credit Agreement.  This Amendment to Credit Agreement shall be executed and delivered by each of the parties thereto (including all Lenders).

 

C. Guarantor Confirmation Letters.  Each Guarantor shall have executed a letter in favor of Administrative Agent (each a "Guarantor Confirmation Letter") confirming that its Guaranty Agreement remains in full force and effect.

 

D. Closing of Term Loan Credit Facility.  The Administrative Agent shall be reasonably satisfied that the Term Loan Credit Facility is being closed contemporaneously with the execution of this Amendment subject to conditions reasonably satisfactory to the Administrative Agent, and the Administrative Agent shall have received a duly executed counterpart of the Term Loan Credit Agreement (as defined in Section 4(a)).

 

E. Planned Merger.  The Administrative Agent shall have received the plan with respect to Borrower's planned merger of ENP with and into the Borrower described in Section 6.01(h) of the Term Loan Credit Agreement.

 

F. Authorization Certificate.  Borrower shall have delivered a certificate of a Responsible Officer satisfactory in form and substance to the Administrative Agent authorizing the execution, delivery and performance by Borrower of the Modification Papers to which Borrower is a party.

 

G. Fees and Expenses.  The Administrative Agent shall have received payment of all out-of-pocket fees and expenses (including reasonable attorneys' fees and expenses) incurred by the Administrative Agent in connection with the preparation, negotiation and execution of the Modification Papers to which Borrower is a party.

 

H. Representations and Warranties.  All representations and warranties contained herein or in the other Modification Papers to which Borrower is a party or otherwise made in writing in connection herewith or therewith shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "material adverse effect" shall be true and correct in all respects) as though such representations and warranties have been made on and as of the Effective Date, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the Effective date, such representations and warranties shall continue to be true and correct as of such specified earlier date.

 

3. Conditions Precedent to Obligation to Execute Intercreditor Agreement.  The obligation of the Administrative Agent to execute the Intercreditor Agreement shall be subject to each of the following conditions, unless waived by the Administrative Agent in its discretion:

 

A. Intercreditor Agreement.  The Administrative Agent shall have received from the Term Loan Administrative Agent (as defined in Section 4(a)) and Borrower duly executed counterparts (in such number as may be requested by Administrative Agent) of the Intercreditor Agreement.

 

  

2

  

B. Funding under Term Loan Credit Agreement.  The Administrative Agent shall be reasonably satisfied that the loan contemplated by the Term Loan Credit Agreement is being funded.

 

C. Term Loan Documents.  The Administrative Agent shall have received executed copies of all of the Term Loan Documents (as defined in Section 4(a)) other than the Term Loan Credit Agreement, in form and substance reasonably satisfactory to Administrative Agent.

 

D. Consents to Pledge of ENP Interests.  Borrower shall have provided the Administrative Agent with the same evidence given to the Term Loan Administrative Agent to comply with the governmental/third party approval condition precedent set forth in Section 6.02(k) of the Term Loan Credit Agreement.

 

E. Closing of ENP Acquisition.  The Administrative Agent shall be reasonably satisfied that the ENP Acquisition (as defined in Section 4(a)) is being closed contemporaneously with the funding of the Term Loan Credit Facility.  The Administrative Agent shall have received true and complete copies of all of the ENP Acquisition Documents, and be reasonably satisfied with the substance thereof.

 

F. Pledge of ENP Interests.  Borrower shall have executed and delivered to the Administrative Agent an agreement (the "ENP Interests Pledge Agreement") granting the Administrative Agent a Lien against the ENP Interests (as defined in Section 4(a)) which shall be subordinate and subject only to Liens thereon securing the indebtedness of Borrower under the Term Loan Credit Facility (as defined in Section 4(a)), which shall be satisfactory in form and substance to the Administrative Agent.

 

G. Opinions of Counsel.  The Administrative Agent shall have received opinions of (1) Vinson & Elkins LLP, counsel to the Borrower and its Subsidiaries, and (2) Wyatt, Tarrant & Combs, LLP, special Kentucky counsel to the Borrower and its Subsidiaries, acceptable to the Administrative Agent, covering such matters with respect to the Intercreditor Agreement and the ENP Interests Pledge Agreement, as Administrative Agent may reasonably request, including without limitation those matters described in Sections 7.01 and 7.02 of the Original Credit Agreement.

 

H. Authorization Certificate.  Borrower shall have delivered a certificate of a Responsible Officer satisfactory in form and substance to the Administrative Agent authorizing the execution, delivery and performance of the Intercreditor Agreement and the ENP Interests Pledge Agreement.

 

I. Fees and Expenses.  The Administrative Agent shall have received payment of all out-of-pocket fees and expenses (including reasonable attorneys' fees and expenses) incurred by the Administrative Agent in connection with the preparation, negotiation and execution of the Modification Papers to which Borrower is a party.

 

J. Representations and Warranties.  All representations and warranties contained herein or in the other Modification Papers or otherwise made in writing in connection herewith or therewith shall be true and correct in all material respects (except that any representation or warranty that is qualified as to "materiality" or "material adverse effect" shall be true and correct in all respects) as though such representations and warranties have been made on and as of the date of the Administrative Agent's execution of the Intercreditor Agreement, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the Intercreditor Agreement Effective Date, such representations and warranties shall continue to be true and correct as of such specified earlier date.

 

  

3

  

4. Amendments to Original Credit Agreement.  On the Intercreditor Agreement Effective Date, the Original Credit Agreement shall be amended as follows:

 

(a) Section 1.01 of the Original Credit Agreement shall be amended by adding the following definitions thereto in appropriate alphabetical order:

 

"'Denbury' means Denbury Resources, Inc., a Delaware corporation.

 

'Encore GP Holdings' means Encore Partners GP Holdings LLC, a Delaware limited liability company, an Affiliate of Denbury.

 

'Encore LP Holdings' means Encore Operating LP Holdings LLC, a Delaware limited liability company, an Affiliate of Denbury.

 

'Encore Operating' means Encore Operating LP, a Delaware limited partnership, an Affiliate of Denbury.

 

'ENP' means Encore Energy Partners LP, a publicly traded Delaware limited partnership.

 

'ENP Acquisition' means the acquisition by Borrower of all outstanding ENP General Partner Units from Encore GP Holdings, approximately forty-six percent (46%) of the outstanding ENP Common Units from Encore LP Holdings and Encore Operating, and all of the ENP GP LLC Member Interests from Encore GP Holdings pursuant to the ENP Acquisition Documents.

 

'ENP Acquisition Agreement' means that certain Purchase Agreement of even date herewith by and among Denbury, Encore GP Holdings, Encore LP Holdings and Encore Operating, as selling parties (the 'Selling Parties'), and the Borrower, as buyer.

 

'ENP Acquisition Documents' means the ENP Acquisition Agreement and all agreements, assignments, bills of sale, certificates or other documents and instruments now or hereafter executed and delivered by and between Borrower and/or the Selling Parties pursuant to the ENP Acquisition Agreement or in connection with the ENP Acquisition.

 

'ENP Common Units' means the common units issued by ENP representing limited partner interests in ENP.

