Document:

exv10w1

 

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

Online Resources Corporation

7600 Colshire Drive

McLean, VA 22102

Ladies & Gentlemen:

     The undersigned,
___________________________________________________________________(the “Investor”),
hereby confirms its agreement with you as follows:

1.     This Stock Purchase Agreement (this “Agreement”) is made effective as of
June 6, 2003 between Online Resources Corporation, a Delaware corporation (the
“Company”), and the Investor.

2.     The Company is offering an aggregate of 1,336,000 shares (the “Shares”) of
common stock of the Company, $0.0001 par value per share (the “Common Stock”),
subject to adjustment by the Company’s Board of Directors, to certain investors
in a private placement (the “Offering”).

3.     The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor ______________ Shares, for a purchase price of $3.30 per Share, or an aggregate purchase price
of $_____________, pursuant to the Terms and Conditions for Purchase of Shares
attached hereto as Annex I and incorporated herein by reference as if fully set
forth herein. Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor’s name and address as set forth below.

4.     The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years
with the Company or its affiliates, (b) neither it, nor any group of which it
is a member or to which it is related, beneficially owns (including the right
to acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any NASD member. Exceptions:

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

 

 

     Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.

 

	 	 	 	 	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	“INVESTOR”	 	 
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Print Name:	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Title:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Address:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	email:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	
INFORMATION FOR DISTRIBUTION OF SHARES	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Contact name:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Telephone:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name in which shares should be registered	 	 
	 	 	 	 	 	 	 
	 	 	 	 	(if different):	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Tax ID No.:	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Address where shares should be sent (if different)	 	 
	 	 	 	 	 	 	 
	 	 	 	 	

	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
	 	 

 
	 	 	 	 	 
	AGREED AND ACCEPTED:	 	 
	 	 	 	 	 
	ONLINE RESOURCES CORPORATION	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	

     Catherine
A. Graham
     Executive
Vice President
     and
Chief Financial Officer
	 	 

 

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]

 

 

ANNEX I

TERMS AND CONDITIONS FOR PURCHASE OF SHARES

     1.     Authorization and Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company is offering an aggregate of
1,336,000 shares of Common Stock (the “Shares”). The Company reserves the
right to increase or decrease the number of Shares it is offering.

     2.     Agreement to Sell and Purchase the Shares; Subscription Date.

          2.1      At the Closing (as defined in Section 3), the Company will sell to the
Investor, and the Investor will purchase from the Company, upon the terms and
conditions hereinafter set forth, the number of Shares set forth in paragraph 3
on the first page of this Agreement at the purchase price set forth in such
paragraph.

          2.2      The Company is entering into this same form of Stock Purchase
Agreement with certain other investors (the “Other Investors”) effective as of
the date hereof (the “Subscription Date”) and expects to complete sales of
Shares to them (the Investor and the Other Investors are hereinafter sometimes
referred to collectively referred to as the “Investors,” and this Agreement and
the Stock Purchase Agreements executed and delivered by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements”).

     3.     Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the “Closing”) shall occur on the third business day after
the Subscription Date or upon such earlier date as the Company and the
Investors shall agree (the “Closing Date”), at the offices of the Company’s
counsel. At the Closing, the Company shall deliver to the Investor one or more
stock certificates representing the number of Shares set forth in paragraph 3
on the first page of this Agreement, each such certificate to be registered in
the name of the Investor or, if so indicated on the signature page hereto, in
the name of a nominee designated by the Investor. The Company’s obligation to
issue the Shares to the Investor shall be subject to the following conditions,
any one or more of which may be waived by the Company: (a) receipt by the
Company of a wire transfer of funds in the full amount of the purchase price
for the Shares being purchased hereunder as set forth on the first page of this
Agreement; and (b) the accuracy of the representations and warranties made by
the Investor and the fulfillment of those undertakings of the Investor to be
fulfilled prior to the Closing. The Investor’s obligation to purchase the
Shares shall be subject to the following conditions, any one or more of which
may be waived by the Investor: (a) receipt by the Investor of one or more stock
certificates representing the number of Shares set forth in paragraph 3 on the
first page of this Agreement; (b) the accuracy of the representations and
warranties made by the Company as of the Closing Date and the fulfillment of
those undertakings of the Company to be fulfilled prior to the Closing; (c) on
the Closing Date, no legal action, suit or proceeding shall be pending or
threatened which seeks to restrain or prohibit the transactions contemplated by
the Agreement; (d) the Company shall have delivered to the Investor its

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certificate, dated the Closing Date, duly executed by its Chief Executive
Officer to the effect set forth in clause (b) of this sentence; (e) the Company
shall have delivered to the Investor its certificate, dated the Closing Date,
duly executed by its Secretary, certifying as to (i) the Company’s Amended and
Restated Certificate of
Incorporation, as amended, and (ii) the Company’s Amended and Restated
By-Laws, as amended, each as in effect as of the Closing Date, and (iii) all
resolutions, votes or minutes of the Company’s Board of Directors in connection
with the Offering; (f) the Company shall have delivered to the Investors copies
of certificates evidencing the incorporation and good standing of the Company
in the Company’s state or jurisdiction of incorporation or organization as of a
date within fifteen (15) days of the Closing Date; and (g) receipt by
Investors of such other documents or certificates relating to the Offering as
the Investors may reasonably request.

     4.     Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as
follows:

          4.1      No Subsidiaries; Organization. The Company has no subsidiaries (as
defined by Rule 405 under the Securities Act of 1933, as amended (the
“Securities Act”)). The Company is duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation or
organization. The Company has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each
jurisdiction in which it owns or leases property or transacts business and
where the failure to be so qualified would have a material adverse effect upon
the financial condition or business, operations, assets or prospects of the
Company, and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.

