. COORDINATION OF INVESTMENT BANKING SERVICES. Contemporaneously with the Closing, (i) the employees ("Employees of SBI E2 Capital") of SBI E2 (USA) Capital ("SBI") listed in Schedule 4(g) shall become employees of the Company or one of its affiliates, except that the employment of Shelly Singhal shall be subject to the execution of an employment agreement acceptable to Mr. Singhal which will provide, inter alia, that until June 30, 2002, Mr. Singhal shall be permitted to continue to work for SBI as specified in such agreement, (ii) the Company will assume all of the operational obligations of SBI listed on Schedule 4(g), (iii) the Company shall grant SBI the right of first refusal, which right shall expire on June 30, 2002, to review deals undertaken by the Company's corporate finance group and determine whether or not to make such SBI deals ("SBI Deals"). Such right of first refusal shall only apply to Initial Public Offerings and registered secondary offerings, (iv) a management fee of ten percent (10%) will be paid to SBI for each SBI Deal. This fee shall be paid whether or not the deal is sourced by SBI, (v) for each deal sourced by SBI or any of its affiliates, SBI shall receive additional compensation at a rate of ten percent (10%) of the management fees paid. It is assumed that for all deals sourced by SBI or its affiliates the SBI name will appear on the cover of any such prospectus, and (vi) for all deals distributed by SBI or its affiliates SBI shall receive sales commissions in addition to investment banking fees, if any. Additionally, prior to the Closing,
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the parties shall negotiate in good faith for an agreement pertaining to the future allocation and coordination of investment banking services and fees between the Company and its affiliates and the Buyer and its affiliates.
h. LISTING. The Company shall at all times comply in all respects with the Company's reporting, filing and other obligations under the by-laws or rules of the National Association of Securities Dealers and the OTCBB (or if applicable NASDAQ or such national securities exchange on which the Common Stock may be listed, as applicable).
i. EXPENSES. Except as set forth in Section 8(n) below, each party shall pay their own respective expenses in connection with the transactions contemplated by the Agreement.
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Shares in such amounts as specified by the Buyer to the Company, prior to the conversion of the Note or the exercise of the Option. All such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement only to the extent required by applicable law and as specified in the Transaction Documents. The Company warrants that no instruction other than such instructions referred to in this Section 5 will be given by the Company to its transfer agent and that the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent permitted by applicable law and provided by this Agreement and the Registration Rights Agreement. Nothing in this Section shall affect in any way the Buyer's obligations and agreement to comply with all applicable securities laws upon resale of the Shares. If the Buyer (x) provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration by the Buyer of the Shares is not required under the Securities Act, or (y) transfers Securities to an affiliate which is an accredited investor (in accordance with the provisions of this Agreement) or in compliance with Rule 144, then in either instance the Company shall permit the said transfer, and if applicable promptly (and in all events within two (2) trading days) instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by the Buyer.
b. REMOVAL OF LEGENDS. The Legend shall be removed and the Company shall issue a certificate without such Legend to the holder of any Share upon which it is stamped, and a certificate for a Share shall be originally issued without the Legend, if, unless otherwise required by state securities laws, (x) the sale of such Share is registered under the Securities Act, or (y) such holder provides the Company with an opinion by counsel reasonably satisfactory to the Company, that is in form, substance and scope reasonably satisfactory to the Company, to the effect that a public sale or transfer of such Share may be made without registration under the Securities Act or (z) such holder provides the Company with assurances reasonably satisfactory to the Company and its counsel, that such Share can be sold pursuant to Rule 144. The Buyer agrees that its sale of all Securities, including those represented by a certificate(s) from which the Legend has been removed, or which were originally issued without the Legend, shall be made only pursuant to an effective registration statement (and to deliver a prospectus in connection with such sale) or in compliance with an exemption from the
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registration requirements of the Securities Act. In the event the Legend is removed from any Share or any Share is issued without the Legend and thereafter the effectiveness of a registration statement covering the sales of such Share is suspended or the Company determines that a supplement or amendment thereto is required by applicable securities laws, then upon reasonable advance notice to the holder of such Share, the Company shall be entitled to require that the Legend be placed upon any such Share which cannot then be sold pursuant to an effective registration statement or Rule 144 or with respect to which the opinion referred to in clause (y) next above has not been rendered, which Legend shall be removed when such Share may be sold pursuant to an effective registration statement or Rule 144 (or such holder provides the opinion with respect thereto described in clause (y) next above.
c. INJUNCTIVE RELIEF FOR BREACH. The Company acknowledges that the remedy at law for a breach of its obligations under Sections 5(a) and 5(b) above will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly the Company agrees that the remedy at law for a breach of its obligations under such Sections would be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of such Sections, the Buyer shall be entitled, in addition to all other remedies at law or in equity, to an injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other Share being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligations of the Company hereunder are subject to the satisfaction, on or before the Closing, unless otherwise specified, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion:
a. The parties shall have executed this Agreement, the Investor Rights Agreement and the Registration Rights Agreement.
b. The representations and warranties of the Buyer shall be true and correct in all material respects as of the date made and as of each Closing Date as though made at that time (except for representations and warranties that speak as of a specific date). The Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to each Closing.
c. 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 or any self regulatory organization having authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the transactions contemplated herein.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligations of the Buyer are subject to the satisfaction, on or before the Closing, unless otherwise specified, of each of the following conditions, provided that these conditions
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are for the sole benefit of the Buyer and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement, the Investor Rights Agreement and the Registration Rights Agreement and shall have issued and delivered the Note and the Option.
b. The representations and warranties of the Company shall be true and correct in all material respects as of the date made and as of each Closing as though made at that time (except for representations and warranties that speak as of a specific date). The Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to each Closing. The Buyer may require a certificate, executed by the Chief Executive Officer of the Company, dated as of each Closing, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer.
c. The Common Stock shall not have been suspended by the SEC or other relevant regulatory agency.
d. The Company shall not have received, as of the Closing Date, from the National Association of Securities Dealers, any written or oral communication as to its actual or potential ineligibility for continued listing of the Common Stock on the OTCBB.
e. Company's counsel shall have delivered to the Buyer the legal opinion attached hereto as Exhibit E.
f. 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 or any self regulatory organization having authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the transactions contemplated herein.
g. All consents, approval, authorizations and orders required to be obtained and all registrations, filings and notices required to be made with or given to any regulatory authority or person as provided herein shall have been made.
h. On the Closing, the Employees of SBI E2 (USA) Capital specified on Schedule 4(g) shall become employees of the Company or one of its affiliates.
i. Contemporaneously with the Closing, the Company shall have maintained or increased, as applicable, the size of the Board of Directors at or to three members and have appointed one designee of the Buyer (reasonably acceptable to the Company) to the Board of Directors.
j. The Credit Agreement between the Company and UBS Americas Inc. substantially in the form heretofore delivered to the Buyer shall have closed. |