 

'ENP Credit Agreement' means that certain Amended and Restated Credit Agreement dated March 7, 2007 among ENP Operating as borrower, ENP as a guarantor, Bank of America, N.A., as administrative agent, and the lenders named therein, as from time to time amended, supplemented or restated.

 

'ENP Credit Facility Availability' means, at any time, the difference of (i) the 'Borrowing Base' (as defined in the ENP Credit Agreement) at such time minus (ii) the 'Total Outstandings' (as defined in the ENP Credit Agreement) at such time.

 

  

4

  

'ENP General Partner Units' means the general partner units issued by ENP or representing general partner interests issued by ENP.

 

'ENP GP' means Encore Energy Partners GP LLC, a Delaware limited liability company, the general partner of ENP.

 

'ENP GP LLC Agreement' means the Limited Liability Company Agreement of ENP GP dated as of February 13, 2007 and as in effect on the Term Loan Credit Agreement Effective Date.

 

'ENP GP LLC Member Interests' means the membership interests issued by ENP GP.

 

'ENP Interests' means collectively, the ENP General Partner Units, the ENP Common Units and the ENP GP LLC Member Interests, all rights, titles and interests with respect thereto, and all proceeds thereof.

 

'ENP Interests Pledge Agreement' means a pledge agreement in form and substance satisfactory to the Administrative Agent pursuant to which the ENP Interests are pledged to the Administrative Agent for the ratable benefit of the Lenders to secure the payment of the Indebtedness, as the same may be amended, modified or supplemented from time to time (the Lien created thereby shall be subject and inferior only to a Lien in the ENP Interests granted to the Term Loan Administrative Agent pursuant to the Term Loan Documents).

 

'ENP Material Indebtedness' means Debt of any one or more of ENP and the ENP Restricted Subsidiaries in an aggregate principal amount exceeding $15,000,000.

 

'ENP Operating' means Encore Energy Partners Operating LLC, a Delaware limited liability company, a wholly owned Subsidiary of ENP.

 

'ENP Partnership Agreement" means that certain Second Amended and Restated Agreement of Limited Partnership of the ENP dated as of September 17, 2007 and as in effect as of the Term Loan Credit Agreement Effective Date.

 

'ENP Restricted Subsidiary' means ENP Operating and each other 'Restricted Subsidiary' as such term is defined in the ENP Credit Agreement.

 

'Intercreditor Agreement' means that certain Lien Subordination and Intercreditor Agreement among Administrative Agent, Term Loan Administrative Agent and the Borrower, substantially in the form of Exhibit G attached hereto.

 

'Term Loan Administrative Agent' means BNP Paribas, or any successor agent under the Term Loan Credit Agreement.

 

'Term Loan Credit Agreement' means the Term Loan Agreement among the Borrower, the Term Loan Administrative Agent and the Term Loan Lenders which are parties thereto dated as of November 16, 2010, which creates the Term Loan Credit Facility.

 

  

5

  

'Term Loan Credit Agreement Effective Date' means the Effective Date, as defined in the Term Loan Credit Agreement.

 

'Term Loan Credit Facility' means a loan by the Term Loan Lenders to the Borrower of $175,000,000 on a term loan basis in order to enable Borrower to finance the ENP Acquisition.

 

'Term Loan Lenders' means the lenders which are parties to the Term Loan Credit Agreement.

 

'Term Loan Documents' means the 'Loan Documents' as defined in the Term Loan Credit Agreement."

 

(b) The following definitions in Section 1.01 of the Original Credit Agreement shall be amended in their entirety to read as follows:

 

"'EBITDA' means, for any twelve-month period (except as otherwise expressly provided) ending on the last day of any fiscal quarter, consolidated net income, excluding any non-cash revenue or expense associated with Swap Agreements resulting from FAS 133, plus without duplication and to the extent deducted from revenues in determining consolidated net income, the sum of (a) the aggregate amount of consolidated Interest Expense for such period, (b) the aggregate amount of income tax expense for such period, (c) all amounts attributable to depletion, depreciation and amortization for such period, (d) all other non-cash charges, all determined on a consolidated basis with respect to Borrower, the Consolidated Subsidiaries and Vanguard Resources in accordance with GAAP, using the results of the twelve-month period ending with that reporting period (except as otherwise herein provided), and (e) on an annualized basis, proforma cash distributions by ENP and ENP GP to Borrower with respect to the ENP Interests.

 

'Loan Documents' means this Agreement, the Notes, the Letter of Credit Agreements, the Title Indemnity Agreements, the Affidavits of Payment of Trade Bills, the Property Certificates, the Reconciliation Schedules, the Lewis Energy Title Indemnity Agreement, the Lewis Energy Affidavit of Payment of Trade Bills, the Intercreditor Agreement, the Lewis Energy Property Certificate, and the Security Instruments and all other agreements, instruments, consents and certificates heretofore or hereafter executed and delivered by the Borrower or any of its Affiliates in connection with this Agreement (other than Swap Agreements with Swap Lenders).

 

'Subsidiary' means:  (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, board of managers or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of its Subsidiaries, and (b) any partnership of which the Borrower or any of its Subsidiaries is a general partner; provided, however, the term 'Subsidiary' shall not include ENP, ENP GP, ENP Operating or any of their respective subsidiaries.  Unless otherwise indicated herein, each reference to the term 'Subsidiary' shall mean a Subsidiary of the Borrower.

 

  

6

  

'Transactions' means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement, and each other Loan Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged Properties, the ENP Common Units, the ENP GP LLC Member Interests and other Properties pursuant to the Security Instruments and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document to which it is a party, the guaranteeing of the Indebtedness and the other obligations under the Guaranty Agreement by such Guarantor and such Guarantor's grant of the security interests and provision of collateral under the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments, including without limitation the grant of Liens by ENP GP on the ENP General Partner Units pursuant to the ENP Interests Pledge Agreement."

 

(c) Section 2.09(b) of the Original Credit Agreement shall be amended to read in their entirety as follows:

 

" (b)           Guarantees and Pledges of Equity Interests (other than ENP Interests).  The payment and performance of the Notes and all of the other Indebtedness hereunder, under the Loan Documents, and under the Swap Agreements, and the reimbursement obligations under the Letters of Credit, (A) shall be unconditionally guaranteed by each Subsidiary pursuant to one or more Guaranty Agreements, and (B) shall be secured by a first priority Lien against the Equity Interests of each Subsidiary other than ENP or ENP GP pursuant to a Subsidiary Pledge Agreement.  Reference is made to Section 8.14 of this Agreement for further provisions with respect to additional Guarantors and additional collateral."

 

(d) Section 2.09 shall be amended by adding thereto a new paragraph (e) which shall read in its entirety as follows:

 

"(e)           Pledge of ENP Interests.  The payment and performance of the Notes and all of the other Indebtedness hereunder and under the Loan Documents shall be secured by a first and superior Lien against the ENP Interests (subordinate and subject only to Liens thereon securing the indebtedness created under the Term Loan Documents as provided in the Intercreditor Agreement) pursuant to the ENP Interests Pledge Agreement.  Reference is made to Section 8.14 of this Agreement for further provisions with respect to additional ENP Interests."