          4.2      Due Authorization. The Company has all requisite power and authority
to execute, deliver and perform its obligations under the Agreements, and the
Agreements have been duly authorized and validly executed and delivered by the
Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as
rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

          4.3      Non-Contravention. The execution and delivery of the Agreements, the
issuance and sale of the Shares to be sold by the Company under the Agreements,
the fulfillment of the terms of the Agreements and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with or without the giving of notice or the passage
of time or both) under, (i) any material bond, debenture, note or other
evidence of indebtedness, or under any material lease, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument
to which the Company is a party or by which it or its properties are bound,
(ii) the charter, by-laws or other organizational documents of the 

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Company, or
(iii) any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the Company
or its properties, or (B) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the
material properties or assets of the Company or an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject. No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, self-regulatory
organization, stock exchange or market, or other governmental body in the
United States is required for the execution and delivery of the Agreements and
the valid issuance and sale of the Shares to be sold pursuant to the
Agreements, other than such as have been made or obtained, and except for any
securities filings required to be made under federal or state securities laws.

          4.4      Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), during the 12 months preceding
the date of this Agreement. The following documents complied in all material
respects with the SEC’s requirements as of their respective filing dates, and
the information contained therein as of the date thereof did not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein in light of
the circumstances under where they were made not misleading, except to the
extent that information contained in any such document has been revised or
superseded by a later filed SEC Document (as defined below):

	 	 	 	 	 
	 	 	
(i)
	 	the Company’s Proxy Statement for the 2003 Annual
Meeting of Stockholders (the “Proxy Statement”);
	 	 	 	 	 
	 	 	
(ii)
	 	the Company’s Annual Report on Form 10-K for the
year ended December 31, 2002 including the exhibits therewith
those incorporated therein by reference (the “Form 10-K”);
	 	 	 	 	 
	 	 	
(iii)
	 	the Company’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003 including the exhibits
therewith those incorporated therein by reference (the “Form
10-Q”); and
	 	 	 	 	 
	 	 	
(iv)
	 	all other documents, including the exhibits
therewith those incorporated therein by reference, filed by the
Company with the SEC since December 31, 2002 pursuant to the
reporting requirements of the Exchange Act (together with the
Proxy Statement, the Form 10-K and the Form 10-Q, the “SEC
Documents”).

          The SEC Documents as of the date of their respective filings with the SEC
did not contain an untrue statement of a material fact
or omit to state a
material fact 

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required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

          4.5      Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of 38,000,00 shares of capital stock, of which
35,000,000 shares are designated Common Stock and 3,000,000 shares are
designated Preferred Stock, of which 1,000,000 shares of Preferred Stock are
designated as Series A Preferred Stock and 297,500 shares of Preferred Stock
are designated as Series B Junior Participating Preferred Stock.
As of May 31, 2003 there were (i) approximately 13,810,233 shares of
Common Stock issued and outstanding; (ii) approximately 13,810,223 associated
rights issued and outstanding which were issued pursuant to the Rights
Agreement, dated as of January 11, 2002, between the Company and American Stock
Transfer and Trust Company (the “Rights Agreement”); (iii) 75,525 shares of
Common Stock held in treasury; and (iv) no shares of Preferred Stock issued and
outstanding. As of May 31, 2003, an aggregate of 6,525,964 shares of Common
Stock were reserved for issuance under the Company’s original Stock Option Plan
and its 1999 Stock Option Plan, including 5,596,493 shares issuable upon
exercise of outstanding stock options issued by the Company to employees,
consultants and directors of the Company, and 383,742 shares of Common Stock
reserved for issuance upon exercise of warrants issued by the Company. As of
May 31, 2003, approximately 292,143 shares of Common Stock were reserved for
issuance under the Company’s Employee Stock Purchase Plan. No other shares or
options, warrants or other rights to acquire shares of capital stock of the
Company or securities convertible into capital stock of the Company are
outstanding. All outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable, free from any liens or any other
encumbrances created by the Company with respect to the issuance and delivery
thereof and not subject to preemptive rights. Other than as disclosed in the
SEC Documents, except as set forth above, there are no outstanding rights,
options, warrants, preemptive rights, rights of first refusal agreements,
commitments or similar rights for the purchase or acquisition from the Company
of any securities of the Company. The Shares to be sold pursuant to the
Agreements have been duly authorized, and when issued and paid for in
accordance with the terms of the Agreements will be duly and validly issued,
fully paid and nonassessable, free and clear of all pledges, liens,
encumbrances and other restrictions (other than those arising under federal or
state securities laws as a result of the private placement of the Shares to the
Investors). No preemptive right, co-sale right, right of first refusal or
other similar right exists with respect to the Shares or the issuance and sale
thereof. 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
Shares. Except as set forth in the SEC Documents, no holder of any of the
securities of the Company has any rights (“demand,” “piggyback” or otherwise)
to have such securities registered by reason of the intention to file, filing
or effectiveness of a Registration Statement (as defined in Section 7.1
hereof).

          4.6      Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any of its officers or directors in their capacity as such officer
or director is or may be a party or of which the business or property of the
Company is subject that is not disclosed in the SEC Documents. There is no
action, suit, proceeding, 

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inquiry or investigation before or by any court,
public board or body (including, without limitation, the SEC) pending or, to
the knowledge of the Company, threatened against or affecting the Company
wherein an unfavorable decision, ruling or finding could adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under the Agreements.

          4.7      No Violations. The Company is not in violation of its charter,
bylaws, or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the business, operations, assets or
prospects or financial condition of the Company, or in default (and there
exists no condition which, with or without the passage of time or giving of
notice or both, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company is a party or by which the Company is bound or
by which the properties of the Company are bound, which would be reasonably
likely to have a material adverse effect upon the business, operations, assets
or prospects or financial condition of the Company.