 

(e) Section 7.14 of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"Section 7.14.  Subsidiaries.  Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule 7.14, the Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries.  Each Subsidiary on such schedule is a Wholly-Owned Subsidiary and a disregarded entity for federal income tax purposes.  Schedule 7.14, as supplemented as of the Term Loan Credit Agreement Effective Date, lists the Borrower's and its Subsidiaries' percentage ownership of ENP GP and ENP as of the Term Loan Credit Agreement Effective Date.

  

7

  

(f) Section 7.16 of the Original Credit Agreement shall be amended by adding thereto a new paragraph (f) which reads in its entirety as follows:

 

"(f)           As of the Term Loan Credit Agreement Effective Date, Borrower owns all of the outstanding ENP GP LLC Member Interests and 20,924,055 ENP Common Units, which represent an approximate 46% percentage interest in ENP, and ENP GP owns all of the outstanding ENP General Partner Units, which represent a 1.10% percentage interest in ENP, all as set forth on Schedule 7.14 as supplemented as of the Term Loan Credit Agreement Effective Date, and Borrower or ENP GP, as applicable, has good and marketable title to such ENP Interests, free and clear of all Liens, other than (i) first priority senior Liens securing the Indebtedness (subordinate and subject only to Liens thereon securing the indebtedness under the Term Loan Documents as provided in the Intercreditor Agreement) and (ii) Liens securing the Term Loan Facility.  The ENP GP Units have been duly authorized and validly issued in accordance with the ENP Partnership Agreement.  The ENP Common Units have been duly authorized and validly issued in accordance with the ENP Partnership Agreement, are fully paid (to the extent required by the ENP Partnership Agreement) and nonassessable (except as such nonassessability may be affected by  Section 17-607 of the Delaware Revised Uniform Limited Partnership Act).  The ENP GP LLC Member Interests have been duly authorized and validly issued in accordance with the ENP GP LLC Agreement, are fully paid (to the extent required by the ENP GP LLC Agreement) and nonassessable (except as such nonassessability may be affected by Section 18-607 of the Delaware Limited Liability Company Act)."

 

(g) Section 7.24 of the Original Credit Agreement shall be amended by adding the following to the end thereof:

 

"The ENP Interests Pledge Agreement is effective to create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and enforceable Lien on all of Borrower's and ENP GP's right, title and interest in and to the ENP Interests."

(h) Section 8.01(i) of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"(i)  SEC and Other Filings; Reports to Shareholders.  Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by Vanguard Resources with the SEC, or with any national securities exchange, or distributed by Vanguard Resources to its shareholders generally, as the case may be.  Documents required to be delivered pursuant to this clause (i) may be delivered electronically and if so delivered shall be deemed to have been delivered on the date (x) on which Vanguard Resources posts such documents, or provides a link thereto on Vanguard Resources' website on the Internet; or (ii) on which such documents are posted on Vanguard Resources' behalf on IntraLinks/SyndTrak or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that:  (i) upon written request by the Administrative Agent, the Borrower shall cause Vanguard Resources to deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify, or cause Vanguard Resources to notify, (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents."

 

  

8

  

(i) Section 8.11(b) of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"(b)           The Borrower hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged Property , the ENP Interests or other Property covered by the Lien of the Security Instruments without the signature of the Borrower or any other Guarantor where permitted by law.  A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Mortgaged Property, the ENP Interests, such other Property or any part thereof shall be sufficient as a financing statement where permitted by law."

 

(j) Section 8.14 of the Original Credit Agreement shall be amended by adding a new paragraph (e) thereto which reads in its entirety as follows:

 

"(e)           Upon the acquisition by the Borrower or any Subsidiary of any ENP Interests after the Term Loan Credit Agreement Effective Date, the Borrower shall grant, or shall cause such Subsidiary to grant, within five Business Days after the acquisition thereof, to the Administrative Agent as security for the Indebtedness a security interest in such acquired ENP Interests (which shall be free and clear of all Liens other than the first priority Lien securing the indebtedness created under the Term Loan Documents in accordance with the provisions of the Intercreditor Agreement) and shall deliver to the Administrative Agent any and all certificates evidencing such acquired ENP Interests upon the termination of the Intercreditor Agreement.  All such Liens will be created and perfected by and in accordance with the provisions of the ENP Interests Pledge Agreement and financing statements with respect thereto, all in form and substance reasonably satisfactory to the Administrative Agent."

 

(k) Sections 9.01(b) and (c) of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"(b)           Consolidated Leverage Ratio.  The Borrower will not, as of the last day of any fiscal quarter beginning with the fiscal quarter ending December 31, 2010, permit its Consolidated Leverage Ratio to be greater than the ratios indicated for each period specified below:

 

	
Period

	
Ratio

	
From 12/31/10 through repayment of Term Loan Credit Facility

	
3.75 to 1.0

	
From repayment of Term Loan Credit Facility and thereafter

	
3.50 to 1.0

(c)           Consolidated Current Ratio.  The Borrower will not permit, at any time, the ratio of (i) consolidated current assets (including the unused amount of the total Commitments, but excluding non-cash assets under FAS 133) to (ii) consolidated current liabilities (excluding non-cash obligations under FAS 133 and current maturities under this Agreement and under the Term Loan Credit Agreement) to be less than 1.0 to 1.0.  This ratio shall be computed for the Borrower, the Consolidated Subsidiaries and Vanguard Resources on a consolidated basis."

 

  

9

  

(l) Section 9.01 of the Original Credit Agreement shall be amended by adding thereto a new paragraph (e) which shall read in its entirety as follows:

 

"(e)           Minimum Equity Financing of Acquisitions.  The Borrower will not permit the aggregate received proceeds from Equity Offerings after the Term Loan Credit Agreement Effective Date to be less than the difference of (i) the aggregate purchase price of all Property acquired by the Borrower, ENP and their respective Consolidated Subsidiaries after the Term Loan Credit Agreement Effective Date minus (ii) the aggregate availability under the Borrowing Base and the ENP Credit Facility Availability, if any, resulting from such acquisitions, determined with respect to each such acquisition as of the date of such acquisition."

(m) Section 9.02 of the Original Credit Agreement shall be amended by adding the following paragraph (i) thereto which shall read in its entirety as follows:

 

"(i)           Indebtedness under the Term Loan Credit Facility not to exceed the principal amount of $175,000,000."

 

(n) Section 9.03 of the Original Credit Agreement shall be amended by adding a new paragraph (f) thereto which shall read in its entirety as follows:

 

"(f)           Subject to the terms of the Intercreditor Agreement, Liens securing indebtedness created under the Term Loan Credit Facility."

 

(o) Section 9.05 of the Original Credit Agreement shall be amended by adding a new paragraph (k) thereto which shall read in its entirety as follows, and by changing old paragraph (k) to paragraph (l):

 

"(k)           Investments in ENP Interests."

 

(p) Section 9.11 of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"Section 9.11.  Mergers, Etc.  Neither the Borrower nor any of its Subsidiaries will merge into or with or consolidate with any other Person, or sell, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person, except that (i) any Wholly-Owned Subsidiary may merge with any other Wholly-Owned Subsidiary, (ii) the Borrower may merge with any Wholly-Owned Subsidiary so long as the Borrower is the survivor, and (iii) a Wholly-Owned Subsidiary with no assets may merge with and into ENP so long as ENP is the survivor."