          4.8      Governmental Permits, Etc. The Company possesses all necessary
franchises, licenses, certificates and other authorizations from any foreign,
federal, state or local government or governmental agency, department, or body
that are currently necessary for the operation of its business as currently
conducted, except where the failure to currently possess could not reasonably
be expected to have a material adverse effect upon the business, operations,
assets or prospects or financial condition of the Company.

          4.9      Financial Statements. The consolidated financial statements of the
Company and the related notes thereto included in the SEC Documents present
fairly, in accordance with the rules and regulations of the SEC, the financial
position of the Company as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified. Except as set
forth in such financial statements, such financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified.

          4.10      No Material Adverse Change. Except as publicly disclosed in the SEC
Documents, press releases or in other “public disclosures” as such term is
defined in Section 101(e) of Regulation FD of the Exchange Act, since March 31,
2003, there has not been (i) any material adverse change in the financial
condition, earnings or prospects of the Company nor has any material adverse
event occurred to the Company (it being understood that the Company has
incurred operating losses), (ii) any obligation, direct or contingent, that is
material to the Company, incurred by the Company, except obligations incurred
in the ordinary course of its business, (iii) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company, or (iv)
any loss or damage (whether or not insured) to the physical property of the
Company which has been sustained which has a material 

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adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company. Except as publicly disclosed in the SEC Documents,
press releases or in other “public disclosures” as such term is defined in
Section 101(e) of Regulation FD of the Exchange Act, since March 31, 2003, the
Company has not (i) sold, assigned, transferred, abandoned, mortgaged, pledged
or subjected to lien any of its material properties, tangible or intangible, or
rights under any material contract, permit, license, franchise or other
agreement or (ii) waived or cancelled any indebtedness or other obligations
owed to the Company.

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          4.11
NASDAQ Listing.

               (a) The Company’s Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and is currently listed on The Nasdaq Stock Market, Inc. (the
“Nasdaq Stock Market”), and the Company has taken no action designed to, or
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or de-listing the Common Stock from the Nasdaq Stock
Market, nor to the Company’s knowledge is the National Association of
Securities Dealers, Inc. (“NASD”) currently contemplating terminating such
listing.

               (b) The Company has appealed a delisting notice from its continuing
inclusion on the National Market System of the Nasdaq Stock Market and
anticipates that, as a result of its appeal, if it sells all the Shares it will
maintain its listing on the National Market System.

          4.12 Listing of the Shares.

               (a) In furtherance thereof, the Company shall use its commercially
reasonable efforts to take such actions as may be necessary and as soon as
practicable and in no event later than 20 days after the Closing Date to file
with the Nasdaq Stock Market an application or other document required by the
Nasdaq Stock Market and pay all applicable fees for the listing of the Shares
with the Nasdaq Stock Market and shall provide evidence of such filing to the
Investors.

               (b) Subject to the Company maintaining its listing on the Nasdaq Stock
Market, (i) the Company shall comply with all requirements of the National
Association of Securities Dealers, Inc. with respect to the issuance of the
Shares and the listing thereof on the Nasdaq Stock Market, and (ii) the Company
knows of no reason why the Shares will not be eligible for listing on the
Nasdaq Stock Market.

          4.13 No Manipulation of Stock. The Company has not taken and will not, in
violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.

          4.14 S-3 Status. The Company meets the requirements for the use of Form
S-3 for the registration of the resale of the Shares by the Investors and will
use its best efforts to maintain S-3 status with the SEC during the
Registration Period (as defined in Section 7.1(c)).

          4.15 Investment Company. The Company is not an “investment company”
within the meaning of such term under the Investment Company Act of 1940 and
the rules and regulations of the SEC thereunder.

          4.16 No Registration. Assuming the accuracy of the representations and
warranties made by, and compliance with the covenants of, the Investors in
Section 5
hereof, no registration of the Shares under the Securities Act is required
in connection

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with the offer and sale of the Shares by the Company to the
Investors as contemplated by the Agreements.

          4.17 Form D. The Company agrees to file one or more Forms D with respect
to the Shares on a timely basis as required under Regulation D under the
Securities Act to claim the exemption provided by Rule 506 of Regulation D and
to provide a copy thereof to the Investors and their counsel promptly after
such filing.

          4.18 Certain Future Financings and Related Actions.

               (a) The Company will not sell, offer to sell, solicit offers to buy or
otherwise negotiate in respect of any “security” (as defined in the Securities
Act) that is or could be integrated with the sale of the Shares in a manner
that would require the registration of the Shares under the Securities Act.

               (b) The Company shall not offer, sell, contract to sell or issue (or
engage any person to assist the Company in taking any such action) any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the market
price of the Common Stock during the period from the date of this Agreement to
the effective date of the Registration Statement; provided, however, that
nothing in this Section 4.18(b) shall prohibit the Company from issuing
securities (v) to employees, directors, officers, advisors or consultants of
the Company; (w) upon exercise of conversion, exchange, purchase or similar
rights issued, granted or given by the Company and outstanding as of the date
of this Agreement; (x) pursuant to a public offering underwritten on a firm
commitment basis registered under the Securities Act; (y) for the purpose of
funding the acquisition of securities or assets of any entity in a single
transaction or a series of related transactions; or (z) pursuant to a strategic
partnership or alliance agreement, loan agreement, equipment lease or similar
commercial agreement (including licensing and similar arrangements).

          4.19 Use of Proceeds. The Company will use the net proceeds from the sale
of the Shares for working capital and general corporate purposes, including,
without limitation, expenditures associated with the repurchase, redemption or
repayment of its indebtedness.

     5.     Representations, Warranties and Covenants of the Investor.

          5.1 The Investor represents and warrants to, and covenants with, the
Company that: (i) the Investor is an “accredited investor” as defined in
Regulation D under the Securities Act and the Investor has the knowledge,
sophistication and experience necessary to make, and is qualified to make
decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including
investments in securities issued by the Company and investments in comparable
companies, and has requested, received, reviewed and considered all information
it deemed relevant in making an informed decision to purchase the Shares; (ii)
the Investor is acquiring the number of Shares set forth in paragraph 3 of the
first page of this Agreement for its own account (or for the accounts of any of
its affiliates to whom the Shares may be
transferred) for investment only and

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with no present intention of
distributing any of such Shares in violation of the Securities Act nor does the
Investor have any arrangement or understanding with any other persons regarding
the distribution of such Shares; (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares except in compliance with the Securities Act, applicable state
securities laws and the respective rules and regulations promulgated
thereunder; (iv) the Investor has filled in all requested information on the
first page and the signature page of this Agreement for use in preparation of
the Registration Statement and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the Closing Date; (v) the
Investor will notify the Company promptly of any change in any of such
information until such time as the Investor has sold all of its Shares or until
the Company is no longer required to keep the Registration Statement effective;
and (vi) the Investor has, in connection with its decision to purchase the
number of Shares set forth in paragraph 3 of the first page of this Agreement,
carefully read and relied only upon the SEC Documents, other publicly available
information and the representations and warranties of the Company contained
herein. The Investor understands that its acquisition of the Shares has not
been registered under the Securities Act or registered or qualified under any
state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of the
Investor’s investment intent as expressed herein.

          5.2 The Investor acknowledges that the Company has represented that no
action has been or will be taken in any jurisdiction outside the United States
by the Company that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States where action for that purpose is
required. If the Investor is located or domiciled outside the United States it
agrees to comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has in
its possession or distributes any offering material, in all cases at its own
expense.

          5.3 The Investor hereby covenants with the Company not to make any sale of
the Shares without complying with the provisions of this Agreement, including
Section 7.2 hereof and, without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied, if applicable, and the
Investor acknowledges that the certificates evidencing the Shares will be
imprinted with (i) a legend that prohibits their transfer except in accordance
therewith, and (ii) a legend required pursuant to the terms of the Rights
Agreement. The Investor acknowledges that there may occasionally be times when
the Company, based on the advice of its counsel, determines that, subject to
the limitations of Section 7.2, it must suspend the use of the Prospectus
forming a part of the Registration Statement until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the SEC or until the Company has amended or supplemented such Prospectus.

          5.4 The Investor further represents and warrants to, and covenants with,
the Company that (i) the Investor has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby

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and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement and (ii) this Agreement constitutes a valid
and binding obligation of the Investor
enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification and contribution agreements of the Investors herein may be
legally unenforceable.

          5.5 The Investor will not, prior to the effectiveness of the Registration
Statement, sell, offer to sell, solicit offers to buy, dispose of, loan, pledge
or grant any right with respect to (collectively, a “Disposition”), the Common
Stock of the Company in violation of the Securities Act, nor will Investor
engage in any hedging or other transaction which is designed to or could
reasonably be expected to lead to or result in a Disposition of Common Stock of
the Company by the Investor or any other person or entity in violation of the
Securities Act. Such prohibited hedging or other transactions would include
without limitation effecting any short sale or having in effect any short
position (whether or not such sale or position is against the box if such
position was entered into after the effective date of this Agreement) or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to the Common Stock of the Company or with respect to
any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from the Common Stock
of the Company. Nothing in this Section 5.5 is intended or shall be construed
as placing any limitations or restrictions on the Investor’s right to make any
Dispositions of any shares of Common Stock the Investor holds in the Company in
addition to and apart from the Shares; provided any such Dispositions do not
violate the Securities Act.

          5.6 The Investor understands that nothing in this Agreement or any other
materials presented to the Investor in connection with the purchase and sale of
the Shares constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of Shares.

     6.     Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares being purchased and the payment therefor.

     7.     Registration of the Shares; Compliance with the Securities Act.

          7.1 Registration Procedures and Expenses. The Company shall:

               (a) subject to receipt of necessary information from the Investors, use
commercially reasonable efforts to prepare and file with the SEC, as soon as
reasonably practicable but in any event within 30 days after the Closing Date,
a registration statement (the “Registration Statement”) on Form S-3 to enable
the resale

I - 10

 

of the Registrable Shares (as defined below) by the Investors on a
delayed or continuous basis under Rule 415 of the Securities Act. “Registrable
Shares” means (a) all shares of Common Stock purchased in the Offering and (b)
Penalty Shares (as defined below), if any;

               (b) use commercially reasonable efforts, subject to receipt of necessary
information from the Investors, to cause the Registration Statement to become
effective as soon as reasonably practicable after the Closing Date (with
respect to this Section 7.1(b), the term “commercially reasonable efforts”
shall mean that the Company shall submit to the SEC, within five business days
after the Company learns that no review of the Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on the
Registration Statement, as the case may be, a request for acceleration of
effectiveness of the Registration Statement to a time and date not later than
48 hours after the submission of such request);

               (c) use commercially reasonable efforts to prepare and file with the SEC
such amendments and supplements to the Registration Statement and the
Prospectus used in connection therewith and take all such other actions as may
be necessary to keep the Registration Statement current and effective for a
period (the “Registration Period”) not exceeding, with respect to each
Investor’s Registrable Shares, the earlier of (i) the second anniversary of the
Closing Date, (ii) the date on which the Investor becomes eligible to sell all
Shares then held by the Investor under Rule 144 under the Securities Act, and
(iii) such time as all Registrable Shares held by such Investor have been sold
(A) pursuant to a registration statement, (B) to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction,
and/or (C) in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof so that
all transfer restrictions and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale;