 

(q) Section 9.12 of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"Section 9.12.  Sale of Properties.  The Borrower will not, and will not permit any Subsidiary to sell any ENP Interests. The Borrower will not, and will not permit any Subsidiary to,  sell, assign, farm-out, convey or otherwise transfer any other Property except for (a) the sale of Hydrocarbons in the ordinary course of business; (b) farmouts of undeveloped acreage and assignments in connection with such farmouts; (c) the sale or transfer of equipment that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at least comparable value and use; and (d) sales and other dispositions of Property not regulated by Sections 9.01(a) through 9.01(d) having a fair market value not in excess of 5% of the Borrowing Base (as determined by the Administrative Agent), individually or in the aggregate during any 12-month period."

 

  

10

  

(r) Section 9.15 of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"Section 9.15.  Subsidiaries.  The Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary unless the Borrower gives written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(b) and Section 8.14(c); provided however, that the Borrower and any Wholly-Owned Subsidiary may create a Subsidiary to be used in connection with the merger by the Borrower or any Subsidiary with ENP, ENP Operating or any of their respective Subsidiaries.  The Borrower shall not, and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary except in compliance with Section 9.12(d).  Neither the Borrower nor any Subsidiary shall have any Foreign Subsidiaries."

 

(s) Section 9.16 of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

"Section 9.16.  Negative Pledge Agreements; Dividend Restrictions.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Security Instruments or Capital Leases creating Liens permitted by Section 9.03(c)) which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and the Lenders or restricts any Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, or which requires the consent of or notice to other Persons in connection therewith, or which restricts (other than the ENP Partnership Agreement, the ENP GP LLC Agreement and the ENP Credit Agreement) ENP, ENP GP or any ENP Restricted Subsidiary from paying dividends or making distributions."

 

(t) Sections 10.01(f), (g), (h), (i), (j) and (k) of the Original Credit Agreement shall be amended to read in their entirety as follows:

 

"(f)           the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, or ENP, ENP GP or any ENP Restricted Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of ENP Material Indebtedness, in each case when and as the same shall become due and payable (after giving effect to any applicable notice and cure period).

 

(g)           any event or condition occurs that results in any Material Indebtedness or ENP Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Subsidiary to make an offer in respect thereof.

 

  

11

  

(h)           an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary, or its debts, or of a substantial part of its assets, under any  Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary, or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall be entered.

 

(i)           the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary, or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

 

(j)           the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary, shall become unable, admit in writing its inability or fail generally to pay its debts as they become due.

 

(k)           (i) one or more final judgments for the payment of money in an aggregate amount in excess of (x) with respect to the Borrower or any Subsidiary, 2% of the existing Borrowing Base, and (y) with respect to ENP, ENP GP or any ENP Restricted Subsidiary, $15,000,000, (in each case to the extent not covered by independent third party insurance provided by insurers of the highest claims paying rating or financial strength as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered (x) against the Borrower, any Subsidiary or any combination thereof, or (y) against ENP, ENP GP, any ENP Restricted Subsidiary or any combination thereof, and in each such case the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary, or upon any assets of ENP, ENP GP or any ENP Restricted Subsidiary, to enforce any such judgment."

 

(u) Section 10.01(n) of the Original Credit Agreement shall be amended to read in its entirety as follows:

 

  

12

  

"(n)           There occurs under any Swap Agreement an early Termination Date (as defined in such Swap Agreement) resulting from (i) any event of default under such Swap Agreement to which the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary, is the Defaulting Party (as defined in such Swap Agreement), or (ii) any Termination Event (as so defined) under such Swap Agreement as to which the Borrower or any Subsidiary, or ENP, ENP GP or any ENP Restricted Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value (x) owed by the Borrower or such Subsidiary as a result thereof exceeds $2,000,000 or (y) owed by ENP, ENP GP or such ENP Restricted Subsidiary as a result thereof exceeds $15,000,000, and such amount owed by ENP, ENP GP or any ENP Restricted Subsidiary is not paid when due."

 

(v) Section 12.9 of the Original Credit Agreement shall be amended by adding a new paragraph (e) thereto which shall read in its entirety as follows:

 

“(e)           WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.”

 

(w) Article XII of the Original Credit Agreement shall be amended by adding the following Section 12.18 thereto which shall read in its entirety as follows:

 

"Section 12.18.  Concerning the Intercreditor Agreement.  Each Lender (a) consents to the subordination of Liens provided for in the Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement, and (c) authorizes and instructs the Administrative Agent to enter into the Intercreditor Agreement as Revolving Collateral Agent on behalf of such Lender.  The foregoing provisions are intended as an inducement to the Lenders to extend credit and such Lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement."

(x) Exhibit D to the Original Credit Agreement shall be replaced with Exhibit D attached to this Amendment.

 

(y) The Original Credit Agreement is hereby amended by adding thereto a new Exhibit G, the Intercreditor Agreement, which is attached as Exhibit G hereto.

 

(z) Schedule 7.14 to the Original Credit Agreement shall be replaced with an updated Schedule 7.14 taking into account the consummation of the ENP Transaction.

 

  

13

  

5. Concerning the Intercreditor Agreement.  The following provision shall be added to all Security Documents executed on and after the Intercreditor Agreement Effective Date:

 

"Reference is made to that certain Lien Subordination and Intercreditor Agreement (as amended, restated, supplemented or otherwise modified from time to time, the 'Intercreditor Agreement'), among Citibank, N.A., as Revolving Collateral Agent; BNP Paribas, as Term Loan Collateral Agent; Vanguard Natural Gas, LLC ('Vanguard'); and the Subsidiaries of Vanguard from time to time parties thereto.  Notwithstanding any other provisions contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Obligations Security Documents (as defined in the Intercreditor Agreement).  In the event of a conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Interecreditor Agreement shall control."

6. Certain Representations.  Borrower represents and warrants that, as of the Effective Date:  (a) Borrower has full power and authority to execute the Modification Papers and the Modification Papers constitute the legal, valid and binding obligation of Borrower enforceable in accordance with their terms, except as enforceability may be limited by general principles of equity and applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors' rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution, delivery and performance by Borrower thereof.  In addition, Borrower represents that after giving effect to this Amendment all representations and warranties contained in the Original Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Effective Date as if made on and as of such date except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case such representation or warranty is true and correct in all material respects as of such earlier date.

 

7. No Further Amendments.  Except as previously amended in writing or as amended hereby, the Original Credit Agreement shall remain unchanged and all provisions shall remain fully effective between the parties.

 

8. Acknowledgments and Agreements.  Borrower acknowledges that on the date hereof all outstanding Obligations are payable in accordance with their terms, and Borrower waives any defense, offset, counterclaim or recoupment with respect thereto.  Borrower, Administrative Agent, L/C Issuer and each Lender do hereby adopt, ratify and confirm the Original Credit Agreement, as amended hereby, and acknowledge and agree that the Original Credit Agreement, as amended hereby, is and remains in full force and effect.  Borrower acknowledges and agrees that its liabilities and obligations under the Original Credit Agreement, as amended hereby, and under the Loan Documents, are not impaired in any respect by this Amendment.  Any breach of any representations, warranties and covenants under this Amendment shall be a Default or an Event of Default, as applicable, under the Original Credit Agreement.