               (d) promptly furnish to the Investor with respect to the Shares registered
under the Registration Statement such number of copies of the Registration
Statement, Prospectuses and Preliminary Prospectuses in conformity with the
requirements of the Securities Act and such other documents as the Investor may
reasonably request, in order to facilitate the public sale or other disposition
of all or any of the Shares by the Investor;

               (e) promptly take such action as may be necessary to qualify, or obtain,
an exemption for the Registrable Shares under such of the state securities laws
of United States jurisdictions as shall be necessary to qualify, or obtain an
exemption for, the sale of the Registrable Shares in states specified in
writing by the Investor; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;

               (f) bear all expenses in connection with the procedures in paragraph (a)
through (e) of this Section 7.1 and the registration of the Shares pursuant to
the Registration Statement, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and
filing

I - 11

 

fees and expenses (including filings made with the NASD); (ii) fees and
expenses of compliance with federal securities and state “blue sky” or
securities laws; (iii) expenses of printing (including printing certificates
for the Registrable Securities and Prospectuses), messenger and delivery
services and telephone; (iv) all application and filing fees in connection with
listing the
Registrable Securities on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (v) all fees and
disbursements of counsel of the Company and independent certified public
accountants of the Company (including the expenses of any special audit and
“cold comfort” letters required by or incident to such performance); provided,
however, that each Investor shall be responsible for paying the underwriting
commissions or brokerage fees, and taxes of any kind (including, without
limitation, transfer taxes) applicable to any disposition, sale or transfer of
such Investor’s Registrable Securities. The Company shall, in any event, bear
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit, rating agency fees and the fees and expenses of
any person, including special experts, retained by the Company;

               (g) advise the Investors, within two business days by e-mail, fax or other
type of communication, and, if requested by such person, confirm such advice in
writing: (i) after it shall receive notice or obtain knowledge of the issuance
of any stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceeding for
that purpose, or any other order issued by any state securities commission or
other regulatory authority suspending the qualification or exemption from
qualification of such Registrable Securities under state securities or “blue
sky” laws; and it will promptly use its best efforts to prevent the issuance of
any stop order or other order or to obtain its withdrawal at the earliest
possible moment if such stop order or other order should be issued; and (ii)
when the Prospectus or any Prospectus Supplement or post-effective amendment
has been filed, and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become effective;

               (h) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC;

               (i) use commercially reasonable efforts to cause all Registrable Shares to
be listed on each securities exchange or market, if any, on which equity
securities issued by the Company are then listed;

               (j) use commercially reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Shares contemplated hereby and to
enable the Investors to sell the Shares under Rule 144;

               (k) provide the Investor with copies of any opinions of counsel or comfort
letters it obtains in connection with the registration of the Shares;

               (i) the Company further agrees that, in the event that the Registration
Statement has not been declared effective by the SEC within the number of days
following the Closing Date specified in the table set forth below, unless the
failure to become effective is due to the fault of the Investor (such event
referred to

I - 12

 

herein as a “Registration Default”), for all or part of each period
specified below (each a “Penalty Period”) during which the Registration Default
remains uncured, the Company shall issue to the Investor for each Penalty
Period the number of shares of Common Stock that is the product of (i) the
number of Shares originally acquired by the Investor pursuant to this
Offering, times (ii) the percentage specified below for each Penalty
Period; provided, however, that if the issuance of Penalty Shares by the
Company would result in the Company being required under Nasdaq rules or other
applicable rules to obtain the approval of the Company’s stockholders, then the
Company shall pay cash equal to the value of the Penalty Shares then issuable
for the relevant Penalty Period rather than issue such Penalty Shares to the
extent needed to avoid such stockholder approval. In the event that the
Company shall pay cash equal to the value of Penalty Shares that may not be
issued without the approval of the Company’s stockholders, the value of such
Penalty Shares shall be equal to the average of the closing price of the Common
Stock for the three trading days ending on the last trading day of the
applicable Penalty Period.

	 	 	 	 	 	 	 	 	 
	Days Following	 	Percentage of Shares	 	Percentage of Shares
	Closing Date	 	(No SEC Review)	 	(SEC Review)
	
	 	
	 	

	60 days or less
	 	 	0.0	%	 	 	0.0	%
	61-120 days
	 	 	10.0	%	 	 	0.0	%
	121-150 days
	 	 	10.0	%	 	 	10.0	%
	151-180 days
	 	 	10.0	%	 	 	10.0	%
	More than 180 days
	 	 	0.0	%	 	 	10.0	%

If a Registration Default occurs, the Company shall deliver Penalty Shares or a
cash payment, as applicable, to the Investor by the fifth business day
following the last day of each such Penalty Period, and any such Penalty Shares
so delivered shall be deemed to be validly issued, fully paid and
non-assessable shares of Common Stock. Notwithstanding anything to the
contrary in Section 7.3 or any other provision of this Agreement, the issuance
of the Penalty Shares or cash as provided in this Section 7.1(k) shall be the
Investor’s sole and exclusive remedy in the event of any Registration Default;
provided, however, that if the foregoing remedy is deemed unenforceable by a
court of competent jurisdiction then the Investor shall have all other remedies
available at law or in equity. If a Registration Default has been caused by the
Investor, the Company shall have no obligation to issue any Penalty Shares to
the Investor, and the Company shall have the right, if necessary and in order
to avoid any delays in the registration of the Shares issued to other
Investors, to exclude the Shares the Investor holds from the Registration
Statement; and

               (j) upon request by the Investor, make the Investor’s Shares DTC eligible
as soon as reasonably practical but in any event within ten (10) days after the
Registration Statement is effective (or, in the event, the Registration
Statement does not become effective, as soon as the Investor becomes eligible
to sell all the Shares then held by the Investor under Rule 144(k) under the
Securities Act).

I - 13

 

          7.2 Transfer of Shares; Suspension.

               (a) The Investor agrees that it will not effect any Disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act except as contemplated in the Registration
Statement referred to in Section 7.1 and as described below or otherwise in
accordance with the Securities Act, and
that it will promptly notify the Company of any changes in the information
set forth in the Registration Statement regarding the Investor or its plan of
distribution.

               (b) Except in the event that paragraph (c) below applies, the Company
shall, at all times during the Registration Period, promptly (i) prepare and
file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a
supplement or amendment to any document incorporated therein by reference or
file any other required document so that such Registration Statement will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and so that, as thereafter delivered to purchasers of the Shares
being sold thereunder, such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; (ii) provide the Investor copies of
any documents filed pursuant to Section 7.2(b)(i); and (iii) inform each
Investor that the Company has complied with its obligations in Section
7.2(b)(i) (or that, if the Company has filed a post-effective amendment to the
Registration Statement which has not yet been declared effective, the Company
will notify the Investor to that effect, will use its commercially reasonable
efforts to secure the effectiveness of such post-effective amendment as
promptly as possible and will promptly notify the Investor pursuant to Section
7.2(b)(i) hereof when the amendment has become effective).

               (c) In the event (i) of any request by the SEC or any other federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to a Registration
Statement or related Prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; then the

I - 14

 

Company
shall deliver a notice in writing to the Investor (the “Suspension Notice”) to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Registrable Shares pursuant to the
Registration Statement (a “Suspension”) until the Investor’s receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may
be used, and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in any such Prospectus.
In the event of any Suspension, the
Company will use its commercially reasonable efforts, consistent with the
best interests of the Company and its stockholders, to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably practicable after
the delivery of a Suspension Notice to the Investor. In addition to and
without limiting any other remedies (including, without limitation, at law or
at equity) available to the Investor, the Investor shall be entitled to
specific performance in the event that the Company fails to comply with the
provisions of this Section 7.2(c).

               (d) Provided that a Suspension is not then in effect, the Investor may
sell Registrable Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has agreed to provide, at its
own expense, an adequate number of current Prospectuses (including documents
incorporated by reference therein) to the Investor and to supply copies to any
other parties requiring such Prospectuses.

               (e) In the event of a sale of Registrable Shares by the Investor under the
Registration Statement (and to the extent that such Registrable Shares have not
been made DTC eligible) , the Investor must also deliver to the Company’s
transfer agent, with a copy to the Company, a Certificate of Subsequent Sale
substantially in the form attached as Exhibit A hereto, so that the Registrable
Shares may be properly transferred.

          7.3
Indemnification. For the purpose of this Section 7.3:

          (i) the term “Selling Stockholder” shall include the Investor, its
permitted successors and assigns and any person controlling such Investor;

          (ii) the term “Registration Statement” shall include any final Prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement referred to in Section 7.1; and

          (iii) the term “untrue statement” shall include (1) any untrue statement
or alleged untrue statement, or any omission or alleged omission to state in
the Registration Statement a material fact required to be stated therein or
necessary to make the statements therein not misleading and (2) any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Prospectus a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

I - 15

 

               (a) The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages, liabilities or
expenses to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) arise
out of, or are based upon (i) any untrue statement of a material fact contained
in the Registration Statement or Prospectus, (ii) any failure by the Company to
fulfill any undertaking included in the Registration Statement, (iii) any
breach of any representation, warranty or covenant made by the Company in this
Agreement and (iv) any violation or alleged violation of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities, and the Company will promptly
reimburse such Selling Stockholder for any reasonable legal or other expenses
incurred in investigating, defending or preparing to defend, settling,
compromising or paying any such action, proceeding or claim,
provided, however,
that the Company shall not be liable in any such case to the extent that such
loss, claim, damage, liability or expense arises solely out of, or is based
solely upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder specifically for use in preparation of the
Registration Statement or the failure of such Selling Stockholder to comply
with its covenants and agreements contained in Sections 5.3 or 7.2 hereof
respecting sale of the Shares or any statement or omission in any Prospectus
that is corrected in any subsequent Prospectus that was delivered to the
Investor at least three business days prior to the pertinent sale or sales by
the Investor. Notwithstanding the foregoing, the Company shall not be liable
to any Selling Stockholder for any consequential damages, including lost
profits, solely with respect to losses, claims, damages, liabilities or
expenses to which such Selling Stockholder may become subject arising out of,
or based upon, any breach of any representation, warranty or covenant made by
the Company in this Agreement.

               (b) The Investor agrees (severally and not jointly with any other
Investor) to indemnify and hold harmless the Company (and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages,
liabilities or expenses to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise solely out of, or are based solely upon,
(i) any failure to comply with the covenants and agreements contained in
Section 5.3 or 7.2 hereof respecting sale of the Shares, (ii) any untrue
statement of a material fact contained in the Registration Statement if such
untrue statement was made in reliance upon and in conformity with written
information furnished by the Investor specifically for use in preparation of
the Registration Statement (provided, however, that no Investor shall be liable
in any such case for any untrue statement in any Registration Statement or
Prospectus if such statement has been corrected in writing by such Investor and
delivered to the Company at least three business days prior to the pertinent
sale or sales by the Investor) or (iii) any violation or alleged violation by
the Investor of the Securities Act, the Exchange Act, any other law, including,
without limitation, any state securities

I - 16

 

law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities, and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend, settling,
compromising or paying any such action, proceeding or claim. Notwithstanding
the foregoing, (x) the Investor’s aggregate liability pursuant to this
subsection (b) and subsection (d) shall be limited to the net amount received
by the Investor from the sale of the Shares and (y) the Investor shall not be
liable to the Company for any consequential damages, including lost profits,
solely with respect to losses, claims, damages, liabilities or expenses to
which the Company (or any officer, director or controlling person as set forth
above) may become subject (under the Securities Act or otherwise), arising out
of, or based upon, any failure to comply with the covenants and agreements
contained in Section 5.3 or 7.2 hereof respecting sale of the Shares.