 

9. Limitation on Agreements.  The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Credit Agreement or any of the Loan Documents, or (b) to prejudice any right or rights which the Administrative Agent now has or may have in the future under or in connection with the Original Credit Agreement and the Loan Documents, each as amended hereby, or any of the other documents referred to herein or therein. The Modification Papers shall constitute Loan Documents for all purposes.

 

10. Confirmation of Security.  Borrower hereby confirms and agrees that all of the Mortgages, security agreements and other security instruments which presently secure the Indebtedness shall continue to secure, in the same manner and to the same extent provided therein, the payment and performance of the Indebtedness as described in the Original Credit Agreement as modified by this Amendment.

 

  

14

  

11. Counterparts.  This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which constitute one instrument.  In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.

 

12. Incorporation of Certain Provisions by Reference.  The provisions of Section 12.09 of the Original Credit Agreement captioned "Governing Law, Jurisdiction; Consent to Service of Process; Waiver of Jury Trial" are incorporated herein by reference for all purposes.

 

13. Entirety, Etc.  This Amendment and all of the other Loan Documents embody the entire agreement between the parties.  THIS AMENDMENT AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[This space is left intentionally blank.  Signature pages follow.]

 

  

15

  

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be effective as of the date and year first above written.

 

BORROWER

VANGUARD NATURAL GAS, LLC

By:           /s/ Richard Robert                                                                

Richard Robert

Executive Vice President

and Chief Financial Officer

 

  

S-1

  

ADMINISTRATIVE AGENT

CITIBANK, N.A.,

as Administrative Agent

By:          /s/ Ryan Watson                                                      

                Ryan Watson

Vice President

EXISTING LENDER

CITIBANK, N.A.

By:           /s/ Ryan Watson                                                      

Ryan Watson

Vice President

 

  

S-2

  

LENDER

BNP PARIBAS

By:             /s/ Betsy Jocher 

Name:         Betsy Jocher 

Title:           Director                                                                

By:              /s/ Richard Hawthorne 

Name:         Richard Hawthorne 

Title:           Director                                                                

 

  

S-3

  

 LENDER

COMERICA BANK

By:              /s/ Justin Crawford                                                                

Name:         Justin Crawford 

Title:           Vice President 

 

  

S-4

  

LENDER

COMPASS BANK

By:             /s/ Dorothy Marchand 

Name:         Dorothy Marchand 

Title:           Sr. Vice President                                                                

 

  

S-5

  

LENDER

ROYAL BANK OF CANADA

By:              /s/ Don J. McKinnerney 

Name:         Don J. McKinnerney 

Title:           Authorized Signatory 

 

  

S-6

  

LENDER

THE BANK OF NOVA SCOTIA

By:              /s/ John Frazell 

Name:         John Frazell 

Title:           Director                                                                

 

  

S-7

  

LENDER

WELLS FARGO BANK, N.A.

By:              /s/ Richard A. Gould 

Name:         Richard A. Gould 

Title:           Managing Director                                                                

 

  

S-8

  

LENDER

	
  

	
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

By:              /s/ Page Dillehunt                                                                

Name:         Page Dillehunt 

Title:           Managing Director                                                                

By:              /s/ Sharada Manne                                                                

Name:         Sharada Manne 

Title:           Director                                                                

 

  

S-9

  

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he/she is the _______________ of VANGUARD NATURAL GAS, LLC, a Kentucky limited liability company (the "Borrower"), and that as such he/she is authorized to execute this certificate on behalf of the Borrower.  With reference to the Second Amended and Restated Credit Agreement dated as of August 31, 2009 (together with all amendments, restatements, supplements or other modifications thereto being the "Agreement") among the Borrower, CITIBANK, N.A., as Administrative Agent, and the other agents and lenders (the "Lenders") which are or become a party thereto, and such Lenders, the undersigned represents and warrants as follows (each capitalized term used herein having the same meaning given to it in the Agreement unless otherwise specified):

 

(a)           The representations and warranties of the Borrower contained in Article VII of the Agreement and in the Loan Documents and otherwise made in writing by or on behalf of the Borrower pursuant to the Agreement and the Loan Documents were true and correct in all material respects when made, and are repeated at and as of the time of delivery hereof and are true and correct in all material respects at and as of the time of delivery hereof, except to the extent such representations and warranties are expressly limited to an earlier date or the Majority Lenders have expressly consented in writing to the contrary.

 

(b)           The Borrower has performed and complied with all agreements and conditions contained in the Agreement and in the Loan Documents required to be performed or complied with by it prior to or at the time of delivery hereof [or specify default and describe].

 

(c)           Since _________________, 20__, no change has occurred, either in any case or in the aggregate, in the condition, financial or otherwise, of the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect [or specify event].

 

(d)           There exists no Default or Event of Default [or specify Default and describe].

 

(e)           The aggregate amount of cash used to date by Vanguard Resources, LLC to repurchase treasury stock is $_________________.

 

(f)           Attached hereto are the detailed computations necessary to determine whether the Borrower is in compliance with Section 9.01 and Section 8.14 as of the end of the [fiscal quarter][fiscal year] ending [                              ].

 

EXECUTED AND DELIVERED this _________ day of __________, 20__.

 

VANGUARD NATURAL GAS, LLC

By:                                                                           

Name:

Title:                                                                           

 

  

1

  

For the Quarter/Year ended ___________________("Statement Date")

 

SCHEDULE 2

to the Compliance Certificate

($ in 000's)

 

	
I.Section 9.01(a) – Interest Coverage Ratio.

	  
	
A.EBITDA

	  
	
1.consolidated net income, less

	
$______________

	
2.non-cash revenue or expense associated with Swap Agreements resulting from FAS 133, less

	
($______________)

 

	
3.income or plus loss from discontinued operations and extraordinary items, plus

	
($______________)

 

	
4.income taxes, plus

	
$______________

	
5.interest expense, plus

	
$______________

	
6.depreciation, plus

	
$______________

	
7.depletion, plus

	
$______________

	
8.amortization, plus

	
$______________

	
9.non-cash and extraordinary items, plus

	
$______________

	
10.Proforma cash distributions by ENP and ENP GP with respect to ENP Interests (annualized)

	
$______________

	
11.Total EBITDA

	
$______________

	
12.        less  the aggregate amount of cash used to purchase Equity Interests of Vanguard Resources, LLC during the twelve month period ending on the Statement Date

	
 

$______________

	
B. Interest Expense

 

	
$______________

	
C. Ratio (Line I.A.12 ÷ Line I.B)

 

	
_________ to 1.0

	
Minimum Required:  2.5 to 1.0

	  

 

  

1

  

Maximum Permitted:

	
II.           Section 9.01(b) – Consolidated Leverage Ratio.

	  
	
A.Total Debt

	
 

	
1.Debt, less

	
$_______________

	
2.Non-cash obligations under FAS 133, less

	
($______________)

	
3.Accounts payable and other accrued liabilities not greater than 60 days past due or which are being contested in good faith

 

	
($______________)

	
4.Total Debt

	
$_______________

	
B.EBITDA (amount on Line I.A.11)

	
$_______________

	
C.Ratio (Line II.A.4 ÷ Line II.B)

	
__________ to 1.0

	 
	
Period

	
Ratio

	
From 12/31/10 through repayment of Term Loan Credit Facility

	
3.75 to 1.0

	
From repayment of Term Loan Credit Facility and thereafter

	
3.50 to 1.0

	
Period

	
Ratio

	
From 12/31/10 through repayment of Term Loan Credit Facility

	
3.75 to 1.0

	
From repayment of Term Loan Credit Facility and thereafter

	
3.50 to 1.0

	  
	  	  
	
III.Section 9.01(c) – Current Ratio.

	  
	
A.Current Assets (including Borrowing Base availability)

	
$______________

	
B. Current Liabilities (excluding current maturities of Indebtedness owed to Lenders and current maturities of indebtedness owed to Term Loan Lenders)

 

	
$______________

	
C.Ratio (Line III.A ÷ Line III.B):

	
_________ to 1.0

	
Minimum Required:  1.0 to 1.0

	  

 

  

2

  

EXHIBIT G

FORM OF INTERCREDITOR AGREEMENT

 

  

1fp0002263_ex10-1.htm

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”) is dated as of November 16, 2010, between ParkerVision, Inc., a Florida corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

WHEREAS, the Company has registered up to $25,000,000 shares of its capital stock, warrants and debt securities pursuant to an effective registration statement on Form S-3 under the Securities Act of 1933, as amended (the “Securities Act”).

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I.

PURCHASE AND SALE

 

1.1   Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser, severally and not jointly, agrees to purchase, the number of  Shares set forth on the signature page hereto executed by such Purchaser.  Each Purchaser shall deliver to the Company, via wire transfer or a certified check of immediately available funds, an amount equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser and the Company shall deliver to each Purchaser its respective Shares as determined pursuant to Section 1.2(a) and as set forth on such signature page, and the Company and each Purchaser shall deliver the other items set forth in Section 1.2 that are deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 1.2 and 1.3, the Closing shall occur at the offices of Graubard Miller, The Chrysler Building, 405 Lexington Avenue, 19th Floor, New York, New York, or such other location as the parties shall mutually agree.

 

1.2   Deliveries.

 

(a)        Unless other arrangements have been made with such Purchaser, on or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)         this Agreement duly executed by the Company;

 

(ii)        a legal opinion of Graubard Miller LLP, counsel to the Company, in form and substance satisfactory to the Purchasers;

 

  

  

  

 

(iii)       [intentionally omitted]

 

(iv)       a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via The Depository Trust Company Deposit or Withdrawal at Custodian system Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price; and

 

(v)        [intentionally omitted]

 

(vi)       the Base Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b)        On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)         this Agreement duly executed by such Purchaser; and

 

(ii)        such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

 

1.3   Closing Conditions.

 

(a)           The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)         each representation and warranty of the Purchasers shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for those representations and warranties that speak as of a specific date, which shall be true and correct as of such date);

 

(ii)        all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

  

2

  

 

(iii)       the delivery by each Purchaser of the items set forth in Section 1.2(b) of this Agreement.

 

(b)        The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)         each representation and warranty of the Company shall be true and correct as of the date when made and as of the Closing Date as though originally made at that time (except for those representations and warranties that speak as of a specific date, which shall be true and correct as of such date);

 

(ii)        all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)        the delivery by the Company of the items set forth in Section 1.2(a) of this Agreement and such other items as may be agreed to with a particular Purchaser;

 

(iv)       there shall have been no Material Adverse Effect with respect to the Company since the date hereof;

 

(v)       from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market nor shall any such suspension have been threatened, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing;

 

(vi)       the Shares shall be listed on the Company’s principal Trading Market;

 

(vii)      the Company shall have obtained all Required Approvals; and

 

(viii)     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 that prohibits the consummation of the transactions contemplated by the Transaction Documents.

 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

 

2.1  Representations and Warranties of the Company.  Except as specifically disclosed in the “SEC Reports” (as defined in Section 2.1(g) below), the Company hereby makes the following representations and warranties to each Purchaser as of the date hereof and as of the Closing Date (except for those representations and warranties that speak as of a specific date, which are made as of such date):

 

(a)        Organization and Qualification.  The Company’s only direct or indirect subsidiary is D2D, LLC (the “Subsidiary”), which has no operations or business.  The Company owns, directly or indirectly, all of the equity interests of the Subsidiary free and clear of any “Liens” (which for purposes of this Agreement shall mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction), and all the issued and outstanding equity interests of the Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  Each of the Company and the Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or 

 

  

3

  

 

organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor the Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiary, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”), and no “Proceeding” (which for purposes of this Agreement shall mean any action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened) has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(b)        Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the “Required Approvals” (as defined in Section 2.1(d) below).  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(c)        No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or the Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or the Subsidiary under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or the Subsidiary is a party or by which any property or asset of the Company or the Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order,

 

  

4

  

 

judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or the Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(d)        Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other “Person” (defined as an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind, including, without limitation, any Trading Market (as defined in Section 2.1(e) below)) in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than such filings as are required to be made under applicable Federal and state securities laws (the “Required Approvals”).

 

(e)        Issuance of the Securities; Registration.  The issuance of the Shares is duly authorized and, when issued and paid for in accordance with the Transaction Documents, the Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock currently issuable pursuant to the Transaction Documents.  The issuance by the Company of the Securities has been registered under the Securities Act and all of the Securities are freely transferable and tradable by the Purchasers without restriction (other than any restrictions arising solely from an act or omission of a Purchaser).  The Securities are being issued pursuant to the Registration Statement.  The Registration Statement is effective and available for the issuance of the Securities thereunder and the Company has not received any notice that the SEC has issued or intends to issue a stop-order or other order with respect to the Registration Statement or the Prospectus or that the SEC otherwise has (i) suspended or withdrawn the effectiveness of the Registration Statement or (ii) issued any order preventing or suspending the use of the Prospectus, in either case, either temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution of Shelf Securities” section included in the Registration Statement permits the issuance and sale of the Securities hereunder.  The Company has delivered or made available (by email or otherwise) a copy of the Prospectus to each Purchaser prior to such Purchaser’s execution of this Agreement. Following the issuance of Securities in accordance with the applicable Transaction Documents, the Shares will be tradable without further registration under the Securities Act on The Nasdaq Global Market (the “Trading Market”).  At the time the Registration Statement and any amendments thereto became effective, and as of the date hereof and the Closing Date, the Registration Statement and any amendments thereto each conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, each conformed and will conform in all material respects to the requirements of the 1933 Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order

 

  

5

  

 

to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Company meets all of the requirements for the use of Form S-3 under the 1933 Act for the offering and sale of the Shares, and the SEC has not notified the Company of any objection to the use of the form of the Registration Statement pursuant to Rule 401(g)(1) under the 1933 Act.