               (c) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.3, such
indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this Section
7.3. Subject to the provisions hereinafter stated, in case any such action
shall be brought against an indemnified person, the indemnifying person shall
be entitled to participate therein, and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person
of its election to assume the defense thereof, such indemnifying person shall
not be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided further, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate, in the opinion of counsel to the
indemnified person, for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof, the
indemnified person shall be entitled to retain its own counsel at the expense
of such indemnifying person; provided, however, that no indemnifying person
shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified parties.
In no event shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person shall have
approved the terms of such settlement; provided that such consent shall not be
unreasonably withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release of
such indemnified person from all liability on claims that are the subject
matter of such proceeding.

I - 17

 

               (d) If the indemnification provided for in this Section 7.3 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor
on the other in connection with the statements or omissions or other matters
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, in the case of an untrue statement, whether the untrue statement
relates to information supplied by the Company on the one hand or an Investor
on the other and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement. The Company
and the Investors agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Investors were treated as one entity for such purpose)
or by any other method of allocation which does not take into account the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Investor shall be required to contribute any amount in
excess of the net amount received by the Investor from the sale of the Shares.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Investors’
obligations in this subsection to contribute are several in proportion to their
sales of Shares to which such loss relates and not joint.

               (e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7.3, and are fully informed regarding said
provisions.

          7.4
Rule 144. For a period of two years following the date hereof, the
Company agrees with each holder of Registrable Shares to:

               (a) comply with the requirements of Rule 144(c) under the Securities Act
with respect to current public information about the Company; and

               (b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time it is subject to such reporting requirements).

          7.5
Termination of Conditions and Obligations. The conditions precedent
imposed by Section 5 or this Section 7 upon Dispositions of the Registrable

I - 18

 

Shares by the Investor shall cease and terminate as to any particular number of
the Registrable Shares and the restrictive legend shall be removed when such
Registrable Shares shall have been effectively registered under the Securities
Act and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Registrable
Shares or at such time as an opinion of counsel reasonably satisfactory to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act (provided that such
opinion shall not be required if the Company shall be furnished with written
documentation reasonably satisfactory to it that such Registrable Shares are
being transferred in a customary transaction exempt from registration under
Rule 144 under the Securities Act).

     8.     Notices. Except as specifically permitted by Section 7.1(g), all
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within domestic United States by first-class
registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express or facsimile, and shall be deemed given (i) if delivered by
first-class registered or certified mail domestic, three business days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one
business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed, and (iv) if delivered by facsimile,
upon electric confirmation of receipt and shall be delivered as addressed as
follows:

	 	(a)	 	if to the Company, to:

	 
	 	 	 	Online Resources Corporation

7600 Colshire Drive

McLean, VA 22102

Attn: Ms. Catherine Graham

Tel: (703) 394-5155

Fax: (703) 873-0204

I - 19

 

	 	 	 	with a copy to:

	 
	 	 	 	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

12010 Sunset Hills Road

Suite 900

Reston, Virginia 20190

Tel: 703-464-4808

Fax: 703-464-4895
	 
	 	(b)	 	if to the Investor, at its address on the signature
page hereto, or at such other address or addresses as may have
been furnished to the Company in writing.

     9.     Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Investor.

     10.     Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.

     11.     Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

     12.     Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without giving
effect to its principles of conflicts of laws.

     13.     Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements relating to such subject matter are
expressly cancelled.

     14.     Finders
Fees. Neither the Company nor the Investor nor any affiliate
thereof has incurred any obligation that will result in the obligation of the
other party to pay any finder’s fee or commission in connection with this
transaction.

     15.     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.

     16.     Successors
and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
Investors, including without limitation and without the need for an express
assignment, affiliates of the Investors. With respect to transfers that are
not made pursuant to the Registration Statement, the rights and obligations of
an Investor

I - 20

 

under this Agreement shall be automatically assigned by such
Investor to any transferee of all or any portion of such
Investor’s Registrable Shares who is a Permitted Transferee (as defined below);
provided, however, that within two business days prior to the transfer, (i) the
Company is provided notice of the transfer including the name and address of
the transferee and the number of Registrable Shares transferred; and (ii) that
such transferee agrees in writing to be bound by the terms of this Agreement.
(For purposes of this “Agreement, a “Permitted Transferee” shall mean any
Person who is an “accredited investor,” as that term is defined in Rule 501(a)
of Regulation D under the Securities Act. Upon any transfer permitted by this
Section 16, the Company shall be obligated to such transferee to perform all of
its covenants under this Agreement as if such transferee were an Investor.

     17.     Expenses. The Company and each of the Investors shall bear their own
respective expenses in connection with the preparation and negotiation of this
Agreement, except that the Company shall be responsible for the payment of
reasonable fees and expenses in an aggregate amount not to exceed $10,000 for
services rendered by outside counsel to the Investor in connection with the
preparation and negotiation of this Agreement.

I - 21

 

Exhibit A

CERTIFICATE OF SUBSEQUENT SALE

American Stock Transfer and Trust Company

6201 15th Avenue

Brooklyn, NY 11219

Attention: Isaac Kagan (781) 921-8293

	 	RE: 	 	Sale of Shares of Common Stock of Online Resources
Corporation (the “Company”) pursuant to the Company’s
Prospectus dated
                               (the “Prospectus”)

Ladies and Gentlemen:

     The undersigned hereby certifies, in connection with the sale of shares of
Common Stock of the Company included in the table of Selling Stockholders in
the Prospectus, that the undersigned has sold the shares pursuant to the
Prospectus and in a manner described under the caption “Plan of Distribution”
in the Prospectus and that such sale complies with all applicable securities
laws, including, without limitation, the Prospectus delivery requirements of
the Securities Act of 1933, as amended.

	 	 	 	 	 
	Selling Stockholder (the beneficial owner):	 	 
	 	 	 	

	Record Holder (e.g., if held in name of nominee):	 	 
	 	 	 	

	Restricted Stock Certificate No.(s):	 	 
	 	 	 	

	Number of Shares Sold:	 	 	 	 
	 	 	 	

	 	 	 	 	 
	Date of Sale:	 	 	 	 
	 	 	 	

     In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.

	 	 	 	 	 	 	 
	 	 	 	 	Very truly yours,
	 	 	 	 	 	 	 
	Dated:	 	 	 	By:	 	 
	 	 	

	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	Print Name:	 	 
	 	 	 	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	

	 	 	 	 	 	 	 
	cc:	 	
Chief Financial Officer

Online Resources Corporation	 	 	 	 

I - 22exv10w2

 

Exhibit 10.2

FIRST AMENDMENT TO

RIGHTS AGREEMENT

BETWEEN

ONLINE RESOURCES CORPORATION

AND

AMERICAN STOCK TRANSFER & TRUST COMPANY

     This First Amendment to Rights Agreement (the “Amendment”) is made as of
this      day of June, 2003 by and between Online Resources Corporation, a
Delaware corporation (the “Company”), and American Stock Transfer & Trust
Company as rights agent (the “Rights Agent”). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement (as defined below).

     WHEREAS, the Company has entered into several Stock Purchase Agreements
dated as of June 6, 2003 by and between the Company and one or more investors
affiliated with Federated Investors, Inc. (the “Purchase Agreements”), pursuant
to which (i) the Company will sell to up to an aggregate of 636,000 shares of
the Company’s common stock, par value $0.0001 per share (the “Common Stock”)
(the “Purchased Shares”) and (ii) the Company may be required to issue under
such Purchase Agreements up to an aggregate of 190,800 shares of the Company’s
Common Stock in the event of a Registration Default (as defined in the Purchase
Agreements) (the “Penalty Shares,” and together with the Purchased Shares, the
“Shares”);

     WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement dated as of January 11, 2002 (the “Rights Agreement”); and

     WHEREAS, the parties desire to amend the Rights Agreement in connection
with the execution and delivery of the Purchase Agreement and the issuance and
sale of the Shares, and the Company and the Rights Agent have executed and
delivered this Amendment.

     NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:

     1.     The definition of “Acquiring Person” set forth in Section 1(a) of the
Rights Agreement is hereby amended by adding the following sentence to the end
of such definition:

     “Notwithstanding the foregoing, neither Federated Investors, Inc. nor any
affiliate thereof (collectively, “Federated”) shall be or become an Acquiring
Person by reason of (i) the execution or delivery of the Stock Purchase
Agreements dated as of June 6, 2003 by and between the Company and Federated
(the “Purchase Agreements”) or (ii) the purchase (or other receipt) of shares
of Common Stock of the Company pursuant to the terms and conditions of the
Purchase Agreements.”

     2.     The definition of “Stock Acquisition Date” set forth in Section 1(kk)
of the Rights Agreement is hereby amended by adding the following sentence to
the end of such definition:

 

 

     “Notwithstanding anything else set forth in this Agreement, a Stock
Acquisition Date shall not be deemed to have occurred by reason of (i) the
execution or delivery of the Purchase Agreements or (ii) the purchase (or other
receipt) of shares of Common Stock of the Company pursuant to the terms and
conditions of the Purchase Agreements.”

     3.     The definition of “Triggering Event” set forth in Section 1(pp) of the
Rights Agreement is hereby amended by adding the following sentence to the end
of such definition:

     “Notwithstanding anything else set forth in this Agreement, a Triggering
Event shall not be deemed to have occurred by reason of (i) the execution or
delivery of the Purchase Agreements or (ii) the purchase (or other receipt) of
shares of Common Stock of the Company pursuant to the terms and conditions of
the Purchase Agreements.”

     4.     Section 3(a) of the Rights Agreement shall be amended by adding the
following sentence to the end thereof:

     “Notwithstanding anything else set forth in this Agreement, no
Distribution Date shall be deemed to have occurred by reason of (i) the
execution or delivery of the Purchase Agreements or (ii) the purchase (or other
receipt) of shares of Common Stock of the Company pursuant to the terms and
conditions of the Purchase Agreements.”

     5.     The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms, until terminated as
provided in the Rights Agreement as so amended.

     6.     This Amendment shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made
and performed entirely within such State. This Amendment may be executed in
any number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument. If any term, provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Amendment shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

[The remainder of this page is intentionally left blank.]

2

 

     IN WITNESS WHEREOF, the parties herein have caused this First Amendment to
be duly executed and attested, all as of the date and year first above written.

	 	 	 	 	 	 	 
	Attest:	 	 	 	ONLINE RESOURCES CORPORATION
	 	 	 	 	 	 	 
	By:	 	 	 	By:	 	 
	 	 	

	 	 	 	

	Name:	 	
Catherine A. Graham
	 	Name:
	 	Matthew P. Lawlor
	Title:	 	
Executive Vice President and
Chief Financial Officer
	 	Title:
	 	Chairman and Chief Executive
Officer
	 	 	 	 	 	 	 
	Attest:	 	 	 	AMERICAN STOCK TRANSFER &
TRUST COMPANY
	 	 	 	 	 	 	 
	By:	 	 	 	By:	 	 
	 	 	

	 	 	 	

	Name:	 	 	 	Name:	 	 
	Title:	 	 	 	Title:	 	 

3

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