 

(f)        Capitalization.  The capitalization of the Company is as set forth in the SEC Reports and the Prospectus Supplement.  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the Registration Statement, including any amendments or supplements thereto, pursuant to the exercise of employee stock options under the Company’s stock option plans and pursuant to the conversion or exercise of securities exercisable, exchangeable or convertible into Common Stock (“Common Stock Equivalents”).  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in any transaction pertaining to the Company’s capital stock.  Except as set forth in the SEC Reports and the Registration Statement, including any amendments or supplements thereto, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or the Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(g)        SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials filed prior to the date hereof, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC

 

  

6

  

 

Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiary as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(h)        Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or “Affiliate” (defined as any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act), except pursuant to existing Company stock option plans.  Except for the request for confidential treatment filed in connection with the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010, the Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development has occurred or exists with respect to the Company or the Subsidiary or their respective business, properties, operations, financial condition or prospects that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed one (1) Trading Day prior to the date that this representation is made.

 

(i)         Litigation.  There is no action, suit, inquiry, notice of violation, Proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, the Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor the Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  To the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission

 

  

7

  

 

involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or the Subsidiary under the Exchange Act or the Securities Act.

 

(j)         Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company or the Subsidiary which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiary’s employees is a member of a union that relates to such employee’s relationship with the Company, and neither the Company nor the Subsidiary is a party to a collective bargaining agreement, and the Company and the Subsidiary believe that their relationships with their employees are good.  No executive officer of the Company or the Subsidiary, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or the Subsidiary to any liability with respect to any of the foregoing matters.  The Company and the Subsidiary are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(k)        Compliance.  Neither the Company nor the Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or the Subsidiary under), nor has the Company or the Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not reasonably be expected to result in a Material Adverse Effect.

 

(l)           Regulatory Permits.  The Company and the Subsidiary possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor the Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(m)       Title to Assets.  The Company and the Subsidiary have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiary and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiary, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do

 

  

8

  

 

not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiary and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiary are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiary are in compliance.

 

(n)        Intellectual Property.  The Company and the Subsidiary own, possess, or can acquire on reasonable terms, all Intellectual Property necessary for the conduct of their business as now conducted or as described in the Registration Statement, the Base Prospectus and the Prospectus Supplement to be conducted, except as such failure to own, possess, or acquire such rights would not result in a Material Adverse Change.  Except as set forth in the Registration Statement, the Base Prospectus and the Prospectus Supplement, (i) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property, except as such infringement, misappropriation or violation would not result in a Material Adverse Change; (ii) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the Company’s or the Subsidiary’s rights in or to any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iii) the Intellectual Property owned by the Company and the Subsidiary and to the knowledge of the Company, the Intellectual Property licensed to the Company and the Subsidiary have not been adjudged invalid or unenforceable, in whole or in part, and there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) there is no pending or threatened action, suit, proceeding or claim by others that the Company or the Subsidiary infringe, misappropriate or otherwise violate any Intellectual Property or other proprietary rights of others, neither the Company nor the Subsidiary has received any written notice of such claim, and the Company is unaware of any other fact which would form a reasonable basis for any such claim; and (v) to the Company’s knowledge, no employee of the Company or the Subsidiary is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or the Subsidiary or actions undertaken by the employee while employed with the Company or the Subsidiary, except as such violation would not result in a Material Adverse Change.  “Intellectual Property” shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, technology, know-how and other intellectual property.

 

(o)        Insurance.  The Company and the Subsidiary are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiary are engaged, including, but not limited to, directors and officers insurance coverage.  Neither the Company nor the Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

 

  

9

  

 

(p)        Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or the Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000, other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee benefits, including equity awards under any incentive equity plan of the Company.

 

(q)        Sarbanes-Oxley.  Each of the Company and the Subsidiary is in compliance with any and all requirements of the Sarbanes-Oxley Act of 2002 that are applicable to the Company and effective as of the date hereof, and any and all rules and regulations promulgated by the Commission thereunder that are applicable to the Company and effective as of the date hereof and as of the Closing Date.  Each of the Company and the Subsidiary maintain a system of internal accounting controls sufficient to provide reasonable assurance that:  (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiary have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiary and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiary as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiary that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiary.

 

(r)        Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by the Company or the Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

  

10

  

 

(s)        Trading Market Rules.  The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(t)         Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(u)        Registration Rights.  Other than with respect to the Company’s existing registration statements filed under the Securities Act, or as otherwise disclosed in the SEC Reports, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(v)        Listing and Maintenance Requirements.  The Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange Act.  Except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been quoted to the effect that the Company is not in compliance with the maintenance requirements of such Trading Market, and the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such maintenance requirements.

 

(w)       Application of Takeover Protections.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(x)        No Integrated Offering.  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 2.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(y)        Solvency.  As of the date hereof and as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed

 

  

11

  

 

 

to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or the Subsidiary, or for which the Company or the Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (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 $50,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor the Subsidiary is in default with respect to any Indebtedness.

 

(z)        Disclosure.  The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information, except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents.  The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in the Securities.  All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiary, their respective businesses and the transactions contemplated hereby, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

(aa)      Tax Status.  Except for matters that could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Company and the Subsidiary each (i) has made or filed all necessary federal, state, foreign and local income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of the Subsidiary know of no basis for any such claim.

 

  

12

  

 

(bb)           Foreign Corrupt Practices.  Neither the Company nor the Subsidiary, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company or the Subsidiary, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or the Subsidiary (or made by any person acting on their behalf of which the Company is aware) which is  in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(cc)           Accountants.  The Company’s accountants are named in the Prospectus Supplement.  To the knowledge of the Company, such accountants, who the Company expects will express their opinion with respect to the financial statements to be included in the Company’s next Annual Report on Form 10-K, are a registered public accounting firm as required by the Securities Act.

 

(dd)           Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee)      Acknowledgement Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 2.2(e) and 3.12 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being

 

  

13

  

 

conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

(ff)       Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities (other than for the Placement Agent’s placement of the Securities), or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company.

 

(gg)      Approvals.  The issuance and quotation of the Shares on the Trading Market  requires no further approvals, including but not limited to, the approval of shareholders.

 

2.2   Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby makes the following representations and warranties to the Company as of the date hereof and as of the Closing Date (except for those representations and warranties that speak as of a specific date, which are made as of such date):

 

(a)        Organization; Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)        Understandings or Arrangements.  Such Purchaser is acquiring the Securities as principal for its own account and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)        [Intentionally omitted]

 

(d)        [Intentionally omitted]

 

  

14

  

 

(e)        Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing on November 3, 2010 and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

The Company acknowledges and agrees that the representations contained in Section 2.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE III.

OTHER AGREEMENTS OF THE PARTIES

 

3.1   [Intentionally omitted].

 

3.2   Furnishing of Information.  Until the time that no Purchaser owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

3.3   Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

3.4   Securities Laws Disclosure; Publicity.  The Company shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby and (b) issue a Current Report on Form 8-K, and including the Transaction Documents as exhibits thereto, within the time required by the Exchange Act.  From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-

 

  

15

  

 

public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser or its investment adviser, or include the name of any Purchaser or its investment adviser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

3.5   Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

3.6   Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes or may constitute material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

3.7   Use of Proceeds.  The Company shall use the net proceeds from the sale of the Securities hereunder as set forth under “Use of Proceeds” in the Prospectus Supplement.

 

3.8   Indemnification of Purchasers.  Subject to the provisions of this Section 3.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any third party who is not an

 

  

16

  

 

Affiliate of such Purchaser Party (including for these purposes a derivative action brought on behalf of the Company by any third party who is not an Affiliate of such Purchaser Party), arising out of or resulting from the execution, delivery, performance or enforcement of any of the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such third party or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 3.8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of any Purchaser Party against the Company or others, and (y) any liabilities the Company may be subject to pursuant to law.

 

3.9   Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Shares pursuant to this Agreement.

 

3.10     Listing of Common Stock.  The Company hereby agrees to use best efforts to maintain the listing of the Common Stock on the Trading Market on which it is currently listed, and concurrently with the Closing, the Company shall, if necessary, promptly secure the listing of all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing and trading of its

 

  

17

  

 

Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

3.11 Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

3.12 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 3.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 3.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in this Agreement and otherwise provided to the Purchaser in connection with this transaction.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 3.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 3.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or the Subsidiary after the issuance of the initial press release as described in Section 3.4.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

3.13 Preemptive Rights.

 

(a)        If, at any time during a period of one hundred eighty (180) days commencing on the Closing Date, the Company offers to sell Covered Securities (as defined below) in a public or private offering of Covered Securities for cash (a “Qualified Offering”), each Purchaser shall be afforded the opportunity to acquire from the Company, for the same price and on the same terms as such Covered Securities are offered, in the aggregate up to the amount of Covered Securities required to enable it to maintain its Qualified Purchaser Percentage Interest (measured immediately prior to such offering).  “Qualified Purchaser 

 

  

18

  

 

Percentage Interest” means, as of any date of determination, the percentage equal to (A) the aggregate number of shares of Common Stock then held by such Purchaser as of the date of determination divided by (B) the total number of outstanding shares of Common Stock as of such date. “Covered Securities” means Common Stock and any rights, options or warrants to purchase or securities convertible into or exercisable or exchangeable for Common Stock, other than securities that are (A) issuable upon the exercise, conversion or exchange of any securities of the Company issued and outstanding as of the date hereof; or (B) issued by the Company pursuant to any employment contract, employee incentive or benefit plan, stock purchase plan, stock ownership plan, stock option or equity compensation plan or other similar plan approved by the Company’s board of directors where stock is being issued or offered to or for the benefit of any employees, consultants, officers or directors of the Company.

 

(b)        Prior to making any Qualified Offering of Covered Securities, the Company shall give each Purchaser written notice of its intention to make such an offering, describing, to the extent then known, the anticipated amount of securities, and other material terms then known to the Company upon which the Company proposes to offer the same (such notice, a “Qualified Offering Notice”).  The Company shall deliver such notice only to the individuals identified on such Purchaser’s signature page hereto, and shall not communicate the information to anyone else acting on behalf of the Purchaser without the consent of one of the designated individuals.  Each Purchaser shall then have three (3) business days after receipt of the Qualified Offering Notice (the “Offer Period”) to notify the Company in writing that it intends to exercise such preemptive right and as to the amount of Covered Securities the Purchaser desires to purchase, up to the maximum amount calculated pursuant to Section 3.13(a) (the “Designated Securities”).  Such notice constitutes a non-binding indication of interest of such Purchaser to purchase the amount of Designated Securities specified by such Purchaser (or a proportionately lesser or greater amount (as appropriate), if the amount of Covered Securities to be offered in such Qualified Offering is subsequently changed) at the price (or range of prices) established in the Qualified Offering and other terms set forth in the Company’s notice to it.  The failure to respond during the Offer Period constitutes a waiver of such Purchaser’s preemptive right in respect of such offering.  The sale of the Covered Securities in the Qualified Offering, including any Designated Securities, shall be closed not later than 30 days after the end of the Offer Period.  The Covered Securities to be sold to other investors in such Qualified Offering shall be sold at a price not less than, and upon terms no more favorable to such other investors than, those specified in the Qualified Offering Notice.  If the Company does not consummate the sale of Covered Securities to other investors within such 30-day period, the right provided hereunder shall be revived and such securities shall not be offered unless first reoffered to the Purchasers in accordance herewith.

 

ARTICLE IV.

MISCELLANEOUS

 

4.1   Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations

 

  

19

  

 

between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before November 23, 2010; provided, however, that no such termination will affect the right of any party to sue for any breach by any other party (or parties).

 

4.2   Fees and Expenses.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

4.3   Entire Agreement.  The Transaction Documents, together with any exhibits and schedules thereto, the Base Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

4.4   Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

4.5   Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least a majority in interest of the Shares based on the initial Subscription Amounts hereunder or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver 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 subsequent default or a waiver of any other provision, 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.

 

4.6   Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

4.7   Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this

 

  

20

  

 

Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

4.8   No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

4.9  Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.

 

4.10 Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

4.11 Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

4.12 Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

4.13 Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

 

  

21

  

 

4.14 Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company or its transfer agent shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company or its transfer agent of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

4.15 Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

4.16 Payment Set Aside.  To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

4.17Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary

 

  

22

  

 

for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents.  The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.  It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

4.18 Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

4.19 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

4.20 [Intentionally omitted].

 

ARTICLE V.

DEFINITIONS

 

5.1    Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 5.1:

 

“Base Prospectus” means the final prospectus filed in the Registration Statement.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 1.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the third Trading Day following the date hereof.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

  

23

  

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Per Share Purchase Price” equals $0.42, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

“Prospectus” means the Base Prospectus and any Prospectus Supplement.

 

“Prospectus Supplement” means any supplement to the Base Prospectus complying with Rules 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser prior to the execution hereof.

 

“Registration Statement” means the effective registration statement with Commission File No. 333-156571 which registers the sale of the Shares to the Purchasers.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“Securities” means the Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Transaction Documents” means this Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

  

24

  

 

[SIGNATURE PAGES FOLLOW]

 

  

25

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	
PARKERVISION, INC.

	  
	  	  
	
By:

	                                                       	  
	  	
Name:

	  
	  	
Title:

	  
	  	  
	
Address for Notice:

	
With a copy to (which shall not constitute notice):

	
 

7915 Baymeadows Way, Suite 400

Jacksonville, Florida 32256

Fax: (904) 731-0958

	
 

David Alan Miller, Esq.

Graubard Miller

405 Lexington Avenue, 19th Floor

New York, New York 10174

Fax:  (212) 818-8881

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 

  

  

  

 

PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT WITH PARKERVISION, INC.

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser:                                                                                                                                                                                    

 

Signature of Authorized Signatory of Purchaser:                                                                                                                                      

 

Name of Authorized Signatory:                                                                                                                                                                     

 

Title of Authorized Signatory:                                                                                                                                                                        

 

Email Address of Authorized Signatory:                                                                                                                                                         

 

Facsimile Number of Authorized Signatory:                                                                                                                                                   

 

Address for Notice to Purchaser:                                                                                                                                                                  

 

Address for Delivery of Securities to Purchaser (if not same as address for notice):

 

                                                                                                                                                                                                                    

 

Subscription Amount: $                                 

 

Shares:                                                        

 

DWAC Instructions:                                    

 

                                                                   

 

                                                                   

 

                                                                   

 

EIN/Taxpayer ID/SSN Numbers:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

  

  

  

 

PURCHASER SUPPLEMENT TO SIGNATURE PAGE

[PROVIDE THIS UNDER SEPARATE COVER]

 

EIN/TIN/SSN:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